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Project document

Information and Communication
Technology (ICT) for development of
small and medium-sized exporters
in Latin America:
Brazil

Antonio José J. Botelho
Paulo Bastos Tigre

This document was prepared by Antonio José J. Botelho from the Pontifícia Universidade Católica do Rio de Janeiro
(PUC-Rio) and Paulo Bastos Tigre from the Federal University of Rio de Janeiro (UFRJ). Both authors are consultants of
the International Trade Division of the Economic Commission for Latin America and the Caribbean (ECLAC). This is the
complete version of his summary paper, which forms part of the book “Information Technology (IT) for Development of
Small and Medium-sized Exporters in Latin America and East Asia”, compiled by Mikio Kuwayama, Matsatsugu Tsuji and
Yasushi Ueki, 2005.
The authors thank Felipe Silveira Marques for his invaluable research assistance in this project. His unwavering
enthusiasm, diligent research and coherent writing made this report possible.
The views expressed in this document, which has been reproduced without formal editing, are those of the authors and do
not necessarily reflect the views of the Organizations.

United Nations Publication

LC/W.44
Copyright © United Nations, December 2005. All rights reserved
Printed in Santiago, Chile – United Nations
Applications for the right to reproduce this work are welcomed and should be sent to the Secretary of the Publications
Board, United Nations Headquarters, New York, N.Y. 10017, U.S.A. Member States and their governmental institutions
may reproduce this work without prior authorization, but are requested to mention the source and inform the United
Nations of such reproduction.

CEPAL – Project document

Information and Communication Technology (ICT) for development of small…..: Brazil

Contents

Abstract ............................................................................................................................................5
I.
Introduction ...............................................................................................................................7
II. Current situation of the IT market and IT use by SMEs ..........................................................9
A. Market estimates...............................................................................................................9
B. Penetration of IT and e-commerce among small and medium-sized enterprises
(SMEs) ............................................................................................................................11
III. SME development in the IT revolution ...................................................................................19
A. Overview of the relative importance of SMEs in the economy at large ..........................19
B. Case studies on the use of e-commerce and supply chain management (SCM) in
selected industries ..........................................................................................................25
C. Problems for SMEs to participate in the trade-oriented value chain ..............................48
IV. Government policies designed for SMES, IT, and international trade ...................................49
A. IT policies in the country’s overall development strategy ...............................................49
B. Policies to support SMEs ................................................................................................51
C. Special measures to correct the ‘digital divide’ among companies ................................59
D. E-government aimed at SMEs and trade promotion ......................................................65
E. Institutional issues...........................................................................................................69
V. Regional Networks..................................................................................................................71
A. Existing regional networks or websites...........................................................................71
B. New networks or websites in the planning stage............................................................75
C. Possibility of inter-regional links......................................................................................76
VI. Conclusion and recommendation ...........................................................................................77
A. Lessons learned..............................................................................................................77
B. Assessment of experiences in export promotion and IT policies for SMEs...................78
C. Assessment of the present situation of regional networks .............................................78
References .....................................................................................................................................79

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CEPAL – Project document

Information and Communication Technology (ICT) for development of small…..: Brazil

Abstract

Whereas small and medium-sized enterprises (SME) export promotion policies in Brazil (BR) are
entering a second-generation, those for information technology (IT) are still in their infancy.
We are still only beginning to gain an understanding of individual SME IT needs and uses.
Nonetheless, we have not yet fathomed the possibilities for IT use in SME networks. Beyond the
basic goal of achieving widespread dissemination, there has been little policy development in this
area. In regard to broad dissemination, the new government initiative to develop cheap computers
could be part of the answer, but that remains to be seen. Moreover, SMEs will still be faced with
the problem of obtaining adequate software and, most importantly, qualified IT staff aware of the
organizational and strategic challenges facing SMEs.
On the other hand, export promotion policies are becoming more sophisticated and tailor
made. The recent emergence of local/regional networks of exporting firms such as the High
Technology Association (HTA) consortium, and the support given to them by Brazilian Export
Promotion Agency (APEX), as well as easier use of export portals such as that of Banco do Brasil
and export facilities such as those provided by Correios, are a few signs of gradual and important
changes in policy. The scope of APEX support for these networks needs to be expanded to
include development of IT tools to promote meaningful collaboration and to allow for interactive
export activities. This would increase the supply of complete platforms in the case of high-tech
sectors, thus capturing greater value-added and providing increased sustainability. Export
sustainability is a critical problem that continues to plague SME exports. This has been correctly
identified but still remains to be diagnosed, above and beyond the lure of the domestic market
once the local economy recovers. Guidance and sustainability by anchor firms appears to be a
promising avenue for both SME export capacity building and sustainability. Care is needed,
however, to prevent a strong dependency relationship from developing. In this regard,
experimentation could be pursued to involve first-tier suppliers in this support and learning
network for export-oriented SMEs.
The full potential of Internet-based instruments has not yet been fully grasped by
promotion agencies. Full interactivity and high-quality graphical interfaces are critical for
breaking into an overcrowded export market. Marketing is often weak or export capability
lacking in exporting SMEs, either because of the type of specialized training needed, in the case
of high-tech firms, or because of a lack specialized training in the case of traditional industry
clusters. Internet tools can be employed effectively in building the capacities that are lacking.
5

CEPAL – Project document

Information and Communication Technology (ICT) for development of small…..: Brazil

I. Introduction

This aim of this study is to analyze the nature and scope of IT applications used by SMEs and
examine the potential of IT as an instrument of trade promotion and industrial development among
SMEs. Brazil’s recent export drive has produced positive results, partly as a result of renewed trade
efforts by SMEs. From 2000 to 2003, Brazilian exports grew from 9.1% to 14.8% of GNP to represent
1% of exports worldwide. In contrast, Brazil accounts for 1.7% of total global IT expenditures.
In 2004 (up to August) Brazilian exports have been growing at the rapid rate of 58% to
reach a cumulative total of US$ 58.5 billion, generating a surplus of US$ 20.1 billion. Export
growth in 2003 (January-June) was 31%. The trade surplus (over a similar period) increased
sevenfold between 2002 and 2004. Manufactured (53%) and basics products account for over
80% of total exports. Transport materials, products in the soybean complex and metallurgical
goods are the main export items (table 1). The top five regional export markets are: the European
Union (26%), the United States (20%), Asia, Latin American Integration Association (LAIA) and
Mercosur (9%). The top five countries for Brazilian exports (United States, Argentine, China,
Netherlands and Germany) absorb almost 45% of the total. In contrast, service exports in 2003
amounted to just US$ 10 billion, producing a US$ 4.6 billion deficit (Vastine 2004).
TABLE 1
MAIN PRODUCTS EXPORTED, JAN-JUN 2004
Value
1
2
3
4
5
6
7
8
9
10
11

Transport material
Soybean complex
Metallurgical products
Meat
Chemicals
Oil and fuel
Machinery and equipment
Ores
Footwear and leather
Paper and pulp
Electric and electronic appliances

6 529
5 460
4 444
2 768
2 707
2 676
2 426
2 201
1 575
1 438
1 409

ÃÈ!#

-2003

35.4
45.4
33.3
57.0
21.1
12.7
42.8
27.9
18.0
4.1
3.9

% Share
15.1
12.6
10.3
6.4
6.3
6.2
5.6
5.1
3.6
3.3
3.3

Source: Ministério do Desenvolvimento, Indústria e Comércio Exterior (MDIC), Summary version of the
Brazilian trade balance http://www.desenvolvimento.gov.br/arquivo/secex/balanca/balComBrasileira/
semanal/NovaBalanca.ppt, consulted on August 23, 2004.

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CEPAL – Project document

Information and Communication Technology (ICT) for development of small…..: Brazil

The number of exporting firms grew by 5.1% from 13,312 in 2002 to 13,996 in 2003 (the
growth rate accelerated to 6.8% in 2004/2003); the number of exporting micro, small and
medium-sized enterprises (MSMEs) grew by just 3.7%, whereas the number of medium-sized
enterprises remained virtually constant (figure 1). In 2003, MSMEs jointly represented 76% of
the total number of exporting firms, but accounted for less than 11% of total exports by value.
FIGURE 1
BRAZILIAN EXPORT BY ENTERPRISE SIZE, 2002-2003
(In thousands of firms)
10

9 479

9 137

8
5 649 5 695

6

4 208 4 140
4
2
460

368

0
Small

Large

Medium
mm
2003

Physical person

2002

Source: Ministério do Desenvolvimento, Indústria e Comércio Exterior (MDIC), Summary
version of the Brazilian trade balance http://www.desenvolvimento.gov.br/arquivo/secex/balanca/
balComBrasileira/semanal/NovaBalanca.ppt, consulted on August 23, 2004.

8

CEPAL – Project document

II.

Information and Communication Technology (ICT) for development of small…..: Brazil

Current situation of the IT market
and IT use by SMEs

A. Market estimates
As the world’s fifth most populated country with over 180 million inhabitants, Brazil ranks
among the top 20 global IT users, although in per capita terms it lags well behind advanced
countries and a number of emerging economies, because of its highly skewed income
distribution. Table 2 shows estimates of IT market development, according to different sources.
For comparison the last column shows the world total or average.
From 1999 to 2002, while IT spending (in US dollars) decreased, it grew in real terms,
since the exchange rate suffered a major devaluation during the period. As a percentage of GDP,
Brazil’s IT spending rose from 3.9% in 1999 to 4.7% in 2002, to represent 1.6% of global IT
spending.
The evolution of IT infrastructure in Brazil reveals a rapid dissemination of PCs and
Internet services, although in many respects at a slower pace than the global average. The number
of PCs per 1,000 inhabitants has grown by about 30% per year between 1999 and 2002.
Nonetheless, the per capita ratio of 7.48%, compared with the world average of 9.91%, shows
that there are still untapped opportunities for growth. In 1999, there were relative few Brazilian
Internet hosts — just 3 per 1,000 habitants. By 2002, this number had multiplied fourfold, but it
still represents half of the world average. The number of Internet users has also increased
fourfold, thereby closing the gap with respect to the global average. Broadband access is still
limited, reaching only 0.5% of the population. IT hardware, software and related services have
grown by about 10% per year, to jointly represent about US$ 14 billion or 1.4% of global
spending.

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Information and Communication Technology (ICT) for development of small…..: Brazil

TABLE 2
IT MARKET ESTIMATES
(In millions of US$)
Brazil
IT Market

IT spending
IT as% of GDP
PCs b
Internet hosts b
Internet users b
Broadband subscribers b
IT Hardware spending
IT Software spending
IT Services spending
Telecommunications spending
Main phone lines b
Cell phone subscribers b
B2B trade
B2C trade
B2G trade

a

World

1999

2002

CAGR (%)
1999-2002

2002

16 300
3.9
36.3
2.7
20.8
5 782
1 635
4 349
30 339
165.4
89.3
165.0
77.7
-

14 900
4.7
74.8
12.8
82.2
4.5
6 891c
1 863 c
5 368 c
31 703 c
223.2
200.6
36 500
1 400
1 200

-2.95
6.42
27.25
69.13
58.10
9.17
6.75
11.10
2.22
10.51
30.97
504.79
162.16
-

899 000
2.8
99.1
25.9
97.2
376 119 c
196 237 c
425 660 c
1 037 877 c
404.0
190.7
916 000
251 000
-

Brazil
as% of
global
spending
1.66
1.83
0.95
1.26
3.05
3.98
0.56
-

Source: E-Consulting Corp. (2003). Internet Indicators. http://www.e-consultingcorp.com.br/insider_
info/indicadores.htm. E-Consulting does not provide definitions. International Telecommunication Union
(ITU). World Telecommunication Indicators, Geneva: ITU, 2003. World Information Technology and
Services Alliance (WITSA). Digital Planet 2002: The Global Information Economy. WITSA, 2002.
a
CAGR (compound annual growth rate) is computed by the formula: [(Pv/P0) (1/n)]-1, where Pv = Present
value; P0 = Initial value; n = Number of periods. The result is multiplied by 100 to obtain a percentage.
b
As per 1,000 inhabitants.
c
2001 data.
Notes:
ITU definitions:
PCs per 1000 population: is the estimated number of personal computers (PCs), obtained from a annual
questionnaire supplemented by other sources;
Internet hosts: refers to the number of computers directly connected to the Internet, data were obtained
from the Internet Software Consortium and RIPE (Réseaux IP Européens);
Internet Users: is based on nationally reported data;
Main telephone lines: refer to telephone lines connecting a customer’s equipment (e.g., telephone set,
fax machine) to the Public Switched Telephone Network (PSTN), and which have a dedicated port on a
telephone exchange (most countries also include public payphones);
Cellular mobile telephone subscribers: refers to users of portable telephones subscribing to an automatic
public mobile telephone service using cellular technology providing access to the PSTN.
WITSA definitions:
IT Hardware: servers, personal computers, workstations, data communication equipment and add-ons
purchased by a corporation, household, school or government agency from a external agent or
corporation;
IT Software: includes the purchase of all software products and external customization of computer
programs; excludes expenses related to the internal customization of computer programs (e.g. wages,
rent); includes system software and utilities, application tools, and application solutions;
IT Services: IT service provided to a corporation by an external agent or corporation, above and beyond
the services provided by an internal IS team; includes IT consulting, implementation services, operations
management, IT training and education, processing services, and IT support services;
Telecommunications: encompasses expenditures by business, household, Government, and education on
public network equipment, private network equipment and telecommunications services.

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CEPAL – Project document

Information and Communication Technology (ICT) for development of small…..: Brazil

In terms of telecommunications infrastructure, Brazil has experienced an investment
boom since 1998 when the telecom system was privatized. By the end of 2002 there were 223
fixed lines per 1,000 inhabitants, compared to 165 in 1999, a 10% increase per year. More
importantly, mobile phone use has spread must faster (30%), above the world’s average.
The boom in telecommunications infrastructure investment in Brazil is now over, however, since
Telecom Operators (TELCOS) could not find clients that could afford to pay their monthly bills.
Future expansion will have to occur mainly in lower-income urban population groups where
paying telephone bills is obviously a secondary priority compared to buying food, electricity and
paying transport fares to get to work. The Brazilian case illustrates the challenge of universalizing
telecommunications services in developing countries that face persistent poverty and a skewed
income distribution.
In short, both the potential and limits of IT development in a large developing country
environment need to be recognized. In industry sectors and regions where there is effective
demand, basic and sophisticated services such as corporate high-speed networks and broadband
Internet services are widely available and prices are declining. Telecom infrastructure does not
seem to be a major problem for B2B diffusion in Brazil anymore, since the relatively large
absolute size of the market has encouraged sufficient private investments.
As elsewhere in the world, e-commerce has spread very rapidly in Brazil. In 2002,
according to E-Consulting Corporation, e-commerce transactions amounted to US$ 39 billion,
representing 3.9% of the world total. Considering the relatively larger global share of Brazil as
compared to other ICT indicators, this total may be overestimated. B2B accounts for the vast
majority of transactions in value terms (US$ 36.5 billion), but B2G is growing fast and is now
almost on level terms with B2C.

B. Penetration of IT and e-commerce among small
and medium-sized enterprises (SMEs)
Figures published by E-Consulting show that electronic transactions in Brazil (B2B, B2C, B2G,
m-commerce and online retail) amounted to US$ 47.2 billion. The 2003/2004digital enterprise
survey, carried out by the Industrial Federation of the State of São Paulo (FIESP) in São Paulo,
Brazil’s most economically advanced state, reveals that half of all SMEs surveyed did not foresee
participation in electronic transactions via Internet (Internet-based Electronic Data Interchange
(EDI)) and 20% did not even have a website. In contrast, 72% of the large firms had already
implemented electronic transactions via Internet or plan to do so in the near future. Among microenterprises, only 8% make use of B2B for sales; 16% use this for purchases, and just 8% engage
in B2C. Among small enterprises, 15% use B2B, for both purchases and sales and 11% engage in
B2C. Despite these relatively small numbers, they are significantly higher than in 2003, when
only 15% of enterprises claimed to use e-commerce, a figure that had jumped to 26% by 2004.
Another survey carried out by Sebrae-SP covering a sample of 1,163 firms representing
the universe of SMEs in the state of São Paulo across different sectors — industry, commerce and
services — revealed that: 47% of the sampled enterprises make use of IT (informatizadas),
compared to 31% in 1997; 54% of entrepreneurs have access to the Internet; half of all IT users
have only one microcomputer, and IT use is greater in older firms, in the industrial sector and in
larger SMEs. By contrast, IT use is less frequent among SMEs in the commerce and service
sectors, in traditional activities and in smaller and newer enterprises.

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CEPAL – Project document

Information and Communication Technology (ICT) for development of small…..: Brazil

The main uses made of Internet access are: (i) Banking services; (ii) Government
services; (iii) News; (iv) Communications (e-mail); (v) Research on business opportunities, prices
and suppliers, and (vi) Website to publicize business.
Furthermore, most SMEs that are IT users are satisfied with their level of IT use and have
a relatively up-to-date ensemble of software and hardware. By contrast, SMEs that do not use IT
do not perceive clear benefits in its use, or else find it expensive in relation to their current
revenue level. As a result, few SMEs are willing to invest more in IT (19%). In general, those
opting not to invest in IT in the short term are divided between those that see no need, those that
already have the required IT resources, and those that are happy with their current level of IT use.
Between 2000 and 2002, the rate of expansion of IT use in the sample grew by 5% per
year, and the proportion of IT users jumped from 42% to 47% of the total. This slower
dissemination rate is partly influenced by the unfavourable conjuncture, but in any case it is still
higher than the overall economic growth rate.
The foregoing analysis of e-commerce dissemination draws on previous research on the
e-commerce environment, policy and dissemination in Brazil. It uses data compiled from a tencountry survey by the Centre for Research on Information Technology and Organizations, of 200
business establishments in Brazil, encompassing large and small firms in the financial,
manufacturing and retail/wholesale distribution industries (Tigre, 2003).
Large Brazilian firms display clear leadership in adopting IT and e-commerce, since they
are better able to achieve economies of scale and scope that enhance the perceived benefits of
adoption and lead to higher levels of dissemination. As information is costly to produce yet very
cheap to reproduce, the cost of information is dominated by the costs of the first copy (Shapiro
and Varian, 1999). The launching of e-commerce may require a considerable investment in
licenses, design, organizational linkages, and data security at the outset, but the costs of adding
new users can be very low. As a result, larger firms that can take advantage of scale economies,
and those with resources to facilitate implementation can be expected to be more aggressive in
adopting technologies such as e-commerce (Tornatzky and Fleischer, 1990). In some cases,
however, small firms may be more agile and flexible in adopting new technologies and exploiting
new business models, unencumbered by IT legacy systems and past organizational and network
rigidities.

1. Adoption of e-commerce technologies
Among Brazilian firms, large establishments have a higher level of use of the Internet
technologies (table 3). All surveyed small firms use e-mail, and roughly 70% have a website.
However, when more advanced applications such as Intranet and Extranet (accessible by
suppliers and business partners) are involved, large firms display twice the level of adoption of
small firms. For electronic fund transfer and call centres, the difference between SMEs and large
firms is less.
The adoption of e-commerce technology can be measured by the degree to which Internet
applications are integrated with internal information systems and those of suppliers and
customers. Table 4 shows that large firms are well ahead of small ones in both internal and
external integration. It also shows that the percentage of Brazilian firms that have integrated
internal databases and information systems is larger than the global average (29.6% compared to
(23.9%). Integration with suppliers and business customers, however, is below the global
average.

12

CEPAL – Project document

Information and Communication Technology (ICT) for development of small…..: Brazil

TABLE 3
USE OF E-COMMERCE TECHNOLOGIES
(In Percentages)
Sizea
E-mail
Website
Intranet
Extranet
Accessible by suppliers/business partners
Accessible by customers
Electronic Data Interchange (EDI)
Over private networks only
Internet-based only
Both
Electronic Funds Transfer (EFT)
Call centre

Total
Large

100
70.4
36.8
32.9
10.1
15.5
35.7
7.0
6.9
21.8
52.0
45.6

Brazilb

Globalc

100
80.8
71.7
44.6
33.7
28.6
71.9
25.8
10.4
35.7
66.5
62.5

SME

100
70.7
37.7
33.2
10.7
15.9
36.7
7.5
7.0
22.2
52.4
46.1

98.5
74.1
63.6
32.7
20.9
17.8
44.3
19.4
8.4
15.9
43.4
32.3

Source: Centre for Research on Information Technology and Organizations (CRITO) Global
E-Commerce Survey, 2002.
a
SMEs are those with 25-250 employees; large firms are those with more than 250 employees.
b
Responses were weighted in terms of the total number of establishments and employee size within the
sector for each country. Survey sample sizes for Brazil by sector are: 68 establishments in
manufacturing, 68 in wholesale  retail distribution, and 64 in banking  insurance; by size 98
establishments are classified as SME and 102 as large.
c
Consists of weighted survey responses in 10 countries combined: United States, Mexico, Brazil,
Germany, France, Denmark, Singapore, Taiwan (Province of China), China and Japan.

TABLE 4
ENTERPRISE INTEGRATION STRATEGY, 2002
(In Percentages)
Sizea

Total

Extent to which Internet applications are
electronically integrated with …

SME

Large

Brazilb

Globalc

Internal databases and information systemsd
Little to none
Some
A great deal

58.9
12.0
29.1

42.0
10.3
47.7

58.4
12.0
29.6

52.5
23.6
23.9

Those of suppliers and business customerse
Little to none
Some
A great deal

90.0
8.5
1.6

70.2
16.1
13.7

89.4
8.7
1.9

72.1
18.3
9.6

Source: Centre for Research on Information Technology and Organizations (CRITO) Global
E-Commerce Survey, 2002.
a
SMEs are those with 25-250 employees; large firms are those with more than 250 employees.
b
Responses were weighted in terms of the total number of establishments and employee size within
the sector for each country. Survey sample sizes for Brazil by sector are: 68 establishments in
manufacturing, 68 in wholesale  retail distribution, and 64 in banking  insurance; by size 98
establishments are classified as SME and 102 as large.
c
Consists of weighted survey responses in 10 countries combined: United States, Mexico, Brazil,
Germany, France, Denmark, Singapore, Taiwan (Province of China), China and Japan.
d
Exact wording of question: Using a 5-point scale where 5 is “a great deal” and 1 is “not at all”,
please rate the extent to which your Internet applications are electronically integrated with your
internal database and information systems. Scores of 1 or 2 are categorized as “little to none”, a score
of 3 as “some” and scores of 4 or 5 as “a great deal”.
e
Exact wording of question: Using a 5-point scale where 5 is “a great deal” and 1 is “not at all”,
please rate the extent to which your company’s databases and information systems are electronically
integrated with those of your suppliers and business customers. Scores of 1 or 2 are categorized as
“little to none”, a score of 3 as “some” and scores of 4 or 5 as “a great deal”.

