Evidence from Africa, Asia and Latin America
Chapter 7: Productivity, export, local sourcing and technology in Brazil
Rajah Rasiah 7.1 INTRODUCTION Brazil is the largest economy in Latin America and has enjoyed a long history of government support in the development of producer goods industries under import substitution (IS). The large domestic economy, fairly developed science and technology (S&T) infrastructure, ownership regulation and domestic content requirements – the latter two applied varyingly since the 1950s – helped create an industrial structure with strong participation by both foreign and local capital in manufacturing. Empirical and analytical accounts examining the role of FDI in technological capabilities in Brazil are dominated by focus on process equipment R&D capabilities. Government policy instruments are argued to have inﬂuenced foreign ﬁrms’ participation in R&D activities to access opportunities to sell in the domestic market and incentives. A number of studies have compared technological capabilities of foreign and local ﬁrms. Katz (1999), Katz and Bercovich (1993), Lastres and Cassiolato (2000) and Costa (2001) presented empirical evidence to show that foreign ﬁrms’ R&D activities are limited to process technology and modiﬁcation of machinery and equipment. Arifﬁn and Figueiredo (2003), using a dynamic methodology that locates ﬁrms on the basis of differentiation of technological activities in respect of their degree and depth of intensity, showed no difference between foreign and local consumer ﬁrms in Manaus, Brazil. This chapter attempts to add to this literature and offer an example of a middle-income economy with some strong high-tech institutions in the development trajectory by examining technological and economic performance differences and relationships using...
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