Economic liberalization and the computer industry: Comparing outcomes in Brazil and Mexico

Market liberalization has been carried out by many developing countries in the hopes of stimulating trade, investment and technology transfer. In orde r to analyze the impacts of liberalization on a specific industry sector, t his paper compares the experiences of Brazil and Mexico in liberalizing the computer industry in the 1990s. The authors conclude that liberalization l eads to lower prices and more rapid diffusion of computer use throughout th e economy, but at a cost to domestic computer firms who were harmed by fore ign competition. Both countries saw an increase in computer production, but Mexico's production was mainly for export to the United States. while Braz il was producing for the domestic market. The differences between outcomes in the two countries have been determined more by environmental factors tha n by the nature and pace of liberalization. (C) 2001 Elsevier Science Ltd. All rights reserved.