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Information and Communication Technology (ICT) for development of small…..: Brazil

The survey shows that large firms perceive greater external pressure to adopt e-commerce
as a result of competitors being online, and because of the requirements of suppliers and
customers (table 5). They also are somewhat more likely to perceive the opportunity to reduce
costs or expand markets. Nevertheless, smaller firms attach greater importance than larger firms
to the role of government online procurement. In Brazil, the launching of the federal government
procurement site, Comprasnet, greatly increased the number of SMEs participating in
government procurement. This suggests that Government could contribute to IT dissemination
through its own use of the technology.
TABLE 5
DRIVERS OF INTERNET USE
(In Percentages)
Sizea

% indicating driver is a significant factor …d

Total

SME

Customers demanded it
Major competitors were online
Suppliers required it
To reduce costs
To expand market for existing product or services
To enter new businesses or markets
To improve coordination with customers and suppliers
Required for government procurement
Government provided incentives

Large

Brazilb

Globalc

44.4
26.3
23.7
60.5
59.1
53.8
60.8
25.6
14.3

56.3
48.8
45.1
71.6
67.5
64.1
66.6
18.5
21.5

44.7
26.9
24.3
60.8
59.3
54.1
60.9
25.4
14.5

36.9
31.3
22.3
35.7
47.9
42.0
43.7
15.2
8.3

Source: Centre for Research on Information Technology and Organizations (CRITO) Global
E-Commerce Survey, 2002.
a
SMEs are those with 25-250 employees; large firms are those with more than 250 employees.
b
Responses were weighted in terms of the total number of establishments and employee size within the
sector for each country. Survey sample sizes for Brazil by sector are: 68 establishments in manufacturing,
68 in wholesale  retail distribution, and 64 in banking  insurance; by size 98 establishments are
classified as SME and 102 as large.
c
Consists of weighted survey responses in 10 countries combined: United States, Mexico, Brazil,
Germany, France, Denmark, Singapore, Taiwan (Province of China), China and Japan.
d
Exact wording of question: Using a 5-point scale where 5 is “a very significant factor” and 1 is “not a
factor at all,” please rate how significant each of the following was to your organization’s decision to
begin using the Internet for business. A score of 4 or 5 was classified as “a significant factor”.

2. Barriers and difficulties
Information technology dissemination can involve profound changes in business organization,
government regulation and human experience. Since these changes are of an institutional nature,
they are usually more difficult and time consuming to overcome than those involved in the
introduction of new equipment and software. Table 6 shows that in Brazil, major obstacles are
imposed by government regulations, including worries about data privacy or security issues
(48.6%); lack of business laws for e-commerce (31.6%); and inadequate legal protection for
Internet purchases (41.4%). Concern over Internet taxation was also cited by 26.8% of Brazilian
firms, compared to just 16.5% of the global sample.
Another finding is that small firms face more barriers than large ones. The only exception
is the prevalence of credit card use, which was considered to be more of an obstacle for large
firms. The use of credit cards for e-commerce was the lowest reported obstacle overall. Brazilian
consumers are now the largest users of credit cards in Latin America, and the country ranks

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eighth worldwide, with about 30 million cards issued and over 1 billion transactions a year.
In 2000, total credit card purchases amounted to US$ 26.5 billion, equivalent to 7% of total
private domestic consumption in Brazil (Gazeta Mercantil L. A., 2001, p. 26).
TABLE 6
BARRIERS AND OBSTACLES TO E-COMMERCE ADOPTION
(In Percentages)
Percentage indicating statement is a significant obstacled
Need for face-to-face customer interaction
Worries about data privacy or security issues
Customers do not use the technology
Finding staff with e-commerce expertise
Prevalence of credit card use in the country
Costs of implementing an e-commerce site
Making necessary organizational changes
Level of ability to use the Internet as part of business strategy
Cost of Internet access
Business laws do not support e-commerce
Taxation of Internet sales
Inadequate legal protection for Internet purchases

Sizea

Total

SME

Large

Brazilb

Globalc

32.6
48.4
48.5
34.3
22.9
33.4
32.6
22.3
20.7
31.9
27.1
41.6

30.2
55.1
20.0
32.2
33.8
39.3
41.1
24.8
8.9
22.2
17.6
34.4

32.5
48.6
47.6
34.2
23.2
33.6
32.9
22.4
20.4
31.6
26.8
41.4

33.8
44.2
31.4
26.5
20.3
33.6
23.9
24.8
15.1
24.2
16.5
34.1

Source: Centre for Research on Information Technology and Organizations (CRITO) Global E-Commerce
Survey, 2002.
a
SMEs are those with 25-250 employees; large firms are those with more than 250 employees.
b
Responses were weighted in terms of the total number of establishments and employee size within the sector
for each country. Survey sample sizes for Brazil by sector are: 68 establishments in manufacturing, 68 in
wholesale  retail distribution, and 64 in banking  insurance; by size 98 establishments are classified as SME
and 102 as large.
c
Consists of weighted survey responses in 10 countries combined: United States, Mexico, Brazil, Germany,
France, Denmark, Singapore, Taiwan (Province of China), China and Japan.
d
Exact wording of question: Using a 5-point scale where 5 is “a very significant obstacle” and 1 is “not an
obstacle,” please rate how significant the following obstacles are to your establishment’s ability to do business
online. A score of 4 or 5 was classified as “a significant obstacle”.

Since the problem of finding staff with e-commerce expertise is greater in Brazil (34.2%)
than in the inter-country sample (26.5%), we must also look at the state of the country’s education
levels and local readiness to engage in the use of ITs. Given that Brazil had 3 million universitylevel students in 2002, a 43% increase over 1998 (INEP, 2003), the problem of skills shortage
seems to be associated with insufficient on-the-job experience to develop and adapt information
technologies to specific applications and business environments, rather than a lack of basic skill
levels. A positive indicator of the availability of IT and managerial capabilities is that the ability
to use the Internet as part of a business strategy is considered slightly less of a barrier in Brazil
(22.4%) than in the inter-country sample (24.8%).
As far as Internet costs are concerned, table 6 above shows that Brazilian firms give equal
importance to the cost of implementing an e-commerce site (33.6%) as do their global
counterparts. The cost of Internet access is considered more of a problem in Brazil, but it seems
to be restricted to SMEs. Apart from Internet access costs, other considerations may be staffing or
the outside services needed to develop e-commerce.

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3. E-commerce diffusion
Table 7 shows that large firms are more intensive e-commerce users in all applications. Overall,
advertising and marketing, followed by online purchasing, are the most widespread applications
among both SMEs and large firms. The pattern of applications is relatively similar, except for
online after-sales customer service and support, which is more specific to large firms. Online
sales are the least widespread application, especially among small manufacturing firms.
TABLE 7
USES OF THE INTERNET, 2002
(In Percentages)
Sizea

Percentage using the Internet for …d

Total

SME

Advertising and marketing purposes
Online sales
After-sales customer service and support
Online purchases
Exchanging operational data with suppliers
Exchanging operational data with business customers
Formally integrating the same business processes with
suppliers or other business partners

Large

Brazilb

Globalc

58.6
28.0
22.6
54.7
51.6
49.0
48.8

59.1
32.3
40.1
63.4
62.4
56.5
48.1

58.6
28.2
23.1
54.9
51.9
49.2
48.8

57.6
29.9
43.7
46.8
48.1
50.7
33.9

Source: Centre for Research on Information Technology and Organizations (CRITO) Global
E-Commerce Survey, 2002.
a
SMEs are those with 25-250 employees; large firms are those with more than 250 employees.
b
Responses were weighted in terms of the total number of establishments and employee size within the
sector for each country. Survey sample sizes for Brazil by sector are: 68 establishments in manufacturing,
68 in wholesale  retail distribution, and 64 in banking  insurance; by size 98 establishments are
classified as SME and 102 as large.
c
Consists of weighted survey responses in 10 countries combined: United States, Mexico, Brazil,
Germany, France, Denmark, Singapore, Taiwan (Province of China), China and Japan.
d
Exact wording of question: “Does your establishment use the Internet for …?”.

4. Impacts of e-commerce
One of the important phenomena of the last ten years has been the rapid growth of business
networks. Although this process had started before the Internet was available for commercial use,
e-commerce is reputed to have important network impacts. Table 8 shows that over one-third of
firms interviewed in Brazil reported an increase in network impacts such as the number of
suppliers (39.8%) and distribution channels (35.2%). The evidence shows that large firms are
more likely to have increased their number of distribution channels since they began using the
Internet, again suggesting that they can achieve economies of scale from their e-commerce
investments.
Going online also can expose firms to greater competitive pressure. Overall, Brazilian
firms were affected roughly to the same extent as the full global sample in terms of the number of
competitors and competitive pressure. However, small firms were much more likely to report
increased competition since going online, perhaps because doing business on the Internet exposed
them to competition beyond their limited existing market area.

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TABLE 8
IMPACTS FROM ONLINE BUSINESS ON INDUSTRY STRUCTURE, 2002
(In Percentages)
Sizea

Percentage indicatingd

Total

SME

Large

Brazilb

Globalc

Number of
Distribution channels increased
Suppliers increased
Competitors increased

34.8
39.7
28.0

48.5
40.5
16.8

35.2
39.8
27.7

40.2
29.9
27.9

Intensity of competition increased

37.9

29.8

37.7

41.5

Source: Centre for Research on Information Technology and Organizations (CRITO) Global
E-Commerce Survey, 2002.
a
SMEs are those with 25-250 employees; large firms are those with more than 250
employees.
b
Responses were weighted in terms of the total number of establishments and employee size
within the sector for each country. Survey sample sizes for Brazil by sector are: 68
establishments in manufacturing, 68 in wholesale  retail distribution, and 64 in banking 
insurance; by size 98 establishments are classified as SME and 102 as large.
c
Consists of weighted survey responses in 10 countries combined: United States, Mexico,
Brazil, Germany, France, Denmark, Singapore, Taiwan (Province of China), China and Japan.
d
Exact wording of question: Please indicate whether the following have increased, decreased
or stayed the same in your establishment since it began using the Internet for business.

Table 9 shows the impacts on business performance of going online. Large firms seem to
be reaping more benefits from e-commerce than smaller enterprises, by increasing their internal
efficiency, widening sales areas, and by improving customer services, coordination with
suppliers, and competitive position. On the other hand, small firms achieve more inventory and
cost reduction through e-commerce. Only 12.8% of firms reported increased international sales
since going online. The figure was very similar for large and small firms, and across the three
sectors, showing that there is no identifiable segment of the economy with a global orientation.
In Brazil, large firms are clearly more active in implementing e-commerce technologies,
and they use the Internet more extensively for most applications. This is consistent with the
notion that potential economies of scale and scope would provide greater incentives for adoption.
On the other hand, 41% of large firms said that making necessary organizational changes was an
obstacle to doing business online, compared to 33% of small firms. This may show that
organizational inflexibility is a barrier that negates some of the advantages enjoyed by larger
firms, or that the cost of making organizational changes is higher among large firms.
Large firms also report greater benefits from going online, mostly in terms of increased
internal efficiency, increased sales and better customer service. Smaller firms did as well or better
in terms of other variables. Nonetheless, large firms were much more likely to report that their
competitive position improved, so it would appear that there are advantages to leveraging
e-commerce investments over a larger scale or scope of activity.
The importance of local and global factors as e-commerce drivers must also be analysed
carefully in other developing countries. The small scale of local markets in most developing
countries may give global factors a more prominent role as drives of e-commerce adoption than
in a larger inward-oriented country as Brazil. O’Connor’s (2002:57) argument about the
importance of competitive pressures for IT adoption seems to ring true here. In the absence of
strong domestic competition, ICT adoption in developing countries may occur earliest in sectors
exposed to international competition.

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TABLE 9
IMPACTS OF DOING BUSINESS ONLINE, 2002
(In Percentages)
Sizea

Percentage indicating high impactd

Total

SME

Brazilb

Globalc

32.4
40.3
26.4
27.4
44.8
12.8
25.0
28.2
34.2
23.5

Internal processes more efficient
Staff productivity increased
Sales increased
Sales area widened
Customer service improved
International sales increased
Procurement costs decreased
Inventory costs decreased
Coordination with suppliers improved
Competitive position improved

Large
52.6
40.7
31.0
40.8
55.9
11.7
26.2
20.0
42.5
39.7

32.9
40.3
26.5
27.8
45.1
12.8
25.1
27.9
34.4
24.0

33.9
27.2
20.5
31.4
34.8
19.5
17.7
14.0
29.8
29.8

Source: Centre for Research on Information Technology and Organizations (CRITO) Global
E-Commerce Survey, 2002.
a
SMEs are those with 25-250 employees; large firms are those with more than 250
employees.
b
Responses were weighted in terms of the total number of establishments and employee size
within the sector for each country. Survey sample sizes for Brazil by sector are: 68
establishments in manufacturing, 68 in wholesale  retail distribution, and 64 in banking 
insurance; by size 98 establishments are classified as SME and 102 as large.
c
Consists of weighted survey responses in 10 countries combined: United States, Mexico,
Brazil, Germany, France, Denmark, Singapore, Taiwan (Province of China), China and Japan.
d
Exact wording of question: Using a 5-point scale where 5 is “a great deal” and 1 is “not at
all”, please rate the degree to which your establishment has experienced the following impacts
since it began using the Internet for business. A score of 4 or 5 was classified as “high
impact”.

Lastly, the fact that large firms are clearly more active in implementing e-commerce
technologies could have negative implications for developing countries. Since the vast majority
of firms in the developing world are small, they may lack the incentives provided by scale and
scope for IT adoption.

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III. SME development in the IT revolution

A. Overview of the relative importance of SMEs
in the economy at large1
Despite the renewed and increasing importance of small firms in Brazil’s social and economic
development, conceptual and definitional issues still plague statistics and policy arenas. Putting
aside the ever-intractable issue of the size and weight of the informal sector, any attempt to
measure the importance of small firms has to grapple with this complexity.
A first hurdle concerns multiple levels of aggregation. The 1988 Brazilian Constitution2
established a legal framework for support to micro-enterprises and small businesses only, making
no mention of medium-sized firms. In 1994, the Micro-enterprise Statute (Law 7.256) established
a series of differential treatments for that segment in the administrative, fiscal, social security and
labour domains. A second statute in 1994 (Law 8.864) established a basis for favourable
treatment in the labour, social security, fiscal, credit and entrepreneurial development areas.
However, as happened with the 1994 law, not all the benefits included in its bylaws were
regulated. It was only in 1996 that a major implementation in the fiscal area occurred with the
passing of Law 9.317, improving and enlarging the existing tax payment regime for microenterprises (Sistema Integrado de Pagamento de Impostos e Contribuições das Microempresas e
das Empresas de Pequeno Porte (SIMPLES)). Since then, most federal states and a few
municipalities have also adopted a simplified tax legislation for small enterprises.
A second hurdle related to classification of the small enterprise segment. Here, even the
Brazilian micro and small enterprise support service (Serviço Brasileiro de Apoio às Micro e
Pequenas Empresas (SEBRAE) adopts one form for policy functions (gross annual revenue) and
another for research purposes (number of employees). Two key norms that establish a
classification according to the size of the firm are Mercosur Resolution GMC 59/98 and the
Micro-enterprise and Small Business Statute (Law 9.841, of 1999).
1

2

A broader and more in-depth discussion of the role of MSMEs in the Brazilian economy, and an
encompassing, albeit now outdated, overview of strategies and policies to promote their evolution and
performance can be found in IETS 2002.
Articles 146, 170, 179.

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Mercosur Resolution GMC 59/98 serves as a reference for common policy formulation
and was adopted by Brazil to shape its export financing programmes. It builds upon Mercosur
Resolution GMC 90/93, which instituted a policy in support of MSMEs and divided the sector
into: (i) industry and (ii) commerce and services. It classifies a firm through a combination of
number of employees and maximum gross annual revenues, as shown in table 10.
TABLE 10
MSME CLASSIFICATION BY SECTOR – SEBRAE
Micro enterprise

Small enterprise

Medium enterprise

Industry
Number of employees
Annual revenues
(millions of US$)

Commerce
and
services

Industry

Commerce
and
services

Industry

1 – 10

1–5

11 – 40

6 – 30

41 –200

0.4

0.2

3.5

1.5

Commerce
and
services

20.0

7.0

Source: MERCOSUL/GMC/RES 90/93 and MERCOSUL/GMC/RES 59/98.

Furthermore, MSMEs must not be controlled by another company or be part of an
economic group which as a whole surpasses the established ceiling. A firm ceases to belong in
this segment if it breaks out of these parameters in two consecutive years.
The Micro-enterprise and Small Business Statute is the main legal framework for policy
formulation. It was regulated by Decree 3.474/00, and initially simplified registration procedures
and incorporated a series of provisions not yet implemented, among other things: 20% of federal
funds for research and capacity training (art. 20), and fiscal and financial incentives for
entrepreneurial development. The statute classifies small enterprises by gross annual revenues.
TABLE 11
SME CLASSIFICATION BY GROSS ANNUAL REVENUE – SEBRAE
Size

Gross annual revenue

Micro-enterprise

Up to R$ 244,000

(approximately US$ 81,000)

Small enterprise

Between R$ 244,000 and R$ 1,200,000

(approximately US$ 400,000)

Source: Federal Law 9.841, of 05/10/99 (Micro-enterprise and Small Business Statute).

These criteria are also being employed by several government SME credit programmes.
The SIMPLES regime, however, has not yet been updated to the current values, and still uses the
old R$ 1,200,000.00 value. Some states and municipalities use these current values while others
have their own reference values, in line with local fiscal and tax regimes.
Sebrae also classifies enterprises by employed personnel in commerce and services.
The Ministry of Labour and Employment (Ministério do Trabalho e Emprego (MTE)),
also adopts the Sebrae industry research criteria in its major employment survey, the Annual
Social Information Report (Relação Anual de Informações Sociais (RAIS)).

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Brazil’s central statistical office (Instituto Brasileiro de Geografia e Estatística (IBGE))
has a different segment scope (micro and small) and uses yet another criterion to classify small
firms in its surveys, based on staff employed, which includes both employees and owners, to
allow for the collection of data on micro enterprises with no employees.
TABLE 12
SME CLASSIFICATION BY NUMBER OF EMPLOYEES – SEBRAE
Size

Employees in

Micro-enterprise

Commerce and services:
Industry:
Commerce and services:
Industry:

up to 9 employees
up to 19 employees
from 10 to 49 employees
from 20 to 99 employees

Medium-sized enterprise

Commerce and services:
Industry:

from 50 to 99 employees
from 100 to 499 employees

Large enterprise

Commerce and services:
Industry:

over 99 employees
over 499 employees

Small enterprise

Source: Boletín Estatístico de Micro e Pequenas Empresas/Observatório Sebrae, 2003.

TABLE 13
SME DEFINITIONS BY NUMBER OF EMPLOYEES – SEBRAE
Enterprise

Employs up to

Micro
Small

5 people
19 people

These definitions are linked to a level of annual gross revenue below
R$ 1.5 million (US$ 500,000)

Source: Boletín Estatístico de Micro e Pequenas Empresas/Observatório Sebrae, 2003.

Lastly, the National Bank for Economic and Social Development (Banco Nacional de
Desenvolvimento Econômico e Social (BNDES)), employs yet another classification in its credit
operations, based on annual revenues.
In 2000, according to IBGE, there were a total of 4.1 million firms in Brazil. Microenterprises and small firms account for 98% of this total. In relation to the labour market of 30.5
million workers in formal companies, SMEs account for 45% of the total; 46.2% in industry,
79.7% in commerce and 29% in services. A special IBGE study of the commerce and service
sectors in 2001 showed that small and medium enterprises employed 7.3 million people,
accounting for 95.5% of total firms in the sector. The same study detected 2 million SMEs, of
which 1.1 million employed staff while 926.8 were family firms. In the industrial sector, the
IBGE Central Enterprise Registry, base year 2000, identified 550,000 micro-enterprises and small
businesses, which employ 46% of formal labour.
Between 1996 and 2001, micro-enterprises and small firms grew in number from 3.1
million to 4.6 million, rising proportionately from 98.9% to 99.2% of the total. They generated
3.5 million new jobs, while medium-sized and large firms only generated 68,000. SMEs also
accounted for 14.5 million formal jobs or 56.1% of the total.

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According to Sebrae Nacional, MSMEs in 2001 accounted for 98.7% of the 4.1 million
formal firms in the industry, commerce and services sectors.3 They generated 96% of all employment
over the last 5 years, accounting for 20% of the GNP and employing 45% of the formal workforce.4
To this universe of legalized firms, one can add another 9.5 million informal economic
establishments, according to IBGE; or 14.5 million, according to the Inter-Union Socioeconomic
Studies Department (Departamento Intersindical de Estatística e Estudos Sócio-Econômicos
(DIEESE)). This number does not include 4 million small family-based agricultural
establishments. Whatever statistics are adopted, there is no denying the importance of this
segment for the Brazilian economy. The majority of the 70 million Brazilians in the country’s
Economically Active Population (EAP) work or have links with the broad segment of MSMEs
(Sebrae Nacional).
Table 14 shows the sector distribution of different categories of MSMEs based on the
RAIS (2001) survey.
TABLE 14
DISTRIBUTION OF NUMBER OF FIRMS IN BRAZIL BY SIZE AND SECTOR, 2000
Industry
Enterprise

Number of
firms

Commerce
%

Number of
firms

Services

Total

%

Number of
firms

%

Number of
firms

%

Small
Medium
Large

939 267
48 314
9 856
1 580

17.8
19.7
33.3
7.0

2 414 652
88 941
5 724
2.955

45.8
36.2
19.4
13.2

1 923 389
108 203
13 999
17 890

36 4
44.1
47.3
79 8

5 277 308
245 458
29 579
22 434

100
100
100
100

Total

999 017

17 9

2 512 272

45.1

2 063 490

37.0

5 574 779

100

Source: Relação Anual de Informações Sociais (RAIS), 2001, Ministério do Trabalho e Emprego (MTE).

Formal micro-enterprises and small businesses account for 41.4% of jobs, medium-sized
firms for 12.3% and large enterprises for 46.3%. In the industrial sector, SMEs account for 51%
of formal workers; in the commerce sector for 78% (9% in medium-sized firms) and in the
services sector 26% (68% in large firms).
TABLE 15
BIRTH AND DEATH OF ENTERPRISES IN BRAZIL, 2000
(In number of)
Micro
1999

Firms

2000

Births
Deaths

Change in size
2000

Net variation
% of net variation
Number of firms

Small

Medium

Large

Total

3 740 764

104 990

21 062

5 259

3 872 075

704 628
453 976

4 894
3 235

634
672

102
107

710 258
457 990

- 7 171

6 173

683

315

0

243 481
6.51
3 984 245

7 832
7.46
112 822

645
3.06
21 707

310
5.89
5 569

252 258
6.52
4 124 343

Source: Boletín Estatístico de Micro e Pequenas Empresas/Observatório Sebrae, 2003.

3

4

According to a different source (RAIS, 2001), there were 5.6 million firms, of which 99% were microenterprises or small businesses.
“Micro e pequenas empresas (MPEs) no mercado internacional”. If one includes medium-sized firms
the broader segment accounts for one quarter of GDP, 60% of employment and 42% of wages.

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Demographic studies of MSMEs between 1997 and 2000 reveal high annual birth and
mortality rates, averaging 19.4% and 12.9%, respectively. In addition to concentrating the largest
number of firms, micro-enterprises also exhibit the highest birth and mortality rates. Table 15
above summarizes enterprise demography in Brazil in 2000.

