Courtesy Reuters

Why Foxconn's iPad Deal is Wrong for Brazil

Brasilia's Unhealthy Obsession With High-End Technology

On October 13, after months of erratic negotiations, Brasilia finally reached an agreement with Foxconn, the largest global manufacturer of electronic components, to build iPads in Brazil. Production is now set to begin in December, backed by a $12 billion investment drawn in part from Brazil’s national development bank, known as BNDES. The country’s business class celebrated the deal as a turning point for Brazil’s technology sector, which has long been marred by excessive protectionism and a deficit of engineers. Unfortunately, their optimism is misguided: Even if production goes off without a hitch (a big if), the iPad will not put Brazil on a path to becoming an international technology giant. In fact, rather than competing in oversaturated markets aimed at high-income consumers, Brazil would benefit far more by leading the developing world in designing affordable technology for low-income markets. With the iPad, Brazil is putting all of its chips in the wrong device.

The technology sector in Brazil has a rocky history, which explains why the iPad contract is so attractive to some. Brazil only began to industrialize its economy in the 1940s, so it missed the semiconductor wave of the 1970s and 1980s, which was a boon for Asian economies. Until just recently, Brazil had to import every single microchip it used. Decades of restrictive policies hampered innovation. The pain of the protectionist 1984 “Informatics Law,” which for eight years prohibited foreign investment and imports in the computer and software industries, is still being felt today.

Although Brazil has moved away from its protectionist tendencies of the past, challenges to technology development, and to the Foxconn deal in particular, are still considerable. When Brazilian President Dilma Rousseff spoke about the agreement in May, she said it would create 100,000 jobs, 20 percent of which would be for engineers. But Brazil might not even have 20,000 engineers available for hire. A recent government study reported that approximately 70 percent of the roughly 750,000 Brazilians who studied to be engineers work in professions unrelated to their

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