the telecommunications restructuring process in the 90s: a comparative study of the impacts on the...
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The Telecommunications Restructuring Process in the 90s: a comparative study of the impacts
on the Brazilian and Spanish innovation system
Marina Szapiro
PhD Candidate and Associate Researcher of the Research Network on Local Productive and Innovative Systems -
RedeSist, Economics Institute, Federal University of Rio de Janeiro, Brazil
Prepared for the Globelics Academy
Lisbon 25th May to 3rd June, 2004
Structure of the presentation
Theoretical Framework Research aim Hypothesis Methodology Preliminary findings
Theoretical Framework: Neo- Schumpeterian Literature
– National Innovation Systems• Conceptual instrumental for the understanding of
innovation dynamics• Developing countries specificities:
– macroeconomic environment as a constraint to technological and innovative development;
– instability of institutional, political, and financial environment.
– Economics of Telecommunications• New set of influences based on internet technologies:
fundamental changes transforming the telecom industry;• Institutional changes in the telecommunications industry:
liberalization and deregulation;• New technological regime: R&D intensive activities
concentrated in the equipment suppliers.
Objectives and Relevance of the research
To study the international process of regulatory and institutional changes in the telecommunications sector
To analyse the telecommunications restructuring strategies in Brazil and Spain and its impacts on their innovation system
Why this comparison?– In the 80s, Brazil and Spain had similar situations on the
telecommunications sector;– Actually, Telefonica (Spain) is the major carrier in Brazil;
and – To continue studying the telecommunications innovation
system in Brazil.
Hypothesis The adoption of different liberalization and
deregulation strategies produces diverse impacts on the structure and organization of the telecommunications sector and on the national innovation system
The existence of implicit and explicit industrial and technological policies influences substantially the results of the process
Methodology Literature review on NIS and Economics
of Telecommunications Field Research in Spain and Brazil
– Spain: Interviews with Telefonica, Telefonica I+D, CMT, equipment suppliers, Researches etc.
– Brazil: Interviews with Telefonica, other carriers, equipment suppliers, Anatel, CPqD, Communications Ministry, etc.
Brazilian telecom innovation system(From the 1980s to mid 1990s)
OperatingCompanies
IndustryCPqD
Public policiesMinicom and Telebrás
University andIndustry
technology
demands
products
joint projects
demands
Brazilian telecom innovation system: main achievements
Gradual involvement of multinational subsidiaries in the process of innovation and technological capability development
Establishment of a network of local suppliers (120 local firms responsible for 17% of the market in 1982)
Local development of key technologies for the telecom system expansion (Trópico)
Reduction in the investment costs of building the Brazilian telecom network
The Context of Telecommunications Restructuring Processes in Brazil and Spain (I)
BRAZIL: Trade liberalization of the beginning of 90s, Liberalisation process (1995) and Telebrás’ fragmentation and privatisation (1998)
– Entrance of new international operators
– Increase in investments– Increase in number of
fixed and mobile lines
SPAIN: Internationalization of Telefonica in the end of 80s, Liberalization (EU) and privatization in 1995 and 1997 (with golden share)– End of Telefonica’s
monopoly– Strong presence of
Telefonica in Latin America
Impacts on the innovation systems (I)
Brazil – Entrance of new
equipment suppliers
– Increase in imports of telecom equipment and acquisition of dynamic nationally owned firms by MNCs subsidiaries
– Privatisation of CPqD and uncertainty
Spain– Internationalization of
national equipment suppliers
– Increase in innovation investment and activities by national SME and multinational subsidiaries
– Strengthening of Telefonica I+D
Impacts on the innovation system (II)
Brazil: Denationalization of the equipment industry
Market Share of the main suppliers of telecom equipment in the Brazilianmarket, by origin of capital (*)
Year 1988 1997 2000
Market share of thenationally owned firms
77% 41,5% 8,7%
Market share of theforeign firms
23% 58,5% 91,3%
Source: Oliva, 2002 .(*)The concept of nationally owned and foreign firms are based on the control of voting capital criterion.
Brazil: Increase in telecommunications imports of components, parts, pieces and final products
Impacts on the innovation system (III)
Trade Balance of Telecommunications Equipment Industry
-3000
-2000
-1000
0
1000
2000
3000
4000
5000
US
$ M
illion
Import 855 1360 2088 2753 2682 2711 3435 3753 1511
Export 124 130 154 288 330 494 1311 1552 1547
Trade Balance (730) (1.230) (1.933) (2.464) (2.353) (2.217) (2.124) (2.201) 37
1994 1995 1996 1997 1998 1999 2000 2001 2002
Impacts on the telecom innovation system (IV)
Sectoral Regulation
Operating Companies
CPqD
New MNCs
Figure 3: Innovation system of telecom(late 1990s)
rules
demands
Old MNCs
Local Industry
orders
orders
orders
services
services
Technology and services
Foreign Firms
technology andservices
technology
Spain: Growth and Internationalization of Telefonica I+D (links with national system of innovation)
Impacts on the innovation system (V)
Growth of Telefonica I+D
0
200
400
600
800
1000
1200
1400
88 90 92 94 96 98 2000 2002
years
nu
mb
er
of
em
plo
yees
Spain: Increase in innovation related investment by national equipment industry – Increase in R&D activities of multinational
subsidiaries in Madrid during the 90s (Rama et alli 2002).
– Significant increase in exports of national firms (almost 40% of production in a sample of 5 firms) (López and Molero, 2004).
– Important interactions among Telefonica I+D and the Spanish telecommunications industry
Impacts on the innovation system (VI)
Preliminary FindingsBrazil and Spain: Adoption of different telecom restructuring
strategies with impacts on the innovation systems
Brazil– Privatization: Maximization of
the entrance of foreign capital
– Entrance of multinationals carries and denationalization of the equipment industry
– Uncertainty of the R&D telecom laboratory
– Weakening of Brazilian telecom IS
Spain– Internationalization of
Telefonica and links with Spanish telecom industry
– Growth of Telefonica I+D
– Strengthening of Spanish telecom IS