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F/OSS Adoption in Brazil: The Growth of a National Strategy

Eugene Eric Kim <eek...@blueoxen.com>
BOA-0000P
May 31, 2005

This paper is part of The Politics of Open Source Adoption, a research report funded and published by the Social Science Research Council (SSRC). Many thanks to Joe Karaganis and Robert Latham at SSRC for their feedback and support.

When Luis Inacio Lula da Silva became president of Brazil in 2003, industrialized nations looked on with some trepidation. The former union organizer was Brazil’s first left-wing leader in 40 years, and many in the international business community wondered how his politics would affect the country’s large, but precarious economy. Brazil boasted the world’s 15th largest economy with a GDP of $493 billion, but its GDP per capita was $7,900, 94th in the world (Cadina, 2004; World Factbook, 2004). Its national debt was $250 billion (“What Will Lula Do?,” 2002). Forty percent of all workers were paid less than minimum wage ($223.26 per month), and less than two percent made more than $1,489 per month. Only 10 percent of its 170 million citizens owned computers (Clendenning, 2003).    (4Y8)

Lula assuaged some of the financial concerns over his leftist leanings by practicing fiscal discipline, cutting federal spending even at the expense of some traditional left-wing programs (Mitchell, 2004). In keeping with this policy, he announced in late 2003 that the federal government would look to migrate to free and open source software (F/OSS) on a broad scale. On the surface, this decision was a simple cost cutting measure. According to Brazil’s Instituto Nacional de Tