*Per Rodolfo Fücher
Industrialization in Brazil started late, around 200 years ago, but managed to occupy prominent positions worldwide. However, it has recently been losing ground, as pointed out by the Vice President and Minister of Development, Industry and Commerce, Dr. Geraldo Alckmin, when saying that “During a good part of the 20th century and until the 1980s, when its share was around 20% of GDP.
What has been seen in recent years has been its shrinkage, reaching 11.3% of GDP in 2021", and that "Reindustrialization is essential for the resumption of sustainable development", highlighting the urgency of drawing up a modern industrial development policy aligned with the green economy.
The intensive use of information technology, the central pillar of digital transformation, has become vital for the competitiveness of any nation, for improving the quality of life of its population and, above all, for the sustainable growth of its economy, attracting investments and ensuring a competitive and thriving industry.
A good example of the benefit of the intense use of information technology is the result of the study “The Impact Of AI On The World Economy” prepared by Mckinsey, which demonstrates that leading companies in the use of AI (Artificial Intelligence) should have a competitive gain of around 25% referring to market opportunities in the same period. On the other hand, companies that are not yet investing in AI could significantly lose competitiveness and, consequently, the market. The study also points out that the same competitiveness gap should occur between countries.
An important indicator referring to the trend in the level of competitiveness of a nation, its economy and its industry is its capacity to absorb technology. Recently, ABES – Brazilian Association of Software Companies presented the results of its Annual Study, which maps trends in our information technology market, including software, services and hardware (devices).
Contrary to our expectations, the study pointed to a growth of only 3%, well below expectations of double-digit growth expected, and below the world average of 7.4% – I, personally, do not remember this ever happening. The study demonstrates that the pace of technology absorption in Brazil has dropped in relation to other countries.
Low technology consumption is directly related to a country's loss of competitiveness. By consuming less technology, society loses, the government loses, the economy loses. And if the economy loses, there is a real commitment to the reindustrialization agenda. One of the main culprits is the indigestible tax framework, which, unlike technology, does not evolve. A complex tax rule creates misinterpretations in relation to the commercialization of goods and services, mainly related to the technology market, impacting and even making the availability of cutting-edge technologies unfeasible, and burdening your. And, parallel to this, Brazil is still in its infancy when it comes to digital literacy. It is very difficult for any country to consume technology when there are barriers to accessing it, as well as low knowledge to absorb it and take advantage of its full potential, ensuring a high level of competitiveness for the country – and, then, encouraging reindustrialization.
Comparing the situation in Brazil with that of other countries, Brazil was in 9th position in 2020, it dropped to 12th in 2022. In Latin America, it is clear how the country is losing strength, in 2020, our share in the Latin market was 44%; in 2021 it dropped to 40%; and, in 2022, reached 36%. We drop an average of 4 percentage points a year, while Mexico, for example, which held a 20% share in 2020, saw its share rise to 23% last year. Even Argentina conquered more space, consuming more technology and with a growth rate higher than ours.
The governmental strategy, as mentioned, aims at the reindustrialization of Brazil. And, if we see a drop in technology absorption in the country, this indicates a tendency towards obsolescence. On the other hand, Brazil ranks as the fifth largest market for internet users, behind China, the United States, India and Indonesia, with around 170 million internet users connected. Now, if we are the fifth largest user market, but the 12th country in technology consumption, what explains this gap? How to understand this account? It's simple, the technology needs to be available, accessible and known. That is, we need to ensure that cutting-edge technologies are available in Brazil, without barriers and with an easy-to-understand tax framework, at affordable prices, and ensure a high level of digital literacy in our society.
The tax reform, under discussion at the congress, has a noble and expected objective: simplification, but on the other hand, it can be a real shot in the foot in the government's strategy of reindustrialization of Brazil, the proposal foresees to raise the tax of the technology sector of information (IT) for 25%, will certainly make it impossible to absorb the main input that could boost the competitiveness of our industry: technology.
*Rodolfo Fücher, President of the Board of the Brazilian Association of Software Companies – ABES
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