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Abstract

In Brazil, high inflation rates and public policies for local information technology (IT) development encouraged the early adoption of IT, including electronic data interchange (EDI), especially in the banking industry. Starting in the early 1970s, Brazil developed capabilities both in the production and use of information technologies. Mexico and Brazil are the only Latin American countries with substantial IT hardware production. Since inflation control became the highest priority in economic policy in the 1990s, the Brazilian economy has grown at a relatively slow pace compared to historical growth rates. Brazil ranks third in the Americas in GDP value. However, in per capita terms, it falls behind the top five wealthiest countries in Latin America. Education levels increased substantially in the last decade. Primary education is almost universal (95.7%). 78.5% of the population in the secondary education age group is enrolled, compared to less than 60% in 1992. In 2000, investments in telecommunications as a percentage of the GDP were the highest in Latin America. In the last four years, fixed line teledensity doubled while cellular subscribers quintupled. In per capita terms, Brazil is now at the Latin American average, both in fixed lines and cellular phones. In 2000, teledensity was about 23 fixed lines per 100 people, 15% of whom were connected to the Internet. The development of the Internet in Brazil was somewhat similar to the NSF Net program in the United States. The National Research Network (RNP) began to operate a national backbone in 1991. In 1996, the backbone became available for commercial purposes. The government is active in promoting e-commerce diffusion, especially through the e-government initiative. This initiative includes on-line purchasing, government information, tax collection, and other applications. However, government programs lack coordination and resources. The use of the Internet as a business tool is most advanced in information- related sectors such as finance, communications, information services, and other services that can easily be digitized. The banking sector leads e-commerce diffusion, followed by government and retailing. Consumers in countries such as Brazil are increasingly demanding products from Web sites located in their own countries. To succeed in the Brazilian e-commerce market, multinational Internet companies need to invest in local content and distribution networks. Although the diffusion of the Internet presents many opportunities for social development, notably in the fields of education, health, and information, the future growth of e-commerce in Brazil may be limited by social and economic factors such as income level, income distribution, and education.

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