1. MSMEs and exports
In 2002, Brazilian exports totalled US$60.4 billion, representing less than 1% of world exports.
About 85% of export sales were made by 709 firms in a universe of 17,407, revealing an export
model concentrated among a few large firms. According to a study by Fundação Centro de
Estudos de Comércio Exterior (FUNCEX), average annual exports by SMEs over the period
1997-2002 accounted for 15% of total exports (Markwald and Pessoa, 1997-2002)
A phenomenon that inhibits the expansion of the enterprise export base is early mortality
(abandonment and/or discontinuity) of up to 80% of the 3,400 new firms that join the export base
each year.
MSME exports have grown slowly over the last few years, only rising from US$ 9.3
billion in 1997 to US$ 9.6 billion in 2002. However, in relative terms their share of total Brazilian
exports has fallen, from 17.6% in 1997 to 13.8% in 2002. Micro and small enterprise exporters
account for over 70% of the country’s total export base,5 but less than 14% of exports.6 This share
is further reduced to 5% once a select group of about 200 high exporting enterprises, consisting
mainly of trading companies and others, is excluded.
TABLE 16
TREND OF SME EXPORT VALUE, 1997/2002
(Millions of US$)
All sizes

Micro-enterprises and small businesses
NonTotal
Micro
Small
identified

1997
1998
1999
2000
2001
2002

52 959
51 106
47 996
55 061
58 139
60 303

9 299
8 569
7 388
7 446
9 040
8 338

3 753
4 046
3 247
3 132
3 657
3 252

5 530
4 472
4 088
4 273
4 255
4 874

36
51
56
41
148
312

Annual (%)

2.6

-2.2

-2.7

-2.5

Share
(Total/all
sizes)
17.6
16.8
15.4
13.5
13.8
13.8

42.6

Source: “Micro e pequenas empresas exportadoras no Brasil: un retrato”, Markwald and Pessoa, 1997-2002.

There is nonetheless great potential for SME export growth, given that over 85% of the
large enterprises in Brazil and about 41% of medium-sized industrial firms already export. As
shown in table 17, the number of exporting SMEs has grown by 31.6% during the period.
In 2002, average exports by this group fell from US$658,000 to US$254,000 per year,
after large-scale exporters are excluded. The value of exports of the median enterprise in this
group was around US$ 40,000 per year throughout the period.

5

6

95% of the growth of the export base between 1997 and 2002, representing 3,045 new enterprises,
consists of micro-enterprises and small businesses.
In 2000, MSEs accounted for 83% of exporting firms, but just 30.6% of total exports.

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TABLE 17
TREND OF EXPORTING SMES, 1997-2002

1997
1998
1999
2000
2001
2002

Micro-enterprises and small businesses

13 850
13 966
15 168
16 016
16 821
17 059

Total

Micro

Small

Non-identified

Share (Total/
all sizes)

9 631
9 858
10 957
11 630
12 316
12 676

All sizes

5 286
5 553
6 343
6 513
6 639
6 859

3 992
4 114
4 442
4 784
5 025
4 958

353
191
172
333
652
879

69.5
70.6
72.2
72.6
73.2
74.4

a

b

c

Source: “Micro e pequenas empresas exportadoras no Brasil: un retrato”, Markwald and Pessoa, 1997-2002.
a

firms with 1 to 19 employees;
firms with 20 to 99 employees;
c
firms with zero employees and/or firms that did not inform the number of employees.
b

Between 1994 and 2000, while the share of SMEs in the total number of exporting firms
grew significantly in the case of non-industrial exports from 19.5% to 24.4%, their share in
industrial exports grew only modestly from 57.5% to 58.9%. Nonetheless, the SME share of the
value of non-industrial exports slumped from 14.4% to 9.4%, and their share of the value of
industrial exports slumped even more sharply during the period, from 28.6% to 21.3%.
TABLE 18
EXPORT FIRMS BY TYPE AND SIZE OF ENTERPRISE, 1990-2000
(In percentages)
Enterprise

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

Industrial
Micro
Small
Medium
Big
Non identified

63.7
9.5
16.3
22.3
9.7
5.9

67.2
10.5
18.3
23.5
9.2
5.6

68.1
10.9
21.3
23.1
8.0
4.8

67.0
11.9
21.9
21.8
7.4
3.9

67.3
12.7
23.0
21.8
7.1
2.6

68.6
13.5
23.1
20.7
7.7
3.6

68.8
13.9
23.6
20.4
7.8
3.2

69.0
14.7
24.4
19.9
7.6
2.4

69.0
17.8
24.7
19.5
6.9
0.1

67.1
18.1
24.3
18.4
6.3
0

66.4
16.9
24.3
17.7
6.0
1.6

Non industrial
Micro
Small
Medium
Big
Non identified

36.3
10.2
3.4
1.7
0.7
20.3

32.8
10.4
3.3
1.8
0.7
16.7

31.9
11.2
3.3
1.8
0.8
14.8

33.0
12.2
3.8
2.1
1.2
13.7

32.7
13.2
4.1
2.2
1.3
12.0

31.4
13.5
3.8
2.1
1.1
11.0

31.2
14.3
4.0
1.9
1.1
9.9

31.0
15.1
4.3
2.0
1.1
8.4

31.0
22.0
4.7
1.8
1.2
1.3

32.9
23.7
5.0
2.0
1.1
1.1

33.6
17.3
5.2
1.9
1.0
8.2

Source: SECEX/MDIC, Cadastro do IBGE e RAIS/MTE (1993, 1997, 1998, 1999).

TABLE 19
EXPORT VALUES BY TYPE AND SIZE OF FIRM, 1990-2000
(In percentages)
Enterprise

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

Industrial
Micro
Small
Medium
Big
Non identified

74.6
4.3
4.7
14.3
49.1
2.2

79.8
3.5
5.9
15.2
53.7
1.5

83.5
4.2
6.1
16.6
55.2
1.3

83.7
4.1
6.7
18.2
54.0
0.6

81.2
3.7
6.6
18.3
52.3
0.2

83.3
2.2
5.2
15.4
60.1
0.3

83.4
2.1
4.7
16.0
60.5
0.2

82.8
1.3
4.3
14.9
62.2
0.1

83.2
2.1
4.2
15.6
61.2
0.1

84.3
2.0
4.0
15.8
62.4
0.1

85.5
1.6
3.6
16.1
64.1
0.1

Non industrial
Micro
Small
Medium
Big
Non identified

25.4
5.8
3.2
5.0
2.5
8.9

20.2
5.2
3.3
4.1
2.6
5.0

16.5
4.0
3.2
3.7
2.4
3.3

16.3
4.3
4.0
3.5
2.4
2.1

18.8
5.0
5.0
4.4
3.4
1.1

16.7
5.2
4.2
3.9
2.9
0.7

16.6
4.8
4.4
3.1
3.8
0.4

17.2
4.0
6.1
3.1
3.6
0.4

16.8
4.4
4.6
3.4
4.4
0

15.7
4.4
4.6
3.2
3.5
0.1

14.5
3.8
3.4
2.2
4.6
0.5

100

100

100

100

100

100

100

100

100

100

100

Total

Source: SECEX/MDIC, Cadastro do IBGE e RAIS/MTE (1993, 1997, 1998, 1999).

24

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Information and Communication Technology (ICT) for development of small…..: Brazil

2. Main SME export markets
The main markets for SME exports are the European Union (28%), followed by the United
States, a position previously occupied by Mercosur before the Argentine crisis, and Canada.
SMEs have also tried to break into new markets, having increased their share of exports to China
and to members of the LAIA, which encompasses 12 countries. So far, neighbouring markets
have been the most important for the SME internationalization process.

B. Case studies on the use of e-commerce and supply
chain management (SCM) in selected industries
1. The ornamental stones cluster in the state of Espírito Santo
Ornamental stones represent a key export sector for SMEs, accounting for 6.6% of their total
exports, behind timber (16.4%) and machinery and equipment (10.5%), but ahead of furniture and
medical-surgical furniture, fruit and footwear.
a)

Characteristics of the cluster
i)

Global market

The global market for ornamental stones has been growing rapidly in recent years.
Between 1997 and 2001, the 30 main producer countries expanded their production by 37%.
Annual growth rates have stayed above 5%, except in 1999, with a peak of 16% in 1998.
TABLE 20
GLOBAL PRODUCTION OF ORNAMENTAL STONES, 1997-2001
(In thousands of tons)
Country

1997

1998

1999

2000

2001

China
Italy
India
Iran
Spain

12 960
9 713
8 172
5 000
5 292

13 000
9 428
8 572
6 500
5 557

13 000
9 757
8 760
7 045
5 600

13 000
10 130
10 054
7 413
5 700

16 800
10 464
10 100
7 536
5 900

Brazila
Others (24 countries)
Totalb
Annual Growth (%)b

3 876

4 001

4 507

5 200

5 611

7 161
52 174

13 454
60 512

13 807
62 476

14 716
66 213

14 840
71 251

8.4

16.0

3.2

6.0

7.6

Source: Adapted from Cunha et al. (2003, p. 78).
Differs from the original: adjusted to include stones others than marble and granite.
b
Differs from the original, because of Brazil’s difference.
a

Growth rates display a rising trend, reflecting the expansion of the market. According to
Cunha et al. (2003, p. 71), the ornamental stone market, including domestic and external sales,
totalled US$ 40 billion in 2000.

25

CEPAL – Project document

Information and Communication Technology (ICT) for development of small…..: Brazil

TABLE 21
GROWTH RATE OF GLOBAL PRODUCTION OF ORNAMENTAL STONES
(In percentages)
Period

1976-1986

1976-1995

1986-1990

1986-1995

1990-1995

2.0

Growth rate

1976-1990
3.1

4.7

5.6

7.5

9.5

Source: “Arranjo Produtivo de Rochas Ornamentais (mármore e granito) no Estado do Espírito Santo”,
Villaschi and Sabadini, 2000, REDESIST Technical Note No. 15, Rio de Janeiro, UFRJ, (p. 4).

Brazil is the world’s sixth largest producer, with output of 5.2 thousand tons in 2000
(7.9% of world’s production). Its production grew by 45% from 1997 to 2001. Brazil is the
world’s seventh largest exporter in volume terms, with shipments totalling 1.1 thousand tons in
2001 (4.5% of worldwide exports).
TABLE 22
GLOBAL EXPORTS OF ORNAMENTAL STONES, 1996-2001
(Thousands of tons)
Countries

1996

1997

1998

1999

2000

2001

China
Italy
India
Spain
Turkey
Portugal

3 095
3 483
1 346
1 497
358
903

3 130
3 563
2 070
1 593
434
914

2 568
3 508
1 724
1 586
469
1 064

3 156
3 429
1 888
1 659
1 100
1 133

4 095
3 635
2 307
2 028
1 402
1 217

4 893
3 515
2 200
2 180
1 850
1 200

724

899

898

1 020

1 084

1 062

5 934
17 340

6 588
19 191

6 864
18 681

7 420
20 805

6 983
22 751

7 193
24 093

-

10.7

-2.7

11.4

9.4

5.9

Brazil
Others (23 countries)
Total
Annual Growth (%)

Source: Adapted from Cunha et al. (2003, p. 79).

The market grew continuously in volume terms between 1996 and 2001, except for 1998,
reaching a level of 24,000 tons in 2001. Brazil’s exports grew by 47% in that period, outpacing
worldwide growth of 39%. The average annual growth rate was 6.6% for Brazil and 5.6% for the
world.
ii) Cluster evolution
The ornamental stones sector (mainly marble and granite) in the state of Espírito Santo
(ES) consists of two main production nodes where most of the extracting and manufacturing
firms are located. The first is located around the city of Cachoeiro de Itapemirim, in the state’s
southern region, and the second, around the city of Nova Venécia, in the northern half.
The history of mining in the region of Cachoeiro dates back to the establishment of a
cement plant in 1924, although European immigrants were already manufacturing whitewash in
certain areas of the city as early as the 1870s.
The first steps in the history of mining of Cachoeiro began with exploration for
calcareous stone for the production of whitewash (obtained from the mineral calcite), which was
used mainly in cement manufacturing.

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CEPAL – Project document

Information and Communication Technology (ICT) for development of small…..: Brazil

iii) Main characteristics
In Brazil, the exploitation of ornamental stones occurs from the southernmost state of Rio
Grande do Sul up to state of Pará, at the mouth of the Amazon river, with prominence for the
states of the south-eastern and north-eastern regions. In the state of Espírito Santo production
progressed furthest, involving all activities of the main production chain and the support activities
chain.
The ornamental stones sector in ES displays the features of a typical Marshallian
industrial district, with a sizeable number of firms in the main productive chain supported by a
group of suppliers that provide services and produce general machinery, equipment and inputs in
the region.
ES is Brazil’s largest producer and exporter. Its activities in the sector have grown
continuously over the last few years, expanding by 150% (in employment and number of firms)
since 1994. The sector in ES has around 24,000 direct employees (15% of the jobs generated by
ES industry) and roughly 1,200 firms (with an absolute predominance of SMEs). It produces 2.5
tons per year (around 47% of Brazilian total in 2000) and exports around US$ 222 million (52%
of country’s total exports in 2003). According to the Brazilian Ornamental Stone Industries
Association (Abirochas), in 2006 the sector expects to export over US$ 750 million and directly
employ 30,000 workers.
iv) Number of firms
The number of firms in the sector has experienced sustained growth since 1970,
increasing twelve -old between 1980 and 2000,7 even though the Brazilian economy grew slowly
in that period. In 1972, there were just 70 firms in ES; less than a decade later, in 1980, the
number had risen to 104 (49% growth) and then accelerated to 278 firms by 1990 (167% growth),
before doubling again to 530 by 1994. Over 193 firms started operations between 1994 and 1995,
an increase of 36%. Similar growth rates have been repeated in 1995-1998 (24%) and 1998-2000
(33%). In 2000, there were 1,200 firms, of which 154 (12%) were exporters.
TABLE 23
GROWTH OF THE NUMBER OF FIRMS IN THE SECTOR IN ES
1972
Number of firms
Growth rate (%)

1980

1990

1994

1995

1998

2000

70
-

104
48.6

278
167.3

530
90.6

723
36.4

900
24.5

1 200
33.3

Source: “Arranjo Produtivo de Rochas Ornamentais (mármore e granito) no Estado do Espírito Santo”,
Villaschi and Sabadini, 2000, REDESIST Technical Note No. 15, Rio de Janeiro, UFRJ, (p. 26), updated
with data from http://www.sindirochas.com.br.

Another key feature of the sector in ES is the absolute predominance of micro-enterprises
and small businesses. According to the Industrial Development Institute of Espírito Santo
(IDEIES), on employment criteria 82.3% were micro-enterprises, 16.0% small firms and 1.7%
medium-sized in 1998. Brazil’s central statistical office (IBGE) confirms this data, revealing the
following structure for the ES extractive industry in 2002:

7

Most of the data analysis extends up to 2000, since that is the most recent data available in the sector’s
union website http://www.sindirochas.com.br.

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CEPAL – Project document

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TABLE 24
EXTRACTIVE INDUSTRIES IN ES BY SIZE - 2002
Number of
Employees

Local units

Total
0
5
10
20
30
50
100
250
500

Percentage

1 190
or

4
9
19
29
49
99
249
499
more

749
194
154
42
29
12
6
2
2

Of total

Cumulative

100

-

62.94
16.30
12.94
3.53
2.44
1.01
0.50
0.17
0.17

62.94
79.24
92.18
95.71
98.15
99.16
99.66
99.83
100

Source: Central Enterprise Register (IBGE).

In 2002, 98.15% of the sector’s firms (1,190) had no more than 50 employees according
to IBGE. It is important to note that 62.94% (749 firms) had four employees or fewer, and 16.3%
(194 enterprises) had between five and nine workers, jointly accounting for 80% of the total.
Despite the small firm size, IDEIES (1998) shows that mortality among enterprises in the
sector is not particularly high. In 1998, 54.8% of firms had been in existence for three years or
longer, and had therefore survived the period in which small firms tend to close. Only 34.7% of
firms (251) had come into being in the previous three years. The figures do not add up to 100%
because 76 firms (10.5%) did not reply to this question.
TABLE 25
ENTERPRISE IMPLEMENTATION PERIODS, 1998
Period of
implementation

Percentage

Number of
firms

Of total

Cumulative

Up to 1979
1980-1989
1990-1994
1995-1998
No answer

62
138
197
251
76

8.56
19.06
27.21
34.67
10.50

8.56
27.62
54.83
89.50
100

Total

724

100

-

Source: “Arranjo Produtivo de Rochas Ornamentais (mármore e granito)
no Estado do Espírito Santo”, Villaschi and Sabadini, 2000, REDESIST
Technical Note No. 15, Rio de Janeiro, UFRJ, (p. 30).

In ES the sector operates as a horizontal cluster with a “ring” structure of governance. No
large enterprise coordinates production, and cooperative relations seem to evolve naturally owing to
the proximity of small firms within each of the two production nodes (Cachoeiro and Nova Venácia).

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CEPAL – Project document

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v) Production and employees
Espírito Santo is the leading producer of ornamental stones in Brazil, which in turn is the
world’s sixth largest producer in volume terms. ES accounts for a large share of the sector’s production,
even though it has just 1.7% of Brazil’s population and occupies only 0.54% of its territory.
TABLE 26
ORNAMENTAL STONE PRODUCTION: BRAZIL VERSUS ESPÍRITO SANTO, 2000
Unit

BR

ES

ES/BR (%)

Production
Granite
Marble

Million tons
% of production
% of production

5.2
90
10

2.4
-

46
-

Firms
Production/firm

Thousand
Tons/firm

10.0
520

1.2
2 000

12
-

Direct employees
Production/employee
Employee/firm

Thousand
Tons/employee
Unities

106
49
11

20
120
17

19
-

Extracting fronts
Production/front
Employees/front

Unities
Thousand of tons/front
Employee/front

1 163
4
91

400
6
50

34
-

Sewing presses
Production/sewing press
Sewing presses/firm
Employee/sewing press
Sewing presses/front

Unities
Thousand of tons/sewing press
Sewing press/firm
Employee/sewing press
Sewing press/front

1 574
3.30
0.16
67
1.35

900
2.67
0.75
22
2.25

57
-

Sawing capacity
Sawing capacity/firm
Sawing capacity/employee
Sawing capacity/front
Sawing capacity/sewing press

Million m2/year
Thousand m2/year/firm
M2/year/employee
Thousand m2/year/front
Thousand m2/year/sewing press

41
4
383
35
26

25
21
1 250
63
28

63
-

Source: Union of Ornamental Marble and Granite, Whitewash and Calcareous Stone Extracting and Improvement
Industries of Espírito Santo (SINDIROCHAS), (http://www.sindirochas.com.br/exportacao_index.htm).

ES accounts for 46% of Brazilian output of ornamental stones, although its production is
concentrated in granite (90% of the state’s total production). It has 34% of the country’s
extractive fronts and 57% of the sewing presses.
Espírito Santo is the state where production is technologically most advanced in Brazil.
Its firms produce an average of 2,000 tons compared to 520 tons in the country as a whole. Each
employee produces 120 tons in ES and 49 tons in Brazil overall, on average, which is reflected in
the number of employees per extracting front, i.e. 50 in ES against 91 in Brazil as a whole. In ES,
each front produces 6,000 tons on average, compared to a national total of 4,000. Nonetheless, the
performance of ES is not outstanding in two indicators: in sawing capacity per sewing press,
which is close to the country average, 28,000 m2 per year per sewing press, while the national
total is 26,000; and it is below average in output per sewing press, 2,670 tons per sewing press
compared to the Brazilian average of 3,300.
Production in ES is also more automated than in the rest of the country. It uses 2.25
sewing presses per extracting front, while the country overall uses 1.35. Sawing capacities in ES
amount to 21,000 m2/year per firm, 1,250 m2/year per employee and 63,000 m2/year per front,
compared to averages of 4,000, 383 and 35,000 m2/year respectively for BR. ES uses one sewing
press for every 22 employees, while the national total is 67. Consequentially, in every four firms

29

CEPAL – Project document

Information and Communication Technology (ICT) for development of small…..: Brazil

in ES, three of them have a sewing press, while in Brazil as a whole only three out of every 19
firms have sewing presses.
The state’s 1,200 enterprises represent 12% of firms in this sector throughout Brazil.
On average, each firm employs 17 workers, compared to an average of 11 for the country at large.
Overall, the ES stone sector employed 20,000 people in 2000 (19% of the sector’s direct employees),
counting formal jobs only. One of the sector’s unions, Labour Union of the Marble, Granite and
Calcareous Stone Industries of Espírito Santo (Sindimármore), estimates the number of informal
workers at 3,000.
The following table shows that firms had 24,000 employees in 2003 (15% of jobs
generated in ES industry). In 1980, there were just 3,200. This number had doubled by 1990 and
grew by over 40% until 1994. From 1998 to 2003, the number of formal employees jumped by
118%, and since 1994 it has increased by 164%. According to Abirochas, the prediction is for
30,000 direct jobs by 2006.
TABLE 27
EVOLUTION OF SECTORAL EMPLOYMENT IN ES
1980
Total
Growth rate

(thousands)
(%)

1990

1994

1995

1998

2000

2003

3.2
-

6.5
102.4

9.1
40.4

10.0
10.2

11.0
10.0

20.0
81.9

24.0
20.0

Source: “Arranjo Produtivo de Rochas Ornamentais (mármore e granito) no Estado do Espírito Santo”,
Villaschi and Sabadini, 2000, REDESIST Technical Note No. 15, Rio de Janeiro, UFRJ,
(p. 50), updated by Abirochas.

vi) Exports
The value of ornamental stone exports in Brazil and Espírito Santo has been growing
continuously since 1999. In 2003, the ES exports amounted to US$ 222 million, up by 31% from
2002 (Brazilian exports grew by 26%), and by 269% since 1999. In the last few years, except for
2001 (up by 10%), the annual growth of ES exports exceeded 30% and without exception
outpaced the figure for Brazil as a whole. Consequently, ES exports of ornamental stones jumped
from 36% of Brazilian exports of these products in 1999 to 52% in 2003.
TABLE 28
ORNAMENTAL STONE EXPORTS, 1999-2004
2004
(Jan-Jun)
ES total
BR total
ES/BR
ES’s growth rate
BR’s growth rate

(US$ million)
(US$ million)
(%)
(%)
(%)

2003

2002

2001

2000

1999

116.34
223.73
52.0
-

222.00
426.92
52.0
31.4
25.9

168.91
339.00
50.0
32.2
21.0

127.79
280.17
46.0
10.3
3.1

115.84
271.77
43.0
37.6
16.9

84.16
232.46
36.0
-

Source: Union of Ornamental Marble and Granite, Whitewash and Calcareous Stone Extracting and Improvement
Industries of Espírito Santo (SINDIROCHAS), (http://www.sindirochas.com.br/exportacao_index.htm).

