The implications of privatization for innovation in Brazilian telecommunications

This article discusses the key role played by the Brazilian telecommunications sector throughout the 1970s and 1980s in building and consolidating a sectoral innovation system (SIS) as part and parcel of a strategy to unify the existing network. The sector provided the essential conditions for the formation of a national technological capability, as was shown by the establishment of the Research and Development Centre of Telebrás (CPqD). A new debate arose, however, which led to the privatization of the Telebrás system - namely, that enhancing CPqD’s competitiveness was essential in a global market formed by strategic alliances. The global market-based strategic alliances set up in Brazil diminished the scope for CPqD and other potential actors to operate in partnership and facilitate the generation and exchange of knowledge. Consequently, the organizational status of CPqD was changed and the Brazilian sectoral innovation system was superseded by a system of global strategic alliances with traditional suppliers around the world. Questions, however, remain about prospects for R&D and innovation consequent upon restructuring of the sector.