Access to Technology versus Manaus: Brazil’s Conflicting Goals

Among the thirteen pillars of President Dilma Rousseff’s mandate,  number 7 and 8 are about education and technology:

7. To guarantee education for social equality, citizenship, and development.

8. Transform Brazil into a scientific and technological power.

A goal that falls in line with both of these pillars is to make computers more accessible to kids. Brazil would be smart to follow the lead of the one laptop per child concept. Undoubtedly the most important learning tool available, a computer is a window into the  universe and a means to engage in self-learning. Self-learning is especially critical given the quality of schooling in Brazil.

With the average teacher’s salary at around US$650 dollars a month–a third less than what my wife’s secretary makes working at a construction site–teachers often lack the training or enthusiasm that fosters curiosity and a desire to learn. Computers provide an important resource for stimulating kids’ curiosity. Finally, greater access to computers may ultimately make technologists out of kids, helping government fulfill goal #8. This goal is certainly not being achieved through Brazil’s computer industry.

One laptop per child program in Paraguay

An article by The Economist in 2000, “Bungle in the Jungle,” describes Brazil’s ill-advised electronics industry. The military government established an industrial park and duty-free zone in 1967 located in Manaus, 1000 kilometers up the Amazon. The project’s motivations were all backwards; rather than technological advancement, the project was predicated on local employment, colonization of the Amazon, and securing Brazil’s borders. As a result, Brazil has what The Economist describes as a “screwdriver” industry: for the most part an assembly site for imported foreign parts. While more successful than Henry Ford’s disastrous attempt at setting up assembly-line-Utopia in the Amazon, Manaus’ industry is subsidized by government and consumers who pay higher prices for all technology.

The cheapest laptop you might find at Casas Bahia, one of Brazil’s leading retailers, is in the vicinity of R$1000 (US$635). The same computer in Canada or the US is almost half the price. What this means in practice is that the middle classes on up go abroad to buy their computers cheap, and the people who can’t afford to travel abroad– 70 percent of Brazilians–pay close to double. They could go to Manaus’ duty-free zone, but the ticket to Manaus is about as expensive as one to Miami.

Massive tariffs on technology have achieved three principal results. First, they have allowed Brazil’s uncompetitive computer industry to stay afloat, and its directors to make millions– directly and indirectly subsidized by government. Tariffs also mean that Brazilian ‘computer companies’ can afford to be uncompetitive, keeping their costs high, just as long as they are able to undercut their taxed competitors. Second, tariffs provide the government with a  tax grab. And third, in addition to costing taxpayers a pretty penny, artificially high computer prices deny millions of Brazilians access to technology and tools for learning.

One of Brazil’s electronic brands, Gradiente, had apparently not made an operational profit in 10 years as of 2007. That same year it was forced to shut its doors under half a billion reais of debt (about US$350  million), much of it owed to Brazil’s taxpayer-funded development bank, BNDES.You can bet that the directors made off like bandits at the taxpayers expense. Now they’re back. One of the original founders of Gradiente, Eugênio Staub, has put together a consortium of investors and raised $68 million reais to get gradiente back up. You would think that US$40 million wouldn’t be enough to jump-start a company that closed under mountains of debt, but magic sometimes happens in Brazil, and often on the backs of taxpayers and the poor. Point-in-case, the investors in this specious project include the pension systems of Petros (Petrobras, which is majority-owned by government), the government of the state of Amazonas, and the pension system for Caixa (FUNCEF, a federally owned bank ).

Brazil’s electronics market contradicts the Rousseff government’s current goals. If Brazil is serious about moving education and technology forward, it should open up its markets and allow everyone access to affordable technology. The other alternative is to make subsidization of the domestic computer industry transparent– a social policy, so to speak– and ensure industrial efficiency and accessible prices for the poor. Having access to technology is the first step towards fostering technological expertise and leadership.