In the first six months of 2004, exports amounted to US$ 116 million (up by 20%
compared to the same period in 2003), accounting for 52.11% of total Brazilian exports. As
mentioned earlier, according to Abirochas, exports are expected to reach US$ 750 million per
year by 2006.
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Processed materials now represent 81% of total exports compared to just 36% in 1996.
Higher value-added is a distinguishing feature of the ES cluster, since Brazilian exports are
generally concentrated in raw material extraction. According to Abirochas, a cubic metre of
polished plate generates up to four times the revenue of raw stone blocks in foreign markets. In
the case of exhausted items, this value may increase by up to tenfold.
In 2000, the state’s exports accounted for 45% of the national total, both in value and by
weight. By weight, Brazil is the world’s seventh largest exporter, and ES exports accounted for
52% of total volume nationwide in 2003 (Abirochas). Shipments of ornamental stones accounted
for 61% of the Brazilian total, with 73% of total shipments destined for sales abroad and 27% to
other regions of Brazil. Both BR and ES export around 20% of their production in weight. In
US$/ton, ES and BR also display very similar indices of US$ 48.35 and US$ 52.22 per ton
exported respectively.
TABLE 29
ORNAMENTAL STONE EXPORTS: BRAZIL VERSUS ESPÍRITO SANTO, 2000
BR

Unit
Production in weight
Exports in weight
Production/exports (in weight)
Ports shipments (ornamental rocks)
Exports in value
Exports value/weight

Million tons
Million tons
%
Million tons
US$ million
US$/ton

ES

ES/BR (%)

5.2
1.1
21.15
1.1
271.54
52.22

2.4
0.49
20.42
0.67
116.05
48.35

46
44
61
43
-

Source: Union of Ornamental Marble and Granite, Whitewash and Calcareous Stone
Extracting
and
Improvement
Industries
of
Espírito
Santo
(SINDIROCHAS),
(http://www.sindirochas.com.br/exportacao_index.htm).

Between 1997 and 2000, the number of ornamental stone exporters has grown by 79% in
ES, from 86 firms to 154, while in Brazil as a whole the number has grown from 332 to 508
(53%). Thus, ES has increased its share of exporting firms from 25.9% in 1997 to 30.3% in 2000.
TABLE 30
EVOLUTION OF EXPORTING UNITS: BR VERSUS ES, 2000
(In units)
1997
Brazil
Espírito Santo

1998

1999

2000

% 1997-2000

332

371

433

508

53.01

86

104

123

154

79.07

Source: Union of Ornamental Marble and Granite, Whitewash and Calcareous Stone
Extracting and Improvement Industries of Espírito Santo (SINDIROCHAS),
(http://www.sindirochas.com.br/exportacao_index.htm).

In 2000, each ES firm exported US$ 752,000 and 3,180 tons on average, compared to
Brazilian averages of US$ 535,000 and 2,170 tons.
The main destination for ES exports is the United States, which absorbed 64% in value
terms and 32% by weight in 2003. The value percentage is much higher than the figure for weight
because the United States buys more manufactured items than Italy, China and Spain, which
usually buy raw stone blocks for manufacture and resale. Italy, for example, accounts for 20% of
31

CEPAL – Project document

Information and Communication Technology (ICT) for development of small…..: Brazil

exports by weight, but just 9% in value terms. The growth of exports to the United States, in
value and weight terms, also involves higher value-added. According to Cunha et al. (2003,
p. 83), Brazil is the third largest stone supplier to the United States, accounting for 18.4% of that
country’s import value.
TABLE 31
DESTINATION OF EXPORTS: 2002-2003

%

US$
thousand

%

Tons

%

%
change
(of US$)

149 691
170 120
97 598
67 460
27 295

25
29
17
11
5

142 479
19 646
15 690
9 199
6 415

64
9
7
4
3

227 440
139 513
138 325
54 367
49 723

32
20
19
8
7

47.62
-20.05
25.55
-12.27
73.61

590 311

100

221 778

100

715 353

100

31.39

2002

2003

US$
thousand

Total

Tons

96 519
24 573
12 497
10 486
3 695

57
15
7
6
2

168 797

United States
Italy
China
Spain
Taiwan

%

100

Source: “Interação econômica BR/UE para além de fluxos comerciais e de investimentos - reflexões
neoschumpeterianas e fatos estilizados capixabas”, Position Paper of Conference Brazil Amplified European
Union, Rio de Janeiro, UFRJ, Villaschi, 2004, (p. 10).

In 1998, IDEIES questioned 724 of the sector’s firms on their export intentions.
The results were as follows:
TABLE 32
SURVEY OF EXPORT INTENTIONS, 1998
Number of firms
27
82
350
224
41

Already exported
Exports
Never exported, but wishes to do so
Never exported, and does not wish to do so
No answer

%
3.73
11.33
48.34
30.94
5.66

Source: “Arranjo Produtivo de Rochas Ornamentais (mármore e granito) no Estado do Espírito
Santo”, Villaschi and Sabadini, 2000, REDESIST Technical Note No. 15, Rio de Janeiro,
UFRJ, (p. 51), updated by Abirochas.

Although only 11.3% of firms export, nearly half of SMEs (48.3%) had never exported
but were interested in doing so, which suggests good potential for expanding export activities.
vii) Exports by firm
The average export value per firm in ES was US$ 752,000 in 2000. Exports are not very
highly concentrated, since the 10 largest marble and granite companies, according to IDEIES, had
estimated exports of around US$ 14 million in 2003, accounting for 6% of the total (US$ 222
million).

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TABLE 33
TURNOVER AND EXPORTS OF THE 10 LARGEST MARBLE
AND GRANITE COMPANIES OF ES, 2003
(In thousands of US$)
Firm

Turnover

Estimated Exportsa

MARBRASAb
ANDRADE MARM. GRAN
VIXTILES
CAJUGRAM
AGG
POLIMENTO ITALIANO
NEMER
MA EXPORT (Aquidabã)
MARCEL
BRAMAGRAN

10 224
8 941
8 463
6 329
4 677
4 658
3 560
3 280
2 516
2 208

5 112
1 826
1 728
1 292
955
951
727
670
514
451

Total

54 856

14 226

Source: Diagnóstico e atualização do cadastro do setor de mármores e granitos do Estado do
Espírito Santo, Vitória, IDEIES, 1998, (www.iel-ideies.com.br).
a
Using the ES exports/production average of 20.42%, except for Marbrasa.
b
Using the 50% exports/production average shown on its website (www.marbrasa.com.br).

viii) Export promotion and export policies
Today the sector in ES organizes two annual international fairs. The older of the two,
held in Cachoeiro, began in 1989 with just 32 mainly local firms, serving a public of 5,500. In
1990, the number of exhibitors doubled and the public grew by 30%. By 1992, the number of
firms and the size of the public had increased by 130% and 30%, respectively. In 1995, the public
grew by 60% and the number of firms increased by 50%, and by 1999 the public had doubled
again. In 20038 there were 40% more exhibitors than in 1995, with 320 firms and 32,000 people.
TABLE 34
INTERNATIONAL FAIR OF CACHOEIRO
(In numbers)
Selected Years

Exhibitors

Public

1989
1990
1992
1995
1999
2003

32
64
150
230
243
320

5 500
7 000
9 200
15 000
30 000
32 000

Source: “Arranjo Produtivo de Rochas Ornamentais (mármore e
granito) no Estado do Espírito Santo”, Villaschi and Sabadini, 2000,
REDESIST Technical Note No. 15, Rio de Janeiro, UFRJ, (p. 61),
updated with www.feiradomarmore.com.br.

8

The 2004 edition of the fair will be held in August.

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Information and Communication Technology (ICT) for development of small…..: Brazil

The fair is held in an area of 25,000 m2. As figure 2 shows, of total exhibitors in 2003,
54% were extracting and manufacturing firms, 24% machinery and equipment producers, 13.2%
inhumes and abrasives suppliers, 4.8% were service firms and 4% were the entities of the sector.
FIGURE 2
EXHIBITORS AT THE INTERNATIONAL FAIR OF CACHOEIRO
(In percentages)
5%

4%

13%

54%

24%

Extracting and manufacturing
Inhumes and Abrasives
Entities

Machinery and equipment
Services

Source: www.feiradomarmore.com.br.

The second fair, targeting an international public, is held in Vitória, the capital of ES and
its largest city. It had a daily average of 4,500 visitors in 2003 and 5,750 in 2004. The distribution
of exhibitors is similar to that at the Cachoeiro fair. The distribution of foreign visitors is shown
in the following figure.
FIGURE 3
INTERNATIONAL VISITORS TO THE VITÓRIA FAIR
(In percentages)
6%

3%

7%

48%

36%

North America

Europe

Asia

Source: www.feiradomarmore.com.br.

34

South America

Others

CEPAL – Project document

Information and Communication Technology (ICT) for development of small…..: Brazil

Of all foreign visitors, 49% came from North America, 36% from Europe, 6.7% from Asia
and 5.5% from South America. Africa, Central America and Oceania jointly account for 2.5%.
Since 1998, the Federal Programme of New Export Arrangements (PNPE), discussed in
chapter IV, is developing actions to increase the value added of the cluster’s exports. The
programme has achieved relatively good results, since the share of manufactured exports has
grown in this period. Another significant development is that the number of raw block buyers,
such as Italy, has decreased, while buyers of manufactured products, such as the United States,
have grown.
Another federal programme that will benefit the sector in ES is the anchor enterprises
support programme, discussed in chapter V. In the framework of that programme, Total Trading,
a trading enterprise specializing in selling to North America, received a US$ 1.7 million credit to
support exports by SMEs in the cluster. Firms sell part of their production to the trading
company, which in turn carries out the export operation (90% of exports of the trading company
came from ES firms). Under the credit arrangement, the SMEs will receive payment at the time of
sale, even though export payments are made within a 90 to 120-day period. Over 78 ES SMEs
currently sell a share of their production to Total Trading and will benefit from the credit.
ix) Main difficulties
The IDEIES survey mentioned above found that the following are the key difficulties
facing firms in the export process:
•
•
•
•
•
•

foreign language;
lack of experience in foreign business;
lack of knowledge of the external market, including information and export
procedures;
lack of a marketing strategy and promotion of materials and companies in others
countries;
absence of organizational and technical capacity in the companies to maintain a
presence in a competitive market; and
lack of internal competitiveness in the firms to comply with requirements and
international standards.

Other bottlenecks identified include: technological imbalance, low productivity compared
to international standards, and environmental degradation. In relation to the first two, Abirochas
foresees the need for investments in excess of US$ 1 billion to bring the sector up to date by
2015. BNDES is currently negotiating a credit facility of R$ 300 million (about US$ 100
million). A small share will be destined for the producers and the largest portion to manufactures
and equipment makers, in an effort to increase the value added of the sector’s exports. According
to the Euvaldo Lodi Institute (Instituto Euvaldo Lodi (IEL)), affiliated to the National Industry
Confederation (Confederação Nacional da Indústria (CNI)), the sector displays a significant
technological lag in terms of automation parts and computer science, mainly because there is just
one manufacturer of automatic machines in the region. For semi-automatic and manual machines,
there is a wider range of supply, and firms can choose from a variety of models covering a wide
range of needs.
Environmental degradation is a corollary of technological imbalance and low
productivity. It gradually reduces productivity and the lifetime of extracting fronts, thereby
threatening the sector’s long-term sustainability.

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x) Promotion institutions
In 2004, the federal government established a working group on “local production
arrangements”, which brought together 23 public and private entities, coordinated by the Ministry
of Development, Industry and Foreign Trade (Ministério do Desenvolvimento, Indústria e
Comércio Exterior (MDIC)). The group selected 11 local arrangements for analysis and to
receive up to R$ 20 million (about US$ 7 million). The ES ornamental stone cluster was one of
those selected, along with the caps industry in Apucarana (PR), auto-parts in the Serra Gaúcha
region (RS), garments in Goiás-Anápolis (GO), footwear in Franca (SP), wood and furniture in
Paragominas (PA) and in Ubá (MG), lingerie in Nova Friburgo (RJ), fruit growing in Juazeiro
(BA) and Petrolina (PE), and plaster in Araripina (PE).
The ES cluster was also selected by the federal “New Export Arrangements Programme”
(PNPE), as one of the 18 main local arrangements by the Sebrae, and it is one of the eight clusters
studied by BNDES, which is developing a specific credit line for local arrangements and a special
line for the ornamental stone sector.
There are also some important institutions at the local level. The sector’s main trade
association, the Union of Ornamental Marble and Granite, Whitewash and Calcareous Stone
Extracting and Improvement Industries of Espírito Santo (SINDIROCHAS), was founded in
1973. It undertakes a range of support activities for the entrepreneurs of the sector, such as job
intermediation and legal assistance. The trade group is also responsible for organizing the
international fair and a series of training courses in cooperation with other public and quasi-public
institutions such as the Marble and Granite Technology Centre (CETEMAG), National Industrial
Apprenticeship Service (SENAI) and Sebrae. SINDIROCHAS also contracted technical studies
from IDEIES; and, in partnership with the Federal University of Espírito Santo (UFES), it has
organized a specialist course on ornamental stones annually since 1995. It also founded a
technology centre (CETEMAG) in 1988, and a credit cooperative (CREDIROCHAS) in 2000,
which offers cheap credit to affiliates; and it is planning to set up an export consortium. The trade
group maintains a website (www.sindirochas.com.br) providing a vast amount of information
about the sector.
There is also a trade association relating to the cluster’s machine producers, the
Association of Machinery, Equipment and Component Manufacturers of Espírito Santo
(MAQROCHAS). This was created in March 2004 and has 20 members.
The Sindimármore, founded in 1990, is not well structured to serve workers’ needs, but
participates in fairs and important sectoral meetings.
The CETEMAG, created in 1988 by SINDIROCHAS, coordinates and executes the
sector’s technological development policy. It gives technical assistance to firms and directs them
towards technical training in Sebrae, SENAI or even courses of its own. It serves as organizer of
the sector’s technical demands and builds continuous partnerships with the Technological
Institute of the Federal University of Espírito Santo (ITUFES). The IEL and IDEIES, in
partnership with UFES, also carry out technological extension projects and prepare diagnostic
studies, partly funded by Sebrae.
The SENAI mainly provides courses, while Sebrae prepares courses and provides
technological assistance, and also finances technology consultancy and innovations.
At the national level, the sector has two top-level organizations: the Brazilian Association
of Ornamental Stone Industries (Abirochas) and the Brazilian Association of Marble and Granite
Export Industries (ABIEMG).

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CEPAL – Project document

b)

Information and Communication Technology (ICT) for development of small…..: Brazil

Technologies introduced, purpose of IT use and its impacts

This section describes IT use in the ES cluster, firstly giving a general overview of
applications and then analysing three IT uses: websites, information portals and e-commerce.
The technologies employed in the sector are related to information provision, such as the
need for customers to view stone colours and patterns before purchase. For this reason, several
ES firms have developed their own websites. In the website registry of local productive
arrangements (also known as a vertical industry portal, or vortal), to be discussed below, 139
firms (11.6% of the sector total) had a website registered. Many of these sites are available in
more than one language, have a product catalogue, offer price quotes by e-mail and allow
customer registration.
The cluster was chosen to take part in the “Regional Action” programme, developed in
partnership with Ministry of Science and Technology (Ministério da Ciência e Tecnologia
(MCT)), the National Research Council (Conselho Nacional de Desenvolvimento Científico e
Tecnológico (CNPq)), Brazil’s Innovation Agency (Financiadora de Estudos e Projetos FINEP))
and the state’s science and technology secretariats.
The programme makes use of a technology platform framework that seeks to generate
technology demands in the private sector, from knowledge-generating groups (e.g. universities
and research institutes), potential customers and other relevant actors for the implementation of
cooperative projects (e.g. a university or consulting firm outside the cluster environment).
Communication processes and negotiation among participating actors are focused on technology.
In order to achieve minimal conditions for success, the “technological platform” has to go
through the following stages (Rocha, 2001): context creation (problem identification) or
construction of scenarios for the sector; identification and knowledge generation for selected
technological problems; motivation of actors to solve the problems identified or to take advantage
of the opportunity envisaged; negotiation among the relevant actors to resolve problems and
prepare cooperative projects.
An initial effort in this framework in the ES cluster involves surveying the main
characteristics of the selected arrangements, taking into consideration the definition of intra- and
inter-sector relations. The result was the report on the analysis of the value chain of the marble
and granite and construction industry of Espírito Santo (Análise da Cadeia de Valor da Indústria
de Mármore e Granito e Construção Civil do Espírito Santo), prepared by the Euvaldo Lodi
Institute (IEL, 1999), regional chapter. The study identified the main technological and training
bottlenecks and labour training and specialization needs for the productive sector, in partnership
with the Marble and Granite Technology Centre (CETEMAQ), IEILDES, UFES, Sebrae, SENAI
and others.
One of the programme’s final activities was the establishment of a “vortal” for the local
arrangement. Vortals are web-portals that bring together online information about certain
Brazilian clusters. They are available for 14 local arrangements in 11 states and 9 different
sectors. The general features of the vortal and additional information about others clusters are
presented in chapter V. Here we discuss the introduction of the vortal in ES.
The aim of the vortal is to contribute to the development of SME competitive capacity,
which it does by providing a set of information, communication channels and devices, and wide
ranging support for marketing services through the web. It uses the Internet to widely disseminate
information on the sector that is already available in the Internet in one location, duly described
and classified. The instrument was created in 2001 and relates mainly to the spread of sectoral
information.

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Information and Communication Technology (ICT) for development of small…..: Brazil

Similar to the vortal, the sector has two private information websites: one launched in
1999 (Marble Website) and another in 2000 (‘The Way to the Stones Website’). They are
important to the sector since the vortal, due to its local characteristic, is available only in
Portuguese. The languages used in the Marble and The Way to the Stones websites are both
Portuguese and English. The private portals are also significant given the nature of services
available, such as the stones catalogue.
E-commerce is not yet a reality in the sector. There are only a few isolated and limited
experiences, such as price quotes sent by e-mail. CETEMAQ and SINDIROCHAS launched an
online business portal (PETRACUS), but this was discontinued because of its high operational
costs. The web-based organization MARMOREGRANITO is a trading company specializing in
marketing and sales, through e-commerce, business-to-consumer (B2C) and business-to-business
(B2B). It has a website (www.marmoregranito.com.br) were it is possible to obtain price quotes.
i)

Websites

There is a wide range of stone colours and patterns. The Marble website catalogue, for
example, contains over 1,100 kinds of stones from 46 countries. Given this bewildering diversity,
customers need to see the product before making a purchase. This was the great incentive for
firms to create websites. In the sector’s vortal, 139 firms (11.6% of the sector total) have a
registered website.
Most websites are relatively well developed, offering a product catalogue, e-mail price
quotes and customer registration. Many are in more than one language. This is not the case with
those developed by Prossiga, however.
•

Prossiga websites

Prossiga is a federal programme created in 1995 to promote the creation and use of
Internet information and communication services, focusing primarily on science and technology
and on country’s relevant socioeconomic activity sectors. It is the host organization of the vortals
and offers a free website creation service for firms in selected local arrangements. The service
consists of a static webpage, with texts describing the firm and its products.
From the standpoint of the ornamental stone industries, the service is not very
satisfactory, since it is very important for the websites to be in more than one language and
display photographs of the stones to potential customers. These features are not present in
Prossiga-developed websites.
Only 14 of the 139 websites listed in the vortal (10%) were made by Prossiga, and many
of the sector’s firms that do not yet have websites refuse to use the federal programme.
•

Comparison with other vortals

The ES stone cluster is one of the vortals with the highest cumulative number of
registered organizations (firms, professionals, associations and others). This section compares
website registry of ornamental stone vortals (ES, Rio de Janeiro-RJ and Bahia-BA) and other
vortals with over 300 cumulative registers (Pharmaceutical Industry, in Góias-GO, and Fruit
Agriculture, in Ceará-CE).
The ES cluster is the clearly the one with the largest number of enterprise websites
registered (139). It is almost the double the size of the RJ stone cluster and over eight times as
large as that of BA. In contrast, the fruit and agriculture vortal (CE) has 131 website registrations,
over half of them developed by Prossiga with the shortcomings indicated above. In fact, in terms
of firm-developed websites, ES has more than twice as many as the second ranked (125 compared
to 60) and six times those of the RJ and BA websites combined.

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Information and Communication Technology (ICT) for development of small…..: Brazil

TABLE 35
CUMULATIVE REGISTRATIONS IN SELECTED VORTALS, BY TYPE
(In number of)
Producers/Industries/
Commerce/Suppliers
OwnProssigadevelopTotal
developed
ment

Cluster

Pharmaceutical industry
Ornamental stones
Fruit growing
Ornamental stones
Ornamental stones

(GO)
(ES)
(CE)
(RJ)
(BA)

13
125
60
13
7

9
14
71
58
9

Researchersa

Others

Total
registers

324
126
51
126
126

314
100
182
136
98

660
365
364
333
240

22
139
131
71
16

Source: Prepared by the authors from www.prossiga.br/arranjos.
a
Personal homepage of academic analysts of the sector.

Although the pharmaceutical industry in GO has many registrations, they are mostly
cantered in researchers (324) and legislation. There are actually few enterprise websites (22).
The service has relatively low use. In May 2003,9 the cumulative number of viewers over
the previous 12 months amounted to a mere 812, up by 4.9% from the previous cumulative figure
and by 4.3% compared to March. The initial vortal page received 1.14 visits per day. In June
2004, the total number of cumulative visits was around 1,500.
TABLE 36
CUMULATIVE VISITS TO THE VORTAL IN 12 MONTHS
March 2003

May 2003

Daily average

742

Ornamental stones

April 2003
774

812

1.14

Source: http://www5.prossiga.br/estatistica/tabelas.html.

The number of registered organizations (firms, professionals, associations and others)
rose from 358 to 365 between March and May 2003, an increase of 1.96%. Of this total, there
were 139 firm registrations (38%) and 125 (32%) researcher registrations.
TABLE 37
CUMULATIVE ONLINE REGISTRATIONS
March 2003
Ornamental stones

April 2003

May 2003

Growth rate

358

358

365

1.96

Source: http://www5.prossiga.br/estatistica/tabelas.html.

•

Marble website

This website (http://www.marble.com.br/), launched in 1999, has the mission to provide
the ornamental stones sector with an interactive channel to provide up-to-date information on the

9

This is the most recent data available in the Prossiga analytic tables.

39

CEPAL – Project document

Information and Communication Technology (ICT) for development of small…..: Brazil

sector and its products. It offers online price quotes, a catalogue of over 1,100 types of stone from
46 countries, and a registry of Brazilian sector’s companies by region, together with information
on events and news items.
It provides information in 15 categories: management; architecture and design; stone
catalogue; legal assistance; construction; online quote; exports; fairs and events; geology and
mining; government and sector entities; marble guide (firm catalogues); marketing; mining
history; publications and technology.
The Marble website contains links to the online exporters guide of the MDIC. This is an
important initiative since firms generally point to lack of experience in foreign business and lack
of information on export procedures as the main difficulties in exporting.
The website also contains the Marble  Inc magazine available for full download, and
one can also subscribe for an e-mail newsletter.
The online quote is not exactly the service available in the website. As is standard
practice in the sector, to obtain quote a customer needs to send e-mail and a reply will be sent by
e-mail or fax.
Between October 2003 and February 2004, the site received over 100,000 visits per
month (an average audited by Integraweb®). During the 17th Vitória Marble and Granite
International Fair, it peaked at 125,000 hits per month.
Its target public includes sectoral entrepreneurs and professionals, government
organizations, associations, engineers, interior designers, decorators, architects and designers. As
shown in the figure below, 45% of its total public are firms, 25% stone buyers, 15% suppliers,
10% academics, and 5% others.
FIGURE 4
USERS OF THE MARBLE WEBSITE
(In percentages)
5%
10%

15%

45%

25%
Sector firms

Stone buyers

Suppliers

Source: www.marble.com.br.

