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Productivity And Growth In The Brazilian Informatics Industry

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Author Info

  • Eduardo Ribeiro
  • Victor Prochnik
  • João DeNegri

Abstract

The informatics industry (ISIC 30 – office, accounting and computing machinery) is one of the fastest growing sectors in manufacturing in the World and in Brazil, and receives special tax breaks in Brazil (the so called “Informatics Law”). We investigate this sector after its liberalization using complementary methods. First, interviews with industry leaders to learn the qualitative aspects of their growth experience. The interviews suggested that firm growth was based either on product differentiation in the business machines subsector (using close software complementarities) or retail chains as distribution channels in computer manufacturing. Access to imported technology is relevant to productivity growth and universities were not an appropriate technology source. Second, we looked at econometric evidence on the role of observable characteristics and, in particular, of the Informatics Law benefits on productivity growth. Our results indicate that firm productivity growth in the sector can be attributed to within firm growth with a positive contribution of market selection, but a negative reallocation effect. The qualitative assessment of the Informatics Law is positive overall for the firms, but its quantitative impact on productivity growth is not significant. On average, less productive firms obtain more Informatics Law benefits, questioning the efficiency of R&D incentives in its current design in Brazil.

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Bibliographic Info

Paper provided by Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto in its series Working Papers with number 12-2010.

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Date of creation: 2010
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Handle: RePEc:fea:wpaper:12-2010

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Related research

Keywords: Informatics industry; tax incentives; total factor productivity;

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  1. Yeaple, Stephen & Helpman, Elhanan & Melitz, Marc, 2004. "Export versus FDI with Heterogeneous Firms," Scholarly Articles 3229098, Harvard University Department of Economics.
  2. Saliola, Federica & Zanfei, Antonello, 2009. "Multinational firms, global value chains and the organization of knowledge transfer," Research Policy, Elsevier, vol. 38(2), pages 369-381, March.
  3. Ernst, Dieter & Kim, Linsu, 2002. "Global production networks, knowledge diffusion, and local capability formation," Research Policy, Elsevier, vol. 31(8-9), pages 1417-1429, December.
  4. Laura Alfaro & Andrés Rodriguez-Clare, 2004. "Multinationals and Linkages: An Empirical Investigation," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
  5. Dieter Ernst, 2004. "Pathways to Innovation in the Global Network Economy: Asian Upgrading Strategies in the Electronics Industry," Economics Study Area Working Papers 58, East-West Center, Economics Study Area.
  6. Katayama, Hajime & Lu, Shihua & Tybout, James R., 2009. "Firm-level productivity studies: Illusions and a solution," International Journal of Industrial Organization, Elsevier, vol. 27(3), pages 403-413, May.
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