40

Academic

Others

CEPAL – Project document

Information and Communication Technology (ICT) for development of small…..: Brazil

Although the information in the site is poorly translated10 and is only available in
Portuguese and English, 38% of its hits come from abroad (58% of them North American).
•

The Way of the Stones website

The Way of the Stones website (http://www.pcpedras.com.br/), has been present in the
stone sector since July 2000. It publishes news and marketing advertisements in English and
Portuguese.
The website contains a registry of stone producing firms, classified in four categories: 1Marble and Granite, 2- Machinery and Equipment, 3- Suppliers and 4- General Services. It also
publishes a newsletter covering fairs and events in the stone sector. Its catalogue provides
information on stone type and the producer firm’s website, and one can generally ask for a quote.
The site receives a stable average of 25,000 hits per month.
ii) E-commerce websites
As mentioned above, in this sector it is misleading to state that a quote by e-mail is an
online one. The only firm that considers itself specialized in e-commerce,
MARMOREGRANITO, does in fact provide online quotes but with the difference that it sells
products made by its commercial partners. Its website location is www.marmoregranito.com.br.
c)

Problems for SMEs in introducing and using IT

The main problems in access to the new technologies indicated by the sector’s
entrepreneurs are (Villaschi and Sabadini, 2000, p. 63):
-

Small production scale
Lack of familiarity with the new technologies
Access to financial resources
Shortage of specialized workers

In order to develop large IT projects, such as e-commerce, small ES firms need to
cooperate and share. This is where they hit the second problem: lack of knowledge of information
technologies. It would be very useful if sector fairs could place more emphasis on IT use. The
APEX could also play a major role in this area.
The Brazilian Development Bank (BNDES) is launching a series of initiatives to deal
with the credit problem, such as a working-capital credit line for clusters and a special line for
investment in the ornamental stones sector. BNDES also has a number of credit lines to help
firms introduce IT, such as Prosoft. Banco do Brasil, a state-owned bank, has a credit line for IT
deployment in firms, and although it is focused on hardware (computers and peripherals), it could
also be of help. The sector also has a credit cooperative (CREDIROCHAS) that could be used to
fund IT programmes among its affiliates.
The lack of specialized workers could be solved with courses in CETEMAG or in
organizations outside the sector.
In the cases analysed, the one that experienced most problems was the vortal. Following
the change in federal government in 2003, the project was halted and no new information is being
added. This, together with the absence of a product catalogue in the vortal, explains why the site
is showing fewer page-views than the private information websites.

10

The translation is apparently done by automatic software. It contains many errors and does not translate
accents properly.

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Information and Communication Technology (ICT) for development of small…..: Brazil

Enterprise websites are generally well developed, which shows that they do not have
many problems in developing their own websites. Another sign of this is that Prossiga produced
relatively few of the sector’s websites (10%, or just 14 out of the 139).
E-commerce is not a reality in the sector, partly because of costs and partly because of
small scales.
d)

Lessons learned from the case

The ES cluster shows that an SME cluster with no large enterprises can succeed in Brazil.
As pointed out above, Brazil is one of world’s largest producers, and ES accounts for almost half
of the country’s production and exports.
Exports are not highly concentrated in the sector. In 2000, 154 or 12% of firms were
exporters. Of total exports (US$ 116 million, in 2000), each firm exported US$ 752,000 on
average. Of total exports in 2003 (US$ 222 million), the 10 largest firms accounted for just 6%
(US$ 14 million).
Mainly because of cluster performance, despite their small size, mortality among the
sector’s firms is not very high. In 1998, 54.83% of existing firms were three years old or more,
and thus had passed through the period in which small firms tend to close down; 28% of firms
had been in existence for over nine years.
Federal export promotion policies are doing well in the sector. The “Programme of New
Export Arrangements” (PNPE) has been very important in increasing the value added of the
cluster’s exports. Raw block buyer destinations, such as Italy, have declined, while buyers of
manufactured products, such as the United States, have expanded.
IT could help solve some of the cluster’s identified bottlenecks, such as low productivity
in
comparison
with
international
standards
and
environmental
degradation.
IT could also be useful in overcoming difficulties in exporting, such as the foreign language and
lack of experience in foreign business, information and export procedures.
The arrangement shows many cooperative relations that result in courses, fairs, credit
cooperatives, export consortia and so forth. Although very promising, such relations have done
little to advance IT use. Of the three information portals, one is governmental and two are owned
by enterprises outside the sector.
The main federal government intervention related to IT in the sector has been
discontinued and is far from achieving its expected results.
Government cluster assistance programmes which develop websites for cluster
participants (e.g. Prossiga) do not develop adequate websites; they are usually static and lack key
features and capabilities for certain product line clusters. For example, to be effective, ornamental
stone sites require a catalogue with pictures and online (indicative) quotes, capabilities that are
generally not provided effectively in sites developed by Prossiga. As can be seen in table 35
above, in the state of Espírito Santo a very small percentage of company websites were developed
under the Prossiga framework. This stands in sharp contrast to other high-use websites (fruits in
Ceará and ornamental stones in Rio de Janeiro), in which the percentage of Prossiga-developed
sites is higher.

2. Aeronautics industry suppliers in São José dos Campos
Brazilian aeronautics exports have grown considerably over the past decade, led by a large
national firm, Embraer. Driven by Embraer and its foreign first-tier suppliers, exports by SMEs in

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Information and Communication Technology (ICT) for development of small…..: Brazil

the São José dos Campos aeronautics vertical cluster have taken off in the past few years, albeit
from a small base. A group of exporting SMEs within the cluster has set up a consortium known
as the High Technology Association (HTA), to jointly promote their export capacity. The
consortium is supported by APEX/MDIC and by Sebrae/Nacional. Estimated export potential is
on the order of R$ 20 million a year, which could occupy between 35% and 40% of the
companies’ idle capacity (Bernardes, 2002: 24).
a)

Characteristics of the selected cluster

This vertical cluster is led by Embraer, one of Brazil’s largest industrial firms and the
world’s fourth largest aircraft manufacturer. Embraer revenues amounted to US$ 3 billion in
2003. The cluster is located in the county of São José dos Campos, in the state of São Paulo,
which saw its share in the state economy rise from 6.5% in 1996 to 11% in 2001.
Embraer purchases supplies worth over US$ 60 million from SMEs, 50% in Brazil and
50% from abroad. Over 30 small-specialized suppliers are located near its assembly plants. The
composition of the cluster is presented in table 38 below.
TABLE 38
VERTICAL CLUSTER OF THE AERONAUTICS INDUSTRY IN SÃO JOSÉ DOS CAMPOS
Product

Firms

Manufacturing,
parts and
composite
materials

Aeroserv (HTA)
Autômata Industrial (HTA)
Mirage (HTA)
Alltec (HTA)
Graúna-Carpini  Marques Indústria (HTA)
Elane Ferreira Pereira, Metinjo Metalizacao Industrial Joseense, Mirage (HTA),
SPU Indústria e Comércio de Peças (HTA)
Status Usinagem Mecânica (HTA)
Tecplas Indústria e Comércio de Fibras (HTA)

Engineering
projects and
software systems

Akros, Dynamic Sollutions, Akae, Cenic, Compoende Equipamentos
para Ensaios e Serviços Especializados (HTA)
Fibraforte Engenharia de Softwares, LEG-Engenharia e Comércio (HTA)
New Plotter Engenharia, Poly Card Engenharia e Comércio de Informática,

Decoration /
Interiors

CD Aerospace (USA),

Landing gear

ELEB/LIBERHERR (Brazil/Germany)

Sub-systems

Sobraer (Spain)

Radar

Mectron (Brazil)

Structures

Kawasaki Heavy Industries (Japan)
Gamesa (Spain)
ENAER (Chile) (not yet in installed in Brazil)
Latecoere (France) (not yet in installed in Brazil)

Windows

Pilkington Aerospace (United Kingdom)

Hydraulic
Systems

Parker-Hamnifin

Source: “Redes de Inovação e Cadeias Produtivas Globais: Impactos da Estratégia de Competição da
Embraer no Arranjo Aeronáutico da Região de São José dos Campos”, Bernardes, 2001, REDESIST
Technical Note No. 23, Rio de Janeiro, UFRJ, updated and adapted by authors.

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•

Information and Communication Technology (ICT) for development of small…..: Brazil

The High Technology Association (HTA) Export Association

In 2002, 11 SMEs in the cluster formed the HTA, an exporter association. Member firms
have an average of 15 years in the aeronautical sector. Most were founded by former EMBRAER
employees, bringing 20 years’ experience to bear in several areas. Member firms have
complementary capabilities in design and development, machining (CNC/Conv.), composites,
surface treatment, and non-destructive tests and assembly.
HTA is a trading company created with the support of support of the government exportsupport agency APEX (the process began in 1999). Since then, thanks to APEX financial and
organizational resources, HTA has participated in several international fairs and missions.
HTA is also responsible for ISO 9000 certification of all of its 11 associated companies
(although Embraer re-certifies them when they become suppliers).
The association’s main potential clients are aircraft manufacturers and firms that supply
aeronautical systems located in the Americas, Europe and Asia. As shown in table 39 below, their
revenues have fluctuated wildly over the past few years. In 2003, the smaller firms had a
minimum revenue of about R$ 100,000 and the largest of about R$ 1.3 million. The average
revenue for the group of 11 SMEs was about US$ 65,000.
TABLE 39
REVENUES OF MEMBER FIRMS OF THE HTA EXPORT ASSOCIATION
(In R$)
Companies

2001

2002

2003

Average

Aeroserv
Alltec
Autômata
Bronzeana
Compoende
Graúna
Leg
Mirage
Spu
Status
Tecplás

4 482 000
995 000
621 404
301 825
360 000
1 634 000
310 000
1 460 500
339 500
390 597
426 106

1 792 000
853 000
497 123
282 300
290 000
1 050 000
220 000
974 320
397 700
308 926
390 597

500 000
710 180
923 229
327 450
330 000
1 342 250
280 000
1 207 300
461 615
532 632
461 614

2 258 000
852 727
680 585
303 858
326 667
1 342 083
270 000
1 214 040
399 605
410 718
426 106

11 320 932

7 055 966

7 076 270

771 308

Total

Source: Prepared by the authors on the basis of High Technology Association (HTA) data.

Of the 11 firms, only three had more than 100 employees in June 2004 (Aeroserv, Altec
and Graúna); most had between 30 and 100 employees, and just two had less than 30
(Compoende and LEG). As shown in table 40 below, one of these smaller firms, LEG, has the
highest revenue/per employee ratio reflecting the highly specialized nature of its activities,
followed by another small firm (Compoende), which is also active in a high-tech activity, and a
large to medium-sized-size one (Autômata).
Enterprises with unique and often high-tech capabilities display the highest revenue per
employee, as also shown in table 41 below. The table also shows the wide scope and generally
complementary nature of the capabilities of the different firms.

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Information and Communication Technology (ICT) for development of small…..: Brazil

TABLE 40
HIGH TECHNOLOGY ASSOCIATION (HTA) EXPORT
ASSOCIATION MEMBER FIRMS: EMPLOYEES AND REVENUES/EMPLOYEE
(In R$)
Revenues
(2003)

Employees
(06/2004)

Revenue/
employee

Aeroserv
Alltec
Autômata
Bronzeana
Compoende
Graúna
LEG
Mirage
Status
SPU
Tecplas

500 000
710 180
923 229
327 450
330 000
1 342 250
280 000
1 207 300
461 615
532 632
461 614

150
110
70
30
17
150
8
145
55
70
50

3 333
6 456
13 189
10 915
19 412
8 948
35 000
8 326
8 393
7 609
9 232

Total

7 076 270

855

8 276

Source: Prepared by the authors on the basis of High Technology Association (HTA) data.

Machining (CNC/Conv.)
Control and electronic system
Sheet metal work
Tooling
Repair and overhaul
Composites
Assembly
Engeneering
Airframe component manufacture
Thermal and surface treatments
Nosdestructive test
Testing and certification
Design and development
Special cutting and drilling
Systems and components integration

Source: High Technology Association (HTA).

45

Tecplás

Status

Spu

Mirage

Leg

Graúna

Compoende

Bronzeana

Autômata

Alltec

Participating companies by sector

Aeroserv

TABLE 41
CAPABILITIES OF HTA EXPORT ASSOCIATION MEMBER FIRMS

CEPAL – Project document

b)

Information and Communication Technology (ICT) for development of small…..: Brazil

IT use11

HTA member firms have a relatively high level of IT use, compared to the averages for
SMEs in the state of São Paulo, as reported above. On average there are 11 PCs per company and
one PC for every seven employees. Nonetheless, there is a low level of Internet use and no use of
EDI or any form of e-commerce. Companies may receive orders and claims from the Embraer
website, but there is no type of Supply Relationship Management (SRM). In terms of software
applications firms are quite advanced, making use of the most advanced professional software in
their fields: Catia, Master CAM and Autocad, among others. The level of industrial automation is
also high with the use of 43 CNC machines involving numerical control and five 3-D Measuring
Machines.
Only four (36%) of the firms have their own website. These sites allow customer
registration, but some do not even provide information on products and services. Those with
websites all post information in 3 languages: Portuguese, English and Spanish.
The HTA website is still at an early stage of development. It only provides static
information about the consortium, its products and services, and does not have a reserved area
either for its associates or for potential customers; nor does it offer the possibility of registering
potential customers, and it has no links to the websites of associate firms.
c)

Exports

Thus far only one of the firms in the group, Aeroserv, has exported over US$ 3 million in
services over the period 2001-2003. In general, the events of September 11 put a brake on the
group’s initial export plans. In 2004, HTA and its members firms are negotiating exports of about
US$ 50,000, aiming to raise the level to an average of US$ 3 million within three years.
The initial export effort included an offset clause in respect of imported aircraft, such as
the CLX programme (cargo plane) purchased from Spain, which involved a 100% counterpart.
The contract provides that Spain will purchase US$ 30 million in Brazilian aeronautics parts over
10 years. Additional offset-clause exports are under negotiation with Israel for a value of US$
500,000 and a number of American customers.
Aeroserv exports had to specialize in design and assembly, which involved sending 50 of
its 130 employees to perform related services in Spain. As seen in table 40, Aeroserv suffered the
sharpest drop in revenues among HTA companies, falling from US$ 4.5 million in 2001 to US$
500,000 in 2003. As shown in table 42, exports accounted for 50% of the firm’s revenues in 2001
and an average of 25% in 2002 and 2003. The remaining cut in revenues is explained by the
termination of an Embraer contract for development of the LX prototype. There were also some
minor exports to France in 2003.
TABLE 42
AEROSERV EXPORTS
(In US dollars)
2001

2002

2003

Total

Exports

2 315 263.50

465 732.74

125 440.92

2 906 437.16

Revenue

4 482 000.00

1 792 000.00

500 000.00

6 774 000.00

Source: High Technology Association (HTA).

11

This section was based on a survey prepared by the authors and administered by HTA to its members.

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i)

Information and Communication Technology (ICT) for development of small…..: Brazil

Export motivations

According to HTA, member firms see exports as a way to expand markets and the
customer base and thus reduce dependence on Embraer, which on average accounts for 70% of
their production. Some firms depend on Embraer for up to 95% of their business. They also seek
capacity-building and competitiveness.
The premise lies in the reality of the global aeronautics market, in which aeronautic parts
represent US$ 33 billion per year. The goal of HTA is to capture 0.5% of this market. Some
enticing analogies are the fact that USA exports US$ 14 billion, Canada US$ 1.3 billion and
Spain US$ 1 billion.
ii) Export policy catalyst
HTA sees the Brazilian Export Promotion Agency (APEX) as a major catalyst for its
export drive. Negotiations with APEX began in 1999, and the project was finally launched in
2001 for three years, after which it was extended for another year. A new project is currently
under development. The existing project provides support for participation in international fairs
and missions, averaging two fairs and two missions per year. It also contributes to member
companies’ ISO 9000 certification programme. Project costs are shared between the firms (50%)
and APEX (50%). The project does not provide technical support to exports, however.
In fact, as volumes are still low, the firms prefer to use private agents for their export
sales; but they do not use either government trade facilitation websites or credit lines, considering
those available to be satisfactory.
Increasing the number and volume of offset contracts, a major source of business, is
perceived by firms as one of the Government’s most important contributions.
iii) Barriers to export
The firms recognize that they lag about 30% behind the technological state of the art.
Other barriers cited include: distance from major markets, freight costs, high input costs (often
imported), lack of working capital, lack of investment capital and lack of guarantees. It was also
mentioned that Embraer does not award long-term contracts, but just one of a kind of sub-contracting
order. This does not generate the necessary incentives for firms to invest in technology and
productivity. Competition from imported equipment above a technological level was also cited.
Finally, it was mentioned that the terms, grace periods, and interest rates on financing are
generally unfavourable, particularly when compared to competitors from East Europe and Asia,
which often benefit from government support.
iv) Export strategy
Active pursuit of offset processes is seen as the key strategy to be followed. There is also a
need to supply integrated solutions that are as complete as possible. In this regard, there is a need to
improve capability in surface treatment technology. Finally, risk sharing is sought with customers.
v) IT  exports
Generally speaking there is very little use of IT to facilitate exports. There is a
widespread perception that because of the highly specialized nature of the sector, personal
contacts are the most important factor when establishing export relationships.
Participation in fairs and missions are seen as the main channel for establishing business
relations, while Internet is rarely used for this purpose. There is no specialized website to search
for and screen international trade partners. Export operations are assisted by private agents. In
short, IT is not used for trade facilitation

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d)

Information and Communication Technology (ICT) for development of small…..: Brazil

Lessons learned from the case study

SMEs in high-tech vertical clusters face particular problems in exporting, because the
nature of the business exposes them to intense international competition very early on. The
existence of a lead or anchor firm in a vertical cluster is a mixed blessing, particularly in sectors
such as aeronautics where subcontracting patterns have developed to the point of relying on a
small number of first-tier suppliers. Breaking into this closed group, often consisting of foreign
firms is a hard task. A lead national firm could in principle assist SMEs in this endeavour, but it
often chooses not to, to avoid disaffecting key first-tier suppliers, which in turn are tied in their
home country government aeronautics subsidy programmes.
The use of IT for exports and to strengthen the cluster’s overall business capacity is
hindered by the short-term nature of supplier contracts allowed by the lead firm, which prevents
firms from pursuing a more long-term cooperative strategy. Government programmes with a onesize-fits-all format have severe limitations in addressing the specific IT needs of such enterprise
groupings.

C. Problems for SMEs to participate in the
trade-oriented value chain
The problems faced by SMEs in participating in IT networks can be subdivided in two groups:
those related to their IT capacity, and those related to institutional factors.
The first group includes the high cost of purchasing equipment and operating it, the
shortage of affordable quality human resources, and difficulties in identifying the company’s IT
needs and designing and implementing a strategy to meet them.
The second group includes the limited scope and administrative burden of finance
programmes, availability of expertise on the IT functions and needs of SMEs, and a lack of
knowledge of sector-specific network and export-oriented IT processes.
The main barriers that prevent SMEs from participating effectively in supply chains and
trade networks include the industrial structure (in the case of high-tech sectors), industry
fragmentation (in the case or ornamental stones) and, in general the one-size-fits-all format of
existing support programmes. The quality of the activities on offer may also be a hindrance to
their full integration into trade networks, as exemplified by the resource-poor nature of the
websites developed by government programmes for ornamental stone and other similar clusters.
•

Obstacles to the creation and growth of new enterprises

A survey conducted by the International Finance Corporation (IFC), entitled Doing
Business in Brazil (Djankov and Mcliesh, 2004) shows that in São Paulo, Brazil’s leading
business city, it takes 152 days to start up a business, while in Mexico City it takes 51. The time
taken can be reduced to 74 days by using specialized services, but this is more than 10 times the
equivalent period in Chile. Bureaucracy is present even after opening the firm: for example,
Brazil has one of the most rigid labour regulations in the world after India.
In relation to exports, Markwald and Puga (2002) claim that SMEs face problems relating
to insufficient tax rebates, lack of relevant commercial information, logistical problems and poor
credit access. They suggest that policies should focus on strengthening firms that are starting to
export, in order to avoid discontinuities in export activity.

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IV. Government policies designed for SMES,
IT, and international trade

A. IT policies in the country’s overall development strategy
Since the early 1990s, industrial policy has been shifting towards a more liberal regime. Local
industry progressively lost its greenhouse protection and became exposed to international
competition. The strategic response by firms facing competition from imports in the local market
led to a downgrading of Brazilian specialization in the international division of labour (Cassiolato
and Baptista, 1996). This trend had a major impact on the more advanced electronic equipment
sector. From 1980 to 1994 its weight in the overall industrial sector decreased from 10% to 8%.
Current Brazilian policy for the IT industry epitomizes this shift from protectionism to
liberalism. The IT policies prevailing in the 1980s were oriented towards local production and
general development of technological capabilities. The outcome of a decade of protectionism was
a locally owned industry manufacturing a wide range of hardware and also designing software,
both for the local market. At this time minicomputers were widely used and the manufacturing
scale did not yet provide a significant competitive edge as it does today for PCs. By the end of the
1980s local production of IT equipment (including telecommunications) had reached a level of
US$ 7 billion, with a high degree of local content in both technology and components. The
liberalization of the IT market for imports and foreign investments in the 1990s altered the
industry structure. International IT leaders gradually took over most existing firms and turned
away from local design and manufacturing to imports. The locally owned firms that survived
were those targeting niche markets, client-specific software, and telecommunications equipment,
where the client-supplier relationship was strong enough to withstand foreign competition (La
Rovere, Tigre and Fagundes, 1996, pp. 123-143).
The 1991 policy (Law 8248/91) aimed to establish alternative mechanisms to preserve
some local equipment manufacturing and RD activities in the IT sector. The policy consisted of
four types of incentives. First, fiscal benefits available until 1999 consisted of a waiver on the
industrial goods tax (IPI) resulting in a 15% reduction in the final cost of production. Second, a
50% income tax discount for RD expenditures was made available to firms in all industrial
sectors. Recent measures, however, limited this incentive to a maximum of 4% of total income
tax. Thirdly, in order to provide support for new capital investment, a discount of 1% on the
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Information and Communication Technology (ICT) for development of small…..: Brazil

income tax payable by companies investing in IT firms was available until 1997. Fourthly,
government procurement policy favours the acquisition of IT goods developed and produced in
Brazil, as long as they have similar prices to imported equipment. By 1997, 248 firms had
benefited from these measures. Part of the firms’ RD expenses were channelled to governmentsponsored RD programmes.
In 1999, the IPI rebate was further extended until 2013 by a law passed by Congress, with
a scheduled reduction of fiscal incentives. The waiver on the IPI will be progressively reduced by
1% a year, from 100% in 1999 to 57% in 2013. In order for firms to take advantage of the fiscal
benefits, the legislation required the following complementary actions by firms:
•

Firms must invest at least 5% of their revenues from IT products (excluding software
and professional services) in RD activities, of which 2% must be through joint
projects with universities or research institutes, or in government-sanctioned IT
programmes.

•

Manufacturing firms have to fulfil the “Basic Productive Process,” which is a
production step defined for each class of product. This production phase is
considered to be the borderline between imports and local manufacturing. In PCs, for
example, most firms assemble the computer’s motherboard in Brazil as a minimum
standard of value-added to qualify for fiscal benefits.

•

Firms are required to comply with quality standards by obtaining ISO 9000
certification.

The extension of existing fiscal incentives was partly justified by the persistence of a
large grey market for IT products. Tax exemptions in IT-related programmes amounted to R$ 600
million in 1997, but smuggled products pay no taxes at all. In fact there is a trade-off between
fiscal incentives and balance of payments: higher taxes may act as a stimulus to the smuggling of
computers, but also prevent the prices of locally produced computer from falling.
Other programmes based on “positive” policy mechanisms include the National Research
Network (RNP) and Associação para Promoção da Excelência do Software Brasileiro (SOFTEX
2000). RNP aims to develop Internet links at science and technology institutions, and has also
boosted commercial use of the Internet by providing infrastructure and technical capabilities. In
1997, RNP invested $ 20 million in local IT service providers, schools, and infrastructure such as
high-speed backbones, and in linking universities and business centres. The project is now
shifting towards academic and social use through Internet II, since private backbones are now
available to support e-commerce.
The software exports programme (Softex 2000) was introduced in 1993 with ambitious
aims: to capture 1% of the world software market, corresponding to US$ 2 billion in exports by
2000, and for local firms to capture a 50% share of the national market. The programme includes
the formation of regional centres to stimulate cooperation among small software firms, the
installation of marketing offices overseas (USA, Germany, Argentina, China) in order to support
the export efforts of Brazilian firms, and incentives for training IT professionals within firms. The
programme is now managed by a non-governmental organization.
Softex 2000 results and prospects are controversial. Nonetheless, if its over-ambitious
aims are discounted, the programme is certainly helping local firms to gain greater exposure to
the demands of international markets, thereby providing a kind of “quality test” for products
developed in Brazil.
Other government-sponsored RD programmes in IT are aimed at building infrastructure
and promoting joint projects between universities and private firms. The main results, according

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Information and Communication Technology (ICT) for development of small…..: Brazil

to the oversight agency CNPq, were the creation of a new cooperative research culture, the
standardization of hardware and software platforms, and the provision of incentives for graduate
programmes in computer science, which expanded from 13 in 1990 to 20 in 1995.
In the framework of the Mercosur free trade agreement, Brazil has been negotiating a
common policy for international trade and industrial development for the IT sector with
Argentina, Paraguay and Uruguay. So far an agreement has been reached under which the
countries’ tariffs on imports from outside the Mercosur zone will converge to 16% by 2006. As
Brazil is now the only country in the region with substantial IT production, its users do not
benefit from the zero tariff now applied to trade with its Mercosur partners. Brazil is unlikely to
join the International Technology Agreement (ITA) proposed by the USA to eliminate all barriers
on trade in IT products.

B. Policies to support SMEs
There are several national and regional government institutions involved in export promotion
policy with an SME focus; and there are 15 organizations, both public and semi-public, involved
in foreign trade support and promotion. These include agencies under the Ministry of
Development, Industry and Foreign Trade – MDIC, (Apex and Camex); Sebrae; the Post Office;
the National Industry Federation (CNI) which operates several International Business Centres; the
Ministry of Foreign Relations (MRE or Itamaraty) through its network of embassies and
consulates abroad; Banco do Brasil, the country’s second largest commercial bank; BNDES; and
Finep, Brazil’s Innovation Agency under the Ministry of Science and Technology.

1. Export promotion
a)

General policies

The main policy to support SMEs in Brazil is the Brazilian Entrepreneurship Programme
(PBE), which focuses on promoting small and medium-sized enterprises, bringing together many
actions and programmes of diversified agents that affect new businesses. It also seeks to
contribute to the formalization of enterprises, revenue generation, and reduction of the mortality
rate among new businesses.
The main thrusts of the programme are: management training; micro-financing; and postcredit monitoring or enterprise assistance. The programme also has complementary activities
aimed at increasing the SME share in exports; their digital inclusion; support for productive
arrangements; and strengthening of the handicraft segment.
Small businesses are given a smaller spread in credit programmes. At BNDES, a major
source of long term credit, the median spread for SMEs is 1% per year, whereas large business
has a median spread of 2.5%. There are also special credit lines in most public banks for small
firms willing to export. In order to facilitate SME access to credit, particularly micro-enterprises,
BNDES launched a magnetic credit card that allows firms to carry out and monitor their own
credit operations.
The following institutions make up the programme: the Ministry of Industrial and Trade
Development (MDIC), which coordinates it; the Ministry of Labour, including the labour
secretariats in the states; the General Secretary of the Presidency of the Republic; the Ministry of
Communications; the Ministry of National Integration; the Brazilian Development Bank
(BNDES); the Amazon Bank (BASA); Banco do Brasil; the Brazilian Northeast Bank (BNB); the
federal government savings bank, the country’s largest (Caixa Economica Federal); Sebrae and
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the Brazilian Post and Telegraph Company (Correios). Some of these entities are presented in the
following section.
Between October 1999 and December 2002, the programme trained 6,070,127
entrepreneurs, provided management consultancy to 239,206 firms and carried out 5,198,996
micro finance operations, involving R$ 35 billion (roughly US$ 12 billion) for an average value
of US$ 2,000.
TABLE 43
FEDERAL ENTREPRENEURSHIP PROGRAMME, OCT-1999/DEC-2002
Benefited
Action
Training (entrepreneur)
Consultancy (firms)

6 070 127
239 206

Micro Finance
Operations
Value (US$ million)

5 198 996
11 550

Source: Ministério do Desenvolvimento, Indústria e Comércio Exterior
(MDIC) (www.mdic.gov.br).

b)

Policy institutions

This section presents some of key institutions involved in the promotion of international
trade and new business creation. The list is not exhaustive.
c)

Ministry of Industrial and Trade Development (MDIC)
The Ministry was established in 2000 with a mandate that includes:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)

Industrial, commerce and services development policy;
Intellectual property and technology transfer;
Metrology, standardization and industrial quality;
Foreign commerce policy;
Regulation and execution of foreign trade programmes and activities;
Application of trade defence mechanisms and participation in international
negotiations on foreign trade;
Formulation of the business support policy; and
Serving as executive secretariat of the Board of Trade

Some of these activities are shared with its agencies and related financial institutions such
as BNDES, the National Institute of Industrial Property (INPI) and the National Institute of
Metrology, Standardization and Industrial Quality (INMETRO).
One of its main programmes in the area of new business development is the Small Scale
Entrepreneur Programme (EPP), the objective of which is to train the SME entrepreneur in the
procedures needed to operate in foreign trade. So far, over 9,000 entrepreneurs from all over
Brazil have been through the programme.

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d)

Information and Communication Technology (ICT) for development of small…..: Brazil

Brazilian micro-enterprise and small business support service (Sebrae)

Sebrae has been working for the sustainable development of small businesses since 1972.
The organization promotes training courses, facilitates access to credit, stimulates cooperation
among firms, organizes business-oriented fairs and roundtables, and stimulates the development
of activities contributing to employment and income generation. Hundreds of projects are
managed by the Sebrae business and management units.12
Sebrae has great policy implementation capacity as it operates throughout Brazil, with
regional units in all 26 states and the Federal District, forming a system offering strong potential
for upward mobility, and over 600 service points.
e)

Export promotion agency (APEX)

APEX is part of the Sebrae structure with a mission to support the implementation of
export promotion policies. Its goals include export growth, in terms of values and items, an
increase in the number of exporting companies, and new job creation. Projects supported by
APEX are executed by private non-profit institutions, public institutions and Sebrae regional
units. The costs are shared between APEX and the executing organizations, with a gradual phaseout of APEX support. Small enterprises are the agency’s focus. It supports projects in firms with
up to 99 employees or US$ 3.5 million in annual revenues.
APEX is developing 185 projects in support of Brazilian product exports such as foods,
beverages, handicrafts, furniture, machinery and equipment, shoes, cosmetics, jewellery, textiles,
clothes, organic products, ornamental rock and flowers, along with new products in Brazil’s
export portfolio. It is also striving to increase the number of micro-enterprises and SMEs capable
of selling their products in the international market through strategic sectors that can be targeted
by coordinated government action. It provides capacity-building and helps firms understand the
needs of the international market.
Its website (http://www.apexbrasil.com.br/) provides a step-by-step guide to exporting,
explains different types of export sales, briefly shows how to determine an export price, and
instructs potential exporters on administrative procedures and documents.
APEX provides financial support for a series of activities that help increase export supply,
together with straightforward commercial promotion, including: seminars and workshops for
awareness raising and mobilization, product and market prospecting, training and capacitybuilding, product and process adaptation, (design, packaging, ISO certification), marketing and
advertisement, participation in fairs abroad, business rounds with exporting firms and importers,
and e-commerce (B2B, B2C, virtual catalogue).
For example, APEX supported the Export Development Programme of the Glass Trade
Association, which in its initial phase is assisting 10 small and medium-sized firms operating in the
interior design, lighting and coffee table utensils markets. The aim is to raise exports from 0.4% to 1%
of revenues within three years (R$ 3.5 billion in 2003). The 2004 export target is US$ 22.3 million.
Up to September 2003, APEX had helped 8,196 SMEs participate in 410 international
events. Business generated in these events amounted to US$ 399 million, and future agreements
top US$ 1.8 billion. Assisted by 185 projects executed by APEX in partnership with the private
sector, micro-enterprises and SMES exported to 42 countries.

12

A fuller discussion of Sebrae entrepreneurship programmes can be found in Botelho, Jonathan and
Gallagher (2004).

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f)

Information and Communication Technology (ICT) for development of small…..: Brazil

The National Economic and Social Development Bank (BNDES)

BNDES is an autonomous federal public entity attached to the MDIC. It provides longterm financing for enterprises that have the potential to contribute to the country’s development.
It also seeks to strengthen the capital structure of private companies and the development of
capital markets, machinery and equipment trade and export finance.
Since its establishment in June 20, 1952, BNDES has financed large industrial and
infrastructure projects, and plays a major role in support of investments in agriculture, commerce
and service and, more recently, in micro, small and medium-sized enterprises. Another quite
recent development in its portfolio involves support for social investments aimed at education and
health, family agriculture, basic sanitation and public transport.
Its financial credit lines and financial programmes serve the investment needs of firms
established in the country of any size and sector. It extends credit in partnership with financial
institutions and regional government agencies, affording greater access to the BNDES resources.
•

BNDES export promotion programmes

Financing for the export of goods and services through accredited financial institutions,
in the following categories:
-

Pre-shipment:
finances the production of goods and services to be exported in specific
shipments;

-

Short-term pre-shipment:
finances the production of goods and services to be exported, with payment terms
of up to 180 days;

-

Special pre-shipment:
finances national production of exported goods, without links to specific
shipments, but with a predetermined period for execution;

-

Pre-shipment anchor company:
finances the commercialization of goods produced by micro, small and mediumsized enterprises through exporting companies (anchor company);

-

Post-shipment:
finances trade in goods and services abroad, by refinancing the exporter, or
through the buyer’s credit category.

The guarantee instruments used are the same as those offered by credit agencies for
exports. To further facilitate access to export credit, the following are available: Guarantee Fund
for the Promotion of Competitiveness (FGPC), aimed at facilitating access to credit for micro,
small and medium-sized enterprises.
Insurance for Export Credit covers the commercial and political risk of exported goods
and services. In Brazil, this instrument is operated by the Brazilian Export Credit Insurer (SBCE).
It is necessary to apply to the accredited financial institution of your preference to
negotiate the operation and decide whether it will be the guaranteeing party or the solicitor of the
operation. Operations are performed in accordance with Operational Standards by presenting
forms defined according to operation type.

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g)

Information and Communication Technology (ICT) for development of small…..: Brazil

Export promotion policies

The key policies used to promote SME exports are the Export Technology Support
Programme (PROGEX), the Programme of New Export Arrangements (PNPE) and the National
Network of Trade Agents (REDEAGENTES).
h)

Export Technology Support Programme (PROGEX)

The purpose of PROGEX is to provide technological assistance to micro-enterprises and
small businesses that want to become exporters, or to those already exporting that wish to
improve their performance in external markets. PROGEX supports product adaptation to external
markets involving improvement of quality and the productive process; cost reduction; meeting
technical specifications; overcoming technical barriers; design and packaging.
The programme makes use of consultancy from universities and research centres in a
two-stage process. In the first stage, professionals from a technological organization carry out a
feasibility study through a visit to the company and prepare an initial diagnostic study. They
analyse the product and productive processes, identifying the main technical problems to be
solved and estimating the costs and investments needed to implement solutions. In the second
stage, the professionals spend time in the firm to adapt the product, improve quality and
implement solutions to the problems identified.
i)

Programme of New Export Arrangements (PNPE)

PNPE carries out actions to provide stimulation and technological and commercial
support to enterprises in sectors with export potential, especially small firms. Its objective is to
expand the number and scope of Brazilian exports in terms of products, companies, and markets.
Its initiatives include the dissemination of marketing information, stimulation of quality and
productivity, help in increasing technological capacity and the incorporation of new technologies
in the productive process.
j)

Rede Nacional de Agentes de Comércio Exterior (REDEAGENTES)

The key aim of the National Network of Trade Agents (REDEAGENTES) is to
disseminate an export culture and to guide small businesses on export procedures. It provides free
training for foreign trade agents and small-scale entrepreneurs. From the beginning of the
programme in 2000 until December 2003, it trained more than 2,000 foreign trade agents and
about 6,000 entrepreneurs and employees from various institutions such as cooperatives, trade
associations, city halls and other similar institutions. After training, foreign trade agents are
integrated into the REDEAGENTES network based on the Internet, where they start to contribute
to the process of disseminating the export culture and provide guidance to other small businesses
on how to export.
There are also various regional export facilitation initiatives such as the Micro-enterprise
Support Service in Santa Catarina state (Sebrae/SC), which initiated a series of debates in April
2004 as part of the pioneering Santa Catarina Export Potential project. The initial goal of the
programme is to build capacity in 400 of the state’s 3,226 SMEs with export potential, to improve
their capacity to sell in the foreign market.
The State of Rio Grande do Sul, Brazil’s southernmost state offers a foreign business
platform targeted on small firms, in which exporters and importers can register. It receives 50 hits
daily (www.redenegocios.rs.gov.br).

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2. Trade facilitation
a)

Banco do Brasil

In late 2002 Banco do Brasil created the Foreign Trade Platform (FTP) as a system
especially designed to facilitate and stimulate SME exports. This allows for an online export
operation and meets demand from small firms that wish to start exporting.
Through the website www.bb.com.br the entrepreneur has access to a virtual international
business room, without restrictions to a bank client (exporter). The service streamlines the export
process for amounts of up to US$10,000. FTP has an electronic catalogue with samples registered
by importers; it issues export documents and offers registration in the Integrated Foreign
Commerce System (SISCOMEX) among other facilities. The site also offers opportunities for
doing business in both directions, covering the whole process from photo exhibition of the
product to transport. In order to avoid risks for beginner export firms, FTP also offers an
additional service of advance payment custody. The exporter only ships the merchandise when
notified that the payment has been made in Brazil. Similarly, payment is converted only when the
importer receives the merchandise.
From its inception in January 2003 until December that year, the service registered 2,846
exporters and 680 importers, and completed 173 operations valued at US$ 483,000. Today, there
are 4,790 export product offers and 701 importing firms registered.
b)

Websites

There are three main websites for SMEs that wish to export. The first two managed by
the MDIC and the third managed by the Ministry of Foreign Relations (MRE):
(i)
(ii)
(iii)

The Exporter’s Portal (http://www.portaldoexportador.gov.br/);
Exporter’s Window (https://www.exportadoresbrasileiros.gov.br/);
The Brazilian Trade Net (http://www.braziltradenet.gov.br.

The Exporter’s Portal is a major source of information on foreign trade. The subjects are
displayed by topic for easy consultation. The site also offers a communication channel for
suggestions, doubts and consultations relating to foreign trade. The site has Portuguese as its sole
language. Since its creation in November 2001, it has received 6,220,000 hits and 6,000 e-mails
from 84 countries, of which 36% addressed the Exporter´s Window (Mancini 2004).
The Exporter’s Window, launched in late 2003, contains a complete catalogue of
information on Brazilian exporters. The site has over 25,000 companies registered in cadastre,
which also include potential exporters. The site is available in Portuguese and English.
The Ministry of Foreign Relations (MRE or Itamaraty) website BrazilTradeNet
(www.braziltradenet.gov.br) offers a virtual space where small exporters can market their
products and processes. Its objectives are: 1- facilitate and increase Brazilian exports through the
use of high technology and the MRE Trade Promotion Sectors network; 2- offer strategic
information for business between Brazilian and foreign firms; 3- increase foreign direct
investment; and 4- disseminate Brazil’s image and the quality of its products.
BrazilTradeNet offers to Brazilian and foreign companies, a large set of free services and
information of interest for export activity and foreign investment. It also publicizes promotional
information: business results from participation in fairs, missions or seminars in Brazil and
abroad, and is a major source of information for foreign companies wishing to invest in Brazil.
The site is available in Portuguese, English and Spanish.

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By late 2003, the site had 13,000 potential exporting firms registered and 9,600 product
offers. About 58,000 importers were also registered on the site. In addition the site makes
available market research reports, market trend information, investment guidelines and resources,
and other related information. Although the site specifies MSMEs as one of its five target
audiences, there is no area dedicated specifically to MSMEs. The number of daily hits ranges
between 3,000 and 5,000.
c)

Export finance

Banco do Brasil finances exporting SMEs through its Export Financing Programme
(Proex) which currently serves 400 firms: 11% large, 39% medium-sized, 37% small and 13%
micro-enterprises.
In 2003, there was a 50% increase in the number of MSMEs seeking financial support to
start exporting. In the same period, they increased their exports by 25%, with goods ranging from
lingerie to balloons. Proex target markets are also quite diverse: Thailand, Croatia, China, Japan
and Tchek Republic, along with traditional ones such as the European Union and the United
States. Despite these positive developments, the number of exporting MSMEs that continue to
export after the initial effort is small, because of the segment’s inherent nature.
d)

Postal service

The State postal company Correios has established the Easy Export programme to take
Brazilian products to the four corners of the world. In 2003, SME products accounted for 62% of
total sales, and SMEs represented 67% of the exporting firms in the programme.
São Paulo state accounted for half of total SME sales, followed by Minas Gerais (18%)
and Rio de Janeiro (14%). The main markets were: United States (38%), Japan (10%) and
Portugal (7%). The products most exported by SMEs were jewellery, precious metals, and
fashion accessories, amounting to 23% of the total, followed by garments and accessories, electric
machinery, equipment and materials.
The export operation can be carried out online, at the website
www.correios.com.br/exportafacil, which provides information about the programme, markets
and legislation, together with a step-by-step guide to exporting.
Correios forecasts that in 2004 it will ship over 24,000 export packages abroad, a 75%
increase over the previous year. Products can be sent to over 200 countries and the process
requires just one export form to be completed. The exported parcel can be up to 30kg in weight
with a maximum value of US$ 10,000.
Created in November 2000, the main results of the Easy Export programme are: in 2001,
6,745 shipments were made for a total value of R$ 8,670,349.89; in 2002 there were 11,440
shipments totalling R$ 19,011,898.37, with a significant increase in the value of exported
merchandise; and in 2003 shipments reached 19,631 valued at R$ 35,543,007.40, growth of 87%
in relation to the previous year.

3. FDI promotion
The MRE website discussed above has an investment attraction area, with an Investors’ Map and
a page on “Why Invest in Brazil?”. In addition, MRE manages its own Investment Promotion and
Corporate Technology Transfer System (SIPRI), a network of national and foreign agents. The
goal of SIPRI is to enhance foreign investment attraction and to establish partnerships between
Brazilian and foreign firms allowing for the transfer of high technology.
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The federal government’s main effort was until recently focused on the hybrid agency
Brazil Invest, which was shut down last July. The Brazilian Investment Promotion Network
(Invest Brazil) was created in November 2000, following a long debate with several actors
involved in the investment attraction process, as a Civil Society Organization of Public Interest
(OSCIP) — a non-profit legal entity. Its founding members include representatives of all major
industry and services trade associations along with bilateral chambers of commerce in Brazil.
It main objective was to attract foreign direct investment and stimulate national
investment for development. In order to fulfil this objective, Brazil Invest had as a permanent
activity the dissemination of information on the Brazilian economy, on Mercosur, on the
country’s business environment and on investment opportunities available to national and foreign
investors and opinion leaders.
The network aimed to operate as a flexible and low-overhead organization, offering
activities on demand, giving priority to investments that filled gaps in the country’s social and
economic infrastructure, helped balance trade deficits, generated jobs and had a technological
content favourable to the generation of local intellectual capital.
Its strategy was to focus initially on building up the country’s image as a competitive
destination for FDI; on establishing partnerships, in coordination with the relevant MRE units,
with state development offices, investment promotion organizations, service and information
providers, among others; and in selectively promoting investment opportunities, emphasizing
projects of high impact and ease of implementation.

4. Business promotion
(new business, incubation, entrepreneurship)
Brazil has an array of programmes for the emergence and early-development of new businesses
(such as incubation), together with entrepreneurship-awareness and capacity-building
programmes. Given the sheer number and the broad scope of these programmes and the report’s
focus and related space limitations, it is impossible even to provide a summary. Full treatment of
this issue can be found in Botelho, Jonathan and Gallagher (2003). This section will thus present
just a few key programmes.
The main policy in support of SMEs is the PBE, which focuses on promoting small and
medium-sized enterprises, bringing together many actions from programmes of diverse agents
that affect new businesses. It also seeks to contribute to the formalization of enterprises, income
generation, and reducing new business mortality.
The programme’s key areas are: management training; micro-financing; after-credit
follow-up, or enterprise assistance. It also has complementary actions aimed at increasing the
participation of SMEs in exports; digital inclusion; support for cluster-like arrangements; and
strengthening of the handicraft segment.
Small businesses have access to smaller interest rate spreads in credit operations.
At BNDES, a major source of long-term credit, the average spread for SMEs is 1% per year,
while the large business are subject to an average spread of 2.5%. There are also special credit
lines for small firms wishing to export in most public banks (Banco do Brasil and Caixa
Econômica Federal), and in regional development banks (such as Banco do Nordeste Brasileiro).
The following institutions participate in the Brazil Entrepreneurship Programme:
Ministry of Industrial and Trade Development (MDIC), which co-ordinates it; the Ministry of
Labour, including the labour secretariats of the states; the General Secretariat of the Presidency of
the Republic; Ministry of Communications; Ministry of National Integration; BNDES; the
Amazons Bank (BASA); Banco do Brasil; the Brazilian Northeast Bank (BNB); the Federal
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government saving bank (Caixa Econômica Federal (CEF)); Sebrae and the Brazilian postal
company (Correios).
Between October 1999 and December 2002, the programme trained 6,070,127
entrepreneurs, assisted 239,206 firms and carried out 5,198,996 microfinance operations,
involving R$ 35 billion (roughly US$ 12 billion) with an average value of US$ 2,000.
•

National Bank for Economic and Social Development (BNDES)

The financial support lines and BNDES programmes serve the investment needs of
companies of any size and sector, established in Brazil. The partnership with financial
institutions, and with agencies established around the country, makes it possible to spread credit
more widely, affording greater access to BNDES resources.
By June 2003 the BNDES Programme in Support of Micro, Small and Medium-sized
Enterprises had undertaken 24,616 loan operations for an average value of US$ 50,700. Almost
half of the loans were made to micro-enterprises, and these accounted for 29.7% of
disbursements. Medium-sized enterprises accounted for 35.4% of the total volume of resources.
IDB is negotiating with the Brazilian Government for a loan of US$1 billion to the SME
sector to be invested in the creation, expansion and diversification of firms and in the support of
foreign trade activities. The loan will be supported by a US$1 billion counterpart from BNDES,
which will transfer the funds to the firms. The loans will be made available to the firms through a
network of over 100 financial institutions accredited by BNDES, including private and public
commercial banks, funding agencies and others. These are medium to long-term loan operations,
lasting an average of five years.
Over the last eight years, BNDES and IDB signed four projects targeted on MSMEs
totalling US$ 5.8 billion, of which US$ 3.5 billion was financed by IDB and the rest by BNDES.

C. Special measures to correct the ‘digital divide’
among companies
1. Human resources
By all measures, education levels in Brazil increased substantially in the last decade, including
literacy and enrolment indicators at all educational levels. Primary education is now almost
universal (95.7%), and 78.5% of the population of secondary school age are already enrolled,
compared to less than 60% in 1992. Secondary education is usually considered a necessary
condition for IT use. Table 44 below displays major education indicators.
TABLE 44
EDUCATION INDICATORS
Indicator

Percentage of

1992

1999

Adult literacy
Functional illiteracy
Primary education
Secondary education
Adult education
Tertiary education

Individuals over 15 years of age who can read and write
Individuals with less than 4 years’ schooling
Enrolment of children from 7 to 14 years of age
Enrolment from 15 to 17 years of age
Enrolment of individuals between 20 and 24 years of age
Tertiary enrolment in age group

82.8
36.9
86.6
59.7
16.9
-

86,7
29.4
95.7
78.5
25.5
-

Source: Human Development Report for 1998 and 1993, United Nations Development Programme (UNDP), 2000.
“Pesquisa Nacional por Amostra de Domicílios 2001”, Instituto Brasileiro de Geografia e Estatística (IBGE), 2001.
World Development Indicators (WDI) for 1998, World Bank (WB), 2000.

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As far as IT technical workforce is concerned, in absolute terms Brazil has a large number
of software professionals compared to other developing countries, as the following table shows.
TABLE 45
HUMAN RESOURCE INDICATORS
Country

Mexico

Population (millions)
Adult literacy (%)
Mean years of education
Secondary enrolment ratio (%)
RD scientists and technicians
(per 1,000 people)
Number of software professionals

Brazil

Korea

Taiwan

96.5
90
4.7
58

159
83
3.9
45

44.9
98
8.8
101

Malaysia

21
n.a
n.a
n.a

20.1
84
N/A
57

0.3

0.2

2.9

n.a

0.2

321 482

549 840

340 168

140 070

53 389

Source: United Nations Development Programme (UNDP), 1998 and 1993. For Mexico, CONACyT, 1995,
Indicators of Scientific and Technological Activities, Dedrick and Kraemer, 1998. Software Productivity and
Quality Today – The Worldwide Perspective, Jones, 1993, data updated in 1995 in correspondence with authors.

In Brazil, there are 680 undergraduate courses on IT-related subjects. Each year, about 22,000
students obtain a degree in those subjects, while enrolment totals roughly 190,000. In addition, students
from others areas such as applied sciences and mathematics eventually became IT professionals.
TABLE 46
GRADUATES AND ENROLMENT ON UNIVERSITY-LEVEL IT COURSES
(In number of)
Area

Courses

Graduates

Enrolment

Data processing
Computer sciences
Social communications
Information systems
Industrial design
System analysis
Other*

180
159
152
53
40
35
61

7 388
8 367
2 701
836
1 242
582
1 167

43 701
74 567
37 738
13 078
9 811
9 829
9 168

Total

680

22 283

197 892

Source: Ministry of Education, Sinopse Estatística do Ensino Superior, 1998.
a
Areas related to IT.

In 2000 about 3,000 students were undertaking post-graduate courses in computer
sciences, of which 20% were doctoral degrees.
TABLE 47
POST-GRADUATES IN COMPUTER SCIENCES, 2000
(In number of)
Item

MSc

Ph.D.

Total

Number of programmes
Incoming students
Enrolment
Conclusion (1999)
Supervisors

28
877
2 405
461
611

13
124
593
65
297

41
1 001
2 998
526
908

Source: Programa Sociedade da Informação no Brasil (SocInfo), based on data
provided by the Brazilian Computer Society (2000).

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2. Technical aspects
Independent committees working in cooperation with Government, universities and business
oversee development of the technical aspects of Internet diffusion. The National Research
Network (Rede Nacional de Pesquisas (RNP)) is an example of such an institution.
It was established in 1989 by the Ministry of Science and Technology and was responsible for
introducing the Internet in Brazil. It provides high-speed backbones to universities, hospitals and
other social institutions by wholesale purchasing and reselling spare capacity available at private
infrastructure providers. Since private institutions are now well established in Internet services,
RNP is targeting social and scientific goals through the implementation of the Internet II project.
The aim here is to provide an alternative high performance network for technical information and
research activities. Although the project will not directly affect e-commerce, it may indirectly
help improve private networks, since it will divert most university and research centre Internet
traffic from existing networks. It may also contribute to the development of new applications and
help these institutions use e-commerce in their management and procurement activities.
Other policies include the development of affordable computers, since equipment and
software costs are major barriers to Internet diffusion in most segments of Brazilian society.
Universities and computer manufacturing firms have designed several versions of a “popular
computer” with a target price of US$ 300. The design specifications were based on the network
computer concept, using upgradeable minimum hardware, operating in connection to local or
remote servers. For software there are versions using either free operational systems (LINUX 6.0)
or open codes based on GNU, oriented towards the Internet environment. The advantages of free
software are twofold. First it costs under $ 5 compared to $ 50 for Windows. Second, users will
not be exposed to frequent changes in versions and thus not forced to buy new software and
hardware as happens to proprietary software users. Nonetheless, free software has the
disadvantages of poor technical support and low availability of applications.
A network computer must be linked to a server, either through local area networks (in the
case of schools and other multi-user institutions) or through a remote ISP. Since there are many
towns in Brazil without an Internet provider, the Government is launching the “0i00 service”,
which enables Internet users to pay local call charges when dialling long distance to any ISP
within the country.

3. Financial aspects
Software firms usually face difficulties in obtaining financial resources from private banks, since
they are unable to provide physical collateral. Although no major government action has been
taken so far in this respect, the Softex-BNDES programme provides financial support for software
development and marketing activities as well as acquisition of equipment and training. The
programme has a credit line from BNDES and holds equity in the software firms as collateral.
Another initiative is to develop financial packages to support the sale of computers to
small business and domestic users. Banco do Brasil has a financing programme including
hardware, software and an Internet service provider. The programme also aims at creating
economies of scale in hardware manufacturing in order to make the system competitive in the
export market.

4. Infocenters
In developing countries, IT dissemination is a more selective process than in advanced countries
where business practices across industry branches, regions and firm sizes are more homogeneous.
In a country where labour is a relatively less expensive input than capital, firms are more

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reluctant to invest in automation. The investment required to introduce IT is a major inhibitor of
diffusion since equipment is relatively unaffordable and employees are less educated than in
developed countries. As expected, this barrier affects small firms more than large ones, and those
operating in less competitive branches of the local economy.
The universalization of Internet access in Brazil cannot rely on individual PCs alone.
While potential demand for computers exists even in micro and informal businesses, investment
costs are a barrier to wide diffusion. There are already government programmes13 aimed at filling
this demand by introducing Internet in small business, such as newsstands, post offices, lottery
and convenience stores. These would play the role of intermediary between consumers and the
net. According to Sebrae, more than 100,000 micro and small retailing shops are already connected.
The federal government has one major programme of digital inclusion for SMEs:
Information and Business Infocentres. Its main goals are to train entrepreneurs and workers in the
use of information technologies, promoting the emergence of new enterprises, boosting exports,
larger joint ventures between entities and new partnerships, improvement of the quality of
products and services, and strengthening of projects for productive arrangements.
WKH (QWHUSULVH RPSXWHUL]DWLRQ
There is only one specialized federal credit OLQH
3URJUDPPH RSHUDWHG E\ %DQFR GR %UDVLO  EXW WKLV VLWXDWLRQ PD\ FKDQJH VLQFH WKH *RYHUQPHQW
is currently developing the Brazilian Digital Inclusion Programme (PBID) to be launched in
2005. Each of these initiatives is described below.
a)

Infocentres of information and business

The specialized contents of SME interests that establish relations among all infocentres
Net, are available at the portal http://www.telecentros.desenvolvimento.gov.br, and are depicted
in a new methodology entitled Hyperbolic Navigation. This is presented graphically in the form
of tree of knowledge, whose centre represents the information desired, from which radial axes
emerge in the direction of nodes, where in turn, new axes emerge, and so on. The site also hosts
virtual communities and contains an informative area with news and events related to SMEs.
infocentres also offer attendance-based and distance training and business opportunities.
By July 2004, 400 infocentres were operating and 10 cooperation agreements had been
signed to implement further 163 units. The project’s goal is to implement 1,000 infocentres by
July 2005 and at least one in each of Brazil’s 5,567 municipalities by 2007. For this purpose, the
Government is establishing partnerships with public banks and private enterprises. TIM, for
example, is responsible for a net of 41 infocentres.
b)

Enterprise computerization programme

There is one major credit line for SMEs wishing to buy computers: the Enterprise
Computerization Programme, operated by Banco do Brasil. The programme aims to finance the
acquisition of computers and peripherals by micro-enterprises and small businesses, in order to
modernize management and facilitate electronic communication between the customer and Banco
do Brasil.
The supplier will provide pre-sales services including advice to customers about the
choice of equipment best suited to its needs. Five different kits (basic or advanced) are available,
for delivery within 20 working days, anywhere in the country:

13

For example, the Information Society Programme.

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CEPAL – Project document

(i)
(ii)
(iii)
(iv)
(v)

Information and Communication Technology (ICT) for development of small…..: Brazil

Microcomputer;
Microcomputer and laser printer;
Microcomputer and ink jet printer;
Microcomputer, laser printer and Emission of Fiscal Coupons (ECF);
Microcomputer, ink jet printer and Emission of Fiscal Coupons (ECF).

The credit can rise to R$ 50,000 (US$ 18,000), financing 100% of the kits. The stated
period is up to 24 months and the applicable interest rate is the long-term rate plus 5.33% per year.
c)

Brazilian digital inclusion programme

A government-working group is currently drafting the Brazilian Digital Inclusion
Programme (PBID) to be launched in 2005. This will have three main axes: “Casa Brasil”, longdistance education and connected PC.
“Casa Brasil” will be the new name for the infocentres and will include not only those
related to Information and Business, but also infocentres located in schools and in rural zones,
and in frontier and remote regions. All of them will use open software, in order to guarantee the
economic sustainability of the project. Open source software is also being used in Ministries.
Distance education will be mainly related to formal education, although the Information
and Business Infocentres offer some business-related training. The focus is to offer primary
education where there are shortages of teaching staff and teacher capacity.
The connected PC is probably the goal that will have greatest impact among SMEs, since
its target is to offer a cheaper personal computer with Internet access to micro-enterprises and
low-income population groups. The aim is to produce up to 40 million of these computers and
sell them for between US$ 340 and US$ 400. The public banks (Banco do Brazil and Caixa
Econômica Federal), would finance the sale in up to 24 instalments, with a monthly cost of US$
15. In consortium, the number of instalments can rise to 50 with monthly payments of just US$ 7.
Telephone companies and cable TV operators would provide the Internet infrastructure. The
federal government will give tax benefits, also being negotiated with local governments. In 2001,
the Federal University of Minas Gerais (UFMG) started a programme to develop a computer to
be sold for US$ 250, but the project was halted. Now the idea is returning, mainly because of the
success of the Korean digital inclusion programme.

5. Other
a)

Sebrae programmes
•

Programme of technological support for small enterprises (PATME)

The first stage is to convince entrepreneurs that investment in modernization systems can
yield returns. For this, Sebrae has reached agreements to provide advisory services through
technological centres, university, research institutions, technical schools and technological
development foundations. The incentives include improvements to products, equipment, methods
and production lines. PATME also offers financial support for computerization and can finance
up to 70% of project costs. Another computerization initiative is SebraeTec, launched in 2002.
The intention here is to invest in programmes that develop technological capacity among small
businesses. Apart from projects to provide advice on computerization, SebraeTec supports the
establishment of new software developers, in order to increase the supply of programmes and

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facilitate access for small firms. Parallel to SebraeTec, Sebrae/RJ develops other activities to
extend computerization in the state. One of the projects, Software Rio, offers support for the
establishment of a new firm that can sell cheaper programs to small enterprises. Ever since its
launch, one of the objectives of Software Rio has been to request state government to grant tax
incentives to developers wishing to start operations in the region. The expectation is to reduce the
state’s dependence on imported software and, consequently, to reduce costs.
b)

Institutional issues

Legal and statutory factors such as regulation of transactions, privacy protection, security,
intellectual capital protection, taxes on e-commerce transactions, and government policies such as
promotion of IT production and use can enable or inhibit IT diffusion.
Brazil has not developed specific legislation but there are several projects in the pipeline
in the National Congress. The rules governing online sales are the same as applied to the “Code
of Customers Defence”. However, there is a project in the legislature (Draft Law 1589/99) to
regulate electronic commerce and authentication of digital signatures. The project has been
approved in the Commission for Science and Technology and is awaiting plenary decision. The
proposed law includes:14
•
•
•

Certification of electronic signatures by a public notary and their annexation to
electronic documents.
Use of a cryptographic system based on a public or asymmetric key. The codified
message will be received using a private key decoded by the corresponding public key.
Foreign certified documents would only be accepted if Brazilian contracts receive the
same treatment overseas.

Cross-country legislation is a necessary condition for e-commerce, especially in freetrade areas like Mercosur. In Argentina, Decree 427/98 is already in force, regulating digital
signatures and a cryptographic system based on an asymmetric key. Its application is restricted to
public administration, however.
Within Brazilian federal government agencies, official document exchange is already
done electronically using a public key Infrastructure. Presidential Decrees 3585 and 3587
establish that official documents for regulatory acts must be transmitted electronically.
In the case of intellectual propriety rights, Brazil joined the WTO Trade Related
Intellectual Propriety Agreement (TRIPS) in 1996. It recognizes software copyright but also
grants patents in specific cases, usually when software is embodied in hardware. Piracy has been
decreasing but it still accounts for a large share of the home software market.
Standardization, such as EDI codes, used to be established by business associations such
as ANFAVEA (automobile manufactures), FEBRABAN (banking association), and drugs
distributors. These sector standards usually follow the EDIFACT international model. Since the
Internet is becoming more secure and available, however, EDI operations are mostly tending to
be phased out as e-business tool.

14

CFF, Veirano  Advogados Asociados; Gazeta Mercantil L. A. (2000, p. 18).

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D. E-government aimed at SMEs and trade promotion
1. Overall strategy/structure of e-government
The e-government policy in Brazil is under the responsibility of the Executive Committee of
Electronic Government, whose aims include: formulate policies, establish guidelines, coordinate
and articulate e-government actions, aimed at providing services and information to citizens.
The Committee was established in the framework of the Government Counsel by Decree
18 of October of 2000. The Ministry of Planning, Budget and Management is its ExecutiveSecretary and guarantees the necessary support to the working of the Committee.
The committee’s brief is to:
(i)
coordinate and articulate the implementation of programmes and projects for
rationalization in the acquisition and use of infrastructure and services, and in
information and communication technology applications within the Federal
Public Administration;
(ii)
establish guidelines for the formulation of an annual information and
communication technologies plan in each Ministry;
(iii)
establish guidelines and strategies for planning the supply of online services in
Federal Public Administration agencies and entities;
(iv)
define quality standards for electronic forms of interaction;
(v)
coordinate the implementation of mechanisms to rationalize expenditures and
cost appropriation in the application of resources in information and
communication technologies, within the Federal Public Administration;
(vi)
establish service levels for the supply of services and information for electronic
media;
(vii)
establish guidelines and orientations, and publish, for the purpose of bid proposal
and revision of the draft law of the Plurianual Plan, Budgetary Lines of direction
and the Annual Budget, on the appropriation bills of the agencies and the entities
of the Federal Public Administration, relating to the allocation of investment
resources and expenditure in the ICT area.
In 2003 following the election of a new Government, the Committee was divided into
eight technical committees. It pursues the action guidelines and expected results in each case:
a)

Digital inclusion committee guidelines
·
·
·
·
·
·
·
·

Digital Inclusion as a right of citizenship
Plurality of models under the same lines of direction
Public segmentation
Infrastructure
Commitment with local development
Integration
Evaluation
Use of open source software

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Expected results - 2003/2006
·
·
·
·
b)

National Digital Inclusion Policy defined
Create 6,000 community infocentres (one in each Brazilian municipality)
Double the number of citizens with Internet access, to have 30% of the
population carrying out transactions online with the federal government
National System for the evaluation of digital inclusion implemented

Online services and website management committee guidelines
·
·
·
·
·

Lines of Direction to guarantee a citizen focus
Lines of direction for integration
Lines of direction for quality assurance and reliability of content
Line of direction for security
Line of direction for management of websites and online services

Expected results – 2003/2006
·
·
·
·
c)

Integration of websites and online services with standards set for federal
government websites and the government portal in operation
Security and privacy policy implemented
Sharing of resources of the federal and state governments
Government-wide knowledge of the preferences, demands, satisfaction and
criticisms of the online services

Open software implementation committee guidelines
·
·
·
·
·
·
·
·
·
·
·
·
·
·
·
·
·
·

Prioritize solutions, programmes and services based on open source software
Counter growth of the legacy based on proprietary technology
Achieve gradual migration from proprietary systems
Prioritize the acquisition of hardware compatible with free platforms
Guarantee the free distribution of systems in free software in a collaborative and
voluntary form
Strengthen and share existing free software actions in and outside the government
Generate incentives for the national market to adopt ICT business models based
on open source software
Generate conditions for cultural organizational change towards the adoption of
open source software
Promote capacity-building/training of public employees in the use of FLOSS
Design a FLOSS national policy
Prioritize web platforms in the development of user systems and interfaces
Adopt open standards in the development of ICT and multi-platform services and
applications
Disseminate the use of FLOSS
Enlarge the network of services supplied to citizens with FLOSS
Ensure citizen access to public services without forcing them to use a specific platform
Use FLOSS as a basis for digital inclusion programmes
Ensure the full auditing and security of systems, respecting existing legislation on
the topics
Establish interoperability standards with legacy systems based on open standards

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Expected results - 2003/2006
·
·
·
·
d)

Committee for systems integration
·
·
·

e)

·

·

Promote knowledge management practices in public administration
Monitor best practices in knowledge management in public administration and
disseminate them through e-government.
Search, and disseminate knowledge management application tools to the
Executive Committee on Electronic Government.

Government to government committee
·
·
·
·
·

h)

Define a networking policy for government agencies.
Promote optimization of network resources.
Develop updated information systems based on the existing situation and
network infrastructure needs.
Ensure the effectiveness of the committees’ activities.

Committee on knowledge management and strategic information
·
·

g)

Establishing policies, standards, rules and methods for integration systems in the
federal government.
Foster a collaborative environment for system integration.
Prioritize the client/server architecture in web government corporate systems

Network infrastructure committee
·
·
·

f)

Development of civil servant capabilities to use free software
Development of interoperability standards and free software in the federal
government
Dissemination of free software in schools and universities
Development of a national free software policy, including support for the local
supply software industry.

Prioritize actions involving social information systems, law and order and
Ministry of Justice services.
Facilitate access to public data and transparency among different levels of government.
Avoid duplication of effort
Promote the sharing of technological, human and financial resources
Develop strategies to help states and municipalities provide services online.

Legacy systems and license committee
·
·

Legacy systems must operate on different platforms, use open sources and enable
interoperability.
Federal government must develop better negotiating skills for obtaining software
licenses, through information and unified negotiations.

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2. Some e-government applications
Some of the applications of e-government policy are very important to SMEs, although none is
actually targeted on that sector. These include the e-procurement portal (Comprasnet), the
SISCOMEX, and the Brazilian Payment System (SPB).
a)

E-procurement

The federal government launched its procurement portal in 1997. The Comprasnet
(http://www.comprasnet.gov.br) portal is where the Government publicizes its business
opportunities. The site enables firms to obtain online all the certificates needed to do business
with Government. It also sends an e-mail to firms alerting them of business opportunities in their area.
Since 2001, the Government has used the portal to make online transactions. These are
important initiatives to improve SME participation in government procurement, because it greatly
reduces the transaction costs of doing business with the public sector. As a result, the number of
SMEs registered in the portal has increased threefold from 33 million in 1997 to 102 million in 2003.
b)

Integrated foreign commerce system (SISCOMEX)

The federal government has a system that integrates the activities of registering, accompanying
and controlling foreign trade procedures, by means of a single computerized flow of information
known as SISCOMEX. This system provides information to many other systems, of which the
most important is the Foreign Trade Information Analysis (ALICE), and plays an important role in
keeping trade facilitation websites up to date, such as the Exporter’s Portal and BrazilTradeNet.
ALICE, is an Internet-based system for foreign trade analysis, under the Foreign Trade
Division of MDIC. ALICE was developed with the aim of modernizing modes of access and the
systematic diffusion of statistical data on Brazilian trade flows. It is update monthly, at the time
of the release of the balance of trade, and is based on data in the SISCOMEX, which manages
Brazil’s foreign trade. Access to ALICE-Web is free (http://aliceweb.desenvolvimento.gov.br/).
c)

E-payment

The Brazilian Payment System (SPB) is one of the most outstanding public-private
partnerships in banking automation in Brazil. Since April 2002, all transactions involving more
than R$ 5,000 have been settled on the same day (previously the operation took at least one day)
and much more securely. The entire banking system is connected to the Central Bank and five
other clearinghouses that began operations in 2002, online with the SPB deployment schedule.
This means that the Central Bank (BACEN) can access detailed online monitoring of banking
transactions, manage the liquidity of the financial system more precisely, and therefore minimize
systemic risk (Botelho, 2004).
“The Brazilian Payment System was implemented on April 2002, respecting the
recommendations of international multilateral financial institutions.15 The system allows
interbank transfers to be accomplished in real time, unconditionally and irrevocably.
In the new system, the completion of transactions has been made conditional on the
presence of a sufficient bank balance to cover the operation. Thus, the new Electronic
Payment System permits real-time transfer of funds from one account to another, in the
same or another financial institution, and settlement of operations with federal bonds,
15

Brazil thus fulfilled the requirements of Model 1, described by the Bank for International Settlements.

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carried out through the SELIC system. These efforts contributed also to the
modernization of the economy, with important efficiency gains.” (Mora, 2003).

E. Institutional issues
1. Standardization and public key infrastructures
The National Institute of Information Technology (ITI), an autonomous federal body attached to
the Civil House of the Presidency of the Republic, is the Authority Certifier Root (AC Root) of
the Brazilian Public Keys Infrastructure (ICP-Brazil). As such it is the first authority in the
certification chain, executor of the certification policies and norms of operational techniques and
approved by the Managing Committee of ICP-Brazil. It has the power to emit, to forward, to
distribute, to revoke and to manage the certificates of the Certifier Authorities (AC) immediately
below it; to manage the list of certificates emitted, revoked and expired; to execute activities of
AC monitoring and auditing, Register Authorities (AIR) and the qualified rendering of services in
ICP-Brazil.
It is also within the purview of the National Institute of Information Technology (ITI) to
stimulate and coordinate scientific research and technological development projects aimed at
expanding digital citizenship. In this area, the main line of ITI action concerns the popularization
of digital certification and digital inclusion; acting on issues such as cryptograph systems, open
software, hardware compatible with open and universal standards, digital convergence of medias,
among others.
Digital certification in Brazil was introduced by a law in 2001 (regulated by Provisional
Measure 2200) that structured the Brazilian Public Keys Infrastructure (ICP Brazil), a digital
certification model.
“ICP Brazil consists of a group of techniques, practices and procedures to be
implemented by the Government and private organizations to guarantee the authenticity,
integrity and legal validity of electronic documents. The managing authority is the ICPBrazil Management Committee.
The digital certification model adopted in Brazil was conceived by the federal
government, based on the logic of public keys. One of the keys, known to the public, is
deposited with the Certifying Authority. The other key, the private one known only to the
user, is stored in the Digital Certificate. Only a specific private key is capable of
“opening” the respective counterpart represented by a public key. When doing so, the
final user guarantees digital certification of the operation and, consequently, its legal validity.
The institutional arrangement of the structure is based on the ICP-Brazil Management
Committee and a chain of certifying authorities consisting of the Root Certifying
Authority - AC Root (exercised by ITI), the Certifying Authorities (ACs) and the
Registration Authorities (ARs). ITI generates and manages the pair of cryptographic keys
of the AC Root. The AC Root is assigned to execute certification policies and to approve
technical norms for the ICP-Brazil Management Committee. The AC Root administers
the list of issued, revoked and expired certificates, although it cannot send certificates to
the final user. It verifies the Certifying Authorities’ power to issue digital certificates and
also oversees the Certifying Authorities (ACs) and Registration Authorities (AR). ACs
issue and revoke digital certificates (i.e. the equivalent of cryptographic keys that match
the public key to a certain title-holder) while ARs are responsible for requesting
certificates and for maintaining registration of their operations.” (Mora, 2003).

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2. Intellectual property rights
The National Industrial Property Institute (INPI) is an autonomous federal body, created in 1970,
linked to the Ministry of Development, Industry, and Foreign Trade. Its main purpose is to
implement standards regulating industrial property within the national sphere, considering its
social, economic, legal, and technical functions. Another of its functions is to issue opinions on
the convenience of execution, ratification and denouncement of conventions, treaties, pacts, and
agreements on industrial property.
Created to replace the former National Industrial Property Department, the Institute was
made responsible for the legalization of technology transfer contracts and subsequently for the
registration of computer programs, corporate franchise contracts, registration of industrial design
and geographic indications, in addition to the traditional tasks of granting trademarks and patents.
INPI provides information from among its over 20 million patent documents to
companies, government agencies, through specific programmes. It executes special programmes
to support domestic enterprises, such as the Patents Promotion Programme (PROMOPAT) which
allows one technical group of INPI to act directly in firms, to identify innovations that could have
legal protection; the Automatic Information Supply Programme (PROFIN), in which INPI sends
regular information contained in patents across the entire world related to the areas of
performance of the contracted companies, over the Internet or on paper; the Programme of
Incentives for Commerce of Patented National Technology (PROCOMTEC), aimed at small
companies and isolated investors wishing to sell or license innovations; and the Programme to
Monitor the Technical Evolution of Industry (PROATEC), which aims to subsidize government
policy in priority sectors, through technological analyses.

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V. Regional networks

A. Existing regional networks or websites
There are two major types of network using IT to promote SME business. One is national with no
focus on specific sectors, and the other is locally or regionally cantered on a sector. The networks
hosted by Information and Business Infocentres, described in chapter IV item C, are a major
example of the first, while the vortals for local clusters are an example of the second
Network of Information and Business Infocentres: www.telecentros.desenvolvimento.gov.br

Complementing all the information on the website, such as the Hyperbolic Tree, and
news and events related to SMEs, the site also offers a restricted area for the information trade.16
This area displays all online members and offers the possibility of sending instantaneous e-mails,
and holding virtual meetings and forums. It also has a large number of virtual communities, some
based in a locational aspect, such as the administrative regions, one for each of the five Brazilian
region, others grouped by themes, such as the Thematic Committee in Training and Entrepreneur
Capacity, with work groups on Strategic Planning and Management Capacity, and Thematic
Committees on Foreign Trade and Integration, Investment and Financing, Legal and Bureaucratic
Rationalization and Technology and Innovation.
In July 2004, the network had over 800 records (which can be also firms, associations or
people). There is no information available on site visits.
Vortals for local clusters: http://www.prossiga.br/arranjos/

Vortals are web portals containing online information on some of the Brazilian clusters.
They are available for 14 local arrangements in 11 states and 9 sectors (see table 48) and were
constructed in partnership with Ministry of Science and Technology (MCT), the National
Research Council (CNPq), Studies and Projects Finance (FINEP) and the state’s science and
technology secretariats, in a programme called “Regional Action”.
They are built on the technology platform methodology and are developed and hosted by
Prossiga, a federal programme established in 1995 to promote the creation and use of Internet

16

In fact, the area is not very restricted. Anyone who fills a cadastre can enter.

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information and communication services, focusing primarily on science and technology, and the
country’s important socioeconomic activity sectors.
TABLE 48
VORTALS OF BRAZILIAN CLUSTERS
Sector

State

Website

Carnaúba

Piauí

http://www.prossiga.br/arranjos/pi-carnauba.html

Floricultura

Ceará

http://www.prossiga.br/arranjos/ce-floricultura.html

Gesso

Pernambuco

http://www.prossiga.br/arranjos/pe-gesso.html

Indústria farmacêutica

Goiás

http://www.prossiga.br/arranjos/go-farmaco.html

Malacocultura

- Santa Catarina
- Amapá
- Espírito Santo

http://www.prossiga.br/arranjos/go-malaco.html
http://www.prossiga.br/arranjos/vortais/moveis_ap.html
http://www.prossiga.br/arranjos/vortais/moveis_es.html

Móveis e artefatos de
madeira

- Pará
- Santa Catarina

http://www.prossiga.br/arranjos/vortais/moveis_pa.html
http://www.prossiga.br/arranjos/vortais/moveis_sc.html

Piscicultura

- Rondônia
- Bahia

http://www.prossiga.br/arranjos/ro-piscicultura.html
http://www.prossiga.br/arranjos/vortais/rochas_ba.html

Rochas ornamentais

- Espírito Santo
- Rio de Janeiro

http://www.prossiga.br/arranjos/vortais/rochas_es.html
http://www.prossiga.br/arranjos/vortais/rochas_rj.html

Sisal

Bahia

http://www.prossiga.br/arranjos/ba-sisal.html

Source: http://www.prossiga.br/arranjos/.

In general, the work follows the following stages:
1.
Survey and analysis of local productive arrangements with current and/or
potential importance for socioeconomic development and the reduction of regional inequalities;
2.
Selection of arrangements to be benefited, with support from regional and/or
state management committees;
3.
Analysis of the main characteristics of the selected arrangements, considering the
intra- and inter-sectoral relations that define them;
4.
Identification of the main technology and training bottlenecks, skill development
and specialization of labour for the productive sector;
5.
Definition of actions to be executed in firms, research and education institutions
and firms providing technical and technological services;
6.

Definition of cooperative projects to carry out actions;

7.
Presentation of projects to promotion agencies through the executive secretariat
installed in the Assessorship of Regionalized RD Actions of the Ministry of Science and
Technology (MCT).
The project approval decision is directly related to the priorities established in the
platform negotiation process. Analysis of the merit of a project considers not only excellence but
also its relevance, especially its impact on local sustainable development.
The vortal service put the first sites online in 2001 and aims to improve SME competitive
capacity by offering a set of information, communication devices and varied support to market
services through the web. It uses the Internet to widely disseminate the information on the sector
already existing on the web, fully described and classified.

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Information on the service is contained in the following structure (model of vortal
presentation http://www.prossiga.br/arranjos/):
a)

Organizations and professionals:

Information of a strictly local type, including organizations directly linked to the
exploration and commercialization of the cluster product. They are compiled under the categories:
- Industry and Commerce.
The other categories are locally broader, exceeding the borders of the states:
- Importers and exporters;
- Suppliers;
- Transporters;
- Artisans and designers;
- Counsellorships;
- Unions;
- Associations;
- Cooperatives;
- Financial institutions (national/regional and local);
- Entrepreneurial management, that brings software of interest to the activities of the sector.
b)

Governmental information:

-

Legislation (of federal, state or municipal scope);
Patents and Trademarks (including number of the order, date of the deposit,
summary, name of the petitioners and inventors, among other information).

The information encompasses national and local scopes in the categories:
- Public Institutions (promotion, regulation, national/local), and
- Governmental Policies and Plans.
c)

Events:

d)

Congress, Seminars, Fairs (publicize names of expositors, date and place held, photos
of products and other information);
Courses (provides information on courses offered by universities or companies,
attendance-based or distance, in addition to timetables and lists of courses);
Missions and road-shows.

Publications:

Scientific or technical information, in full or summary form, under the following categories:
- Newspaper and magazine articles and other texts;
- Statistics, studies and diagnosis;
- Technical Reports and Research;
- Thesis, dissertations and other scientific texts;
- Magazines, periodicals and bulletins;
- Books, manuals and handbooks;
- Audiovisual resources (includes photographs, videos etc, and can support education
activities and others linked to the cluster sector).
e)

Research:

-

Current projects to support research and the formation of human resources in federal
and state RD agencies;

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f)

Information and Communication Technology (ICT) for development of small…..: Brazil

Public and private organizations that carry out research or offer courses relating to
the activity of the sector are also included;
Researchers (lists of specialists).

Market:

Quotations (price quotes for the cluster’s commodity products, when applicable).
g)

E-commerce:

Pages of organizations that engage in business through the Internet.
h)

Information services on the web:

Portals and vortals (homepage of Internet information services on the cluster sector).
For the organizations and professionals of the sector that do not have their own website,
Prossiga offers the service of institutional and personal homepage creation. As result, a large set
of homepages was created, helping to give greater visibility to the organizations of the sector and
the professionals who operate in it.
Largely through the support of MCT and state secretariats, many firms have their own
website, even though it general only contains static information and is available only in
Portuguese. The cluster chain usually has at least one e-commerce site, which shows that IT is
being used to promote business.
The service is relatively highly used. In May 2003,17 accumulated visits over the last 12
months amounted to 23,000, representing an increase of 10% from the last cumulative figure and
20% compared to those for March. The initial vortal page received 10 visits per day (4,500 visits
in 12 months); and, on average, each vortal receives 3.5 visits per day.
TABLE 49
ACCUMULATED VISITS TO VORTALS IN 12 MONTHS
March 2003
Initial page
Carnaúba
Flower growing
Plaster
Pharmaceutical industry
Malacoculture
Furniture and wood artefacts
Furniture and wood artefacts
Furniture and wood artefacts
Furniture and wood artefacts
Fish Farming
Ornamental stones
Ornamental stones
Ornamental stones
Sisal
Total

May 2003

Daily average

3 684
(PI)
(CE)
(PE)
(GO)
(SC)
(AP)
(ES)
(PA)
(SC)
(RO)
(BA)
(ES)
(RJ)
(BA)

4 044

4 459

9.52

2 029
2 664
2 543
1 361
722
403
677
346
759
805
474
742
1 110
884

2 125
3 110
2 654
1 484
786
509
712
401
828
856
515
774
1 199
979

2 305
3 450
2 789
1 647
844
697
748
482
894
950
592
812
1 283
1 070

4.61
12.88
4.26
3.81
1.21
2.78
1.08
1.74
1.46
1.66
1.1
1.14
2.39
2.29

19 203

20 976

23 022

3.46

Source: http://www5.prossiga.br/estatistica/tabelas.html.

17

April 2003

Latest data available.

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The number of entities (firms, professionals, associations and others) registered grew by 10%
from 3,231 to 3,540 between March and May. On average, each vortal has 250 entities registered.
TABLE 50
ONLINE REGISTERED ACCUMULATED
March 2003
Carnaúba
Flower growing
Plaster
Pharmaceutical industry
Malacoculture
Furniture and wood artefacts
Furniture and wood artefacts
Furniture and wood artefacts
Furniture and wood artefacts
Fish farming
Ornamental stones
Ornamental stones
Ornamental stones
Sisal

(PI)
(CE)
(PE)
(GO)
(SC)
(AP)
(ES)
(PA)
(SC)
RO)
(BA)
(ES)
(RJ)
(BA)

Total

April 2003

May 2003

Growth Rate

52
349
281
499
85
230
163
239
178
163
225
358
325
84

52
364
297
580
101
233
182
240
180
165
239
358
327
85

52
364
296
660
102
244
186
269
178
164
240
365
333
87

0.00
4.30
5.34
32.26
20.00
6.09
14.11
12.55
0.00
0.61
6.67
1.96
2.46
3.57

3 231

3 403

3 540

9.56

Source: http://www5.prossiga.br/estatistica.

B. New networks or websites in the planning stage
In June 2004, the federal government launched a new programme to promote SME exports,
which consists of financing the export of goods produced by SMEs, in the pre-shipment phase,
through credit institutions. The credit can be as much as 100% of the FOB value and will be
related to the long-term rate, plus 1% a year of BNDES remuneration (the programme agent) and
remuneration of the credit institution (no more than 4%).
These exporters will operate as anchor enterprises, facilitating indirect export; they can
be trading companies, commercial exporters or firms in the supply chain that acquire the
production of a significant set of SMEs looking for exportation.
If the programme is successful, the federal government expects to have a good number of
anchor enterprises organizing SME exports, through trade nets spread throughout the country.
The fact that the federal government is going to launch a major digital inclusion
programme made it possible for networks such as the Information and Business Infocentres to
grow fast in a few years.
The vortals have been dealing with problems since 2003, when the new government took
office.18 Many expansions plans were interrupted and no new vortal was launched. They are
unlikely to expand in the near future.

18

The tables with visits to the website, for example, ended in May 2003. The monthly electronic
informative with analysis of the site views only extends to October 2002; and the quarterly bulletin of
statistics ended in December 2001.

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The São Paulo State Federation of Commercial Associations (Facesp) launched the
National Network of Business Portals (RNPN) in 2003, which now has 6,000 members. The rapid
growth of RNPN is based on its philosophy of simplicity in connection to the portal, together
with low cost and a safe environment. The portal offers small firms an electronic catalogue,
electronic exchange of product and service information, and either targeted or generic quoting.

C. Possibility of inter-regional links
Mercosur19 is a federal government priority, but online cooperation to promote SMEs is still far
from a reality. The official site of the agreement displays only static information, mainly on
documents and agreements. Apart from the documents, there is no database on the site, and
entrepreneurs will only find interesting subjects in the documents that are launched.
Mercosur has a civil society group on cooperativism, but this is not yet providing any
form of online service that can help SMEs. The electronic commerce group also has not
implemented any suggestion.
LAIA20 has a much more developed website than Mercosur, but its information is also
mainly static. There is also the Entrepreneurial Portal where firms can display information on
their services and products and a complete database on commercial trade, tariff measures and
preferences among country members (SICOEX) is available.
The Entrepreneurial Portal is organized in four main areas: Regulations, Directories,
Preferences and Entrepreneurial Meetings. It aims to inform trade operators in member countries
of the access conditions to the regional market, and provide useful information for the
accomplishment of commercial transactions. The Regulation area contains import and duty free
zone regulation in each member country, together with basic manuals on import operations. The
directories list business associations that are cadastred in the gateway, divided into enterprises
and SMEs, and a list of importers and exporters for each country. The cadastre only contains
institutional information. The Preferences area shows the tariffs preferences by the country
granting it and the country receiving it. Entrepreneurial Meetings contains a list of fairs and
missions per country.
The Foreign Trade Information System (SICOEX) is composed of interconnected online
databases and consists of data, kept up-to-date since 1995, on member countries’ trade, tariff
measures and preferences for any product traded within the framework of the Montevideo Treaty
of 1980,21 together with information on laws regulating foreign trade.
Since the portal contains all these facilities, in the near future it could host developments
such as online settlement gateways that could contribute to the use of IT in SME business
promotion.

19
20

21

Mercosur members are Brazil, Argentina, Uruguay and Paraguay.
LAIA members are Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador, Mexico, Paraguay,
Peru, Uruguay and Venezuela.
The Montevideo Treaty of 1980 created LAIA.

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VI. Conclusion and recommendation

A. Lessons learned
The two contrasting experiences analyzed above first of all show us the importance of paying
attention to the nature of the industry and its structure. In the case of aeronautics parts, the small
number of firms, their highly specialized production capabilities and the critical role played by
the leading firm, Embraer, in the vertical cluster require closer cooperation between firms in order
to negotiate better and longer-term contracts with the leading firm, and to develop foreign niche
markets which are often part of national industry supply chains. Here, a marketing strategy aimed
at building trust with potential customers is needed, given the nature and internationalized
structure of the aeronautics end market. This is a long-term process. Furthermore, firms have to
be able to integrate their complementary capabilities and make up for those that are lacking, in
order to offer foreign customers a more comprehensive solution platform. Finally, in this protocluster, non arms-length forward linkages to first-tier suppliers might be more important than
backward linkages to even smaller firms, thereby complementing the current direct strictly
business linkages to the leading firm. These first-tier suppliers, pressured by end buyers, will be
always pursuing cost reductions in services provision and new parts development.
In contrast, in the ornamental stones sector, the cluster is more horizontal and without
concentration. The relatively large number of firms and the length of the supply chain with
several levels of input and equipment suppliers make the formation of stronger and denser
networks harder to achieve. The cluster is very active in exports, particularly when compared to
other industry-like clusters and other regions. Its success is due in part to previous export
promotion policies. The challenge ahead is to sustain momentum and to increase the value-added
of exports. The Prossiga website creation programme for local productive arrangements and
clusters has been discontinued and it appears no replacement is in sight. The new administration
is emphasizing a wholesale policy of telecentre expansion, which, while necessary, may represent
a setback in relation to the previous orientation of IT diffusion in terms of targeted local
empowerment.

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B. Assessment of experiences in export promotion
and IT policies for SMEs
It seems that whereas SME export promotion policies in Brazil are entering a second-generation,
those for IT are still in their infancy. We are still only beginning to gain an understanding of
individual SME IT needs and uses. Nonetheless, we have not yet fathomed the possibilities for IT
use in SME networks. Beyond the basic goal of achieving widespread dissemination, there has
been little policy development in this area. In regard to broad dissemination, the new government
initiative to develop cheap computers could be part of the answer, but that remains to be seen.
Moreover, SMEs will still be faced with the problem of obtaining adequate software and, most
importantly, qualified IT staff aware of the organizational and strategic challenges facing SMEs.
On the other hand, export promotion policies are becoming more sophisticated and tailor
made. The recent emergence of local/regional networks of exporting firms such as the HTA
consortium, and the support given to them by APEX, as well as easier use of export portals such
as that of Banco do Brasil and export facilities such as those provided by Correios, are a few
signs of gradual and important changes in policy. The scope of APEX support for these networks
needs to be expanded to include development of IT tools to promote meaningful collaboration
and to allow for interactive export activities. This would increase the supply of complete
platforms in the case of high-tech sectors, thus capturing greater value-added and providing
increased sustainability. Export sustainability is a critical problem that continues to plague SME
exports. This has been correctly identified but still remains to be diagnosed, above and beyond
the lure of the domestic market once the local economy recovers. Guidance and sustainability by
anchor firms appears to be a promising avenue for both SME export capacity-building and
sustainability. Care is needed, however, to prevent a strong dependency relationship from
developing. In this regard, experimentation could be pursued to involve first-tier suppliers in this
support and learning network for export-oriented SMEs.
The full potential of Internet-based instruments has not yet been fully grasped by
promotion agencies. Full interactivity and high-quality graphical interfaces are critical for
breaking into an overcrowded export market. Marketing is often weak or export capability
lacking in exporting SMEs, either because of the type of specialized training needed, in the case
of high-tech firms, or because of a lack of specialized training in the case of traditional industry
clusters. Internet tools can be employed effectively in building the capacities that are lacking.

C. Assessment of the present situation of regional networks
Regional networks of SMEs in Latin America are still in an embryonic stage. The conflictive
state of affairs existing between the two leading Mercosur partners, Brazil and Argentina, coupled
with Chile’s autonomous strategy, does not bode well for the next few years in the absence of a
strong policy. Nonetheless, the design of such a policy will require a better understanding of
existing relationships (if any), and a mapping of potential relationships, based on complementary
products and services, contrasting best practices in export activities and willingness to collaborate
across borders in the search for a higher value-added business proposal.

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Websites
Latin American Integration Association (ALADI)
Brazilian Export Promotion Agency (APEX)
Banco do Brasil
National Bank for Economic and Social Development (BNDES)
Portal de comércio exterior (BrazilTradeNet) do MRE
Portal de compras do Governo Federal (COMPRASNET)
do MPOG
Correios (CorreiosNet) do Ministério das Comunicaçoes
Centre for Research on Information Technology and
Organizations (CRITO)
Empresa Brasileira de Aeronáutica S.A. (EMBRAER)
Brazilian Exporters, Ministério do Desenvolvimento,
Indústria e Comércio Exterior
Feira Internacional Mármore e Granito, Espírito Santo
Brazilian Government site
Brazilian Institute of Geography and Statistics (IBGE)
Euvaldo Lodi Institute (IEL)
National Institute of Metrology, Standardization and
Industrial Quality (INMETRO)
National Institute of Industrial Property (INPI)
Marble Connection World
Ministry of Development, Industry and Foreign Trade (MDIC)
Mercosur Brazil
Ministry of Labour and Employment (MTE)
Portal Caminho das Pedras - o Rumo Certo dos Seus Negócios
Portal do Exportador do Ministério do Desenvolvimento,
Indústria e Comércio Exterior
Prossiga
Brazilian Microenterprise and Small Enterprise Support
Service (Sebrae)
Union of the Ornamental Marble and Granite, Whitewash
and Calcareous Stone Extracting and Improvement
Industries of Espírito Santo (Sindirochas)
Integrated Foreign Trade System (SISCOMEX)
Telecentro de Informação e Negocios do Ministério do
Desenvolvimento, Indústria e Comércio Exterior

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:
:
:
:
:
:

www.aladi.org.br
www.apexbrasil.com.br
www.bb.com.br
www.bndes.gov.br
www.braziltradenet.gov.br/
www.comprasnet.gov.br

: www.correios.com.br
: www.crito.uci.edu
: www.embraer.com.br
: www.exportadoresbrasileiros.gov.br/
: www.feiradomarmore.com.br
: www.governoeletronico.e.gov.br/
governoeletronico/index.html
: www.ibge.gov.br
: www.iel-ideies.com.br
: www.inmetro.gov.br
:
:
:
:
:
:
:

www.inpi.gov.br
www.marble.com.br/
www.mdic.gov.br
www.mercosul.gov.br
www.mte.gov.br
www.pcpedras.com.br/
www.portaldoexportador.gov.br/

: www.prossiga.br/arranjos
: www.sebrae.com.br
: www.sindirochas.com.br

: www.receita.fazenda.gov.br/aduana/sisc
omex/siscomex.htm
: www.telecentros.desenvolvimento.gov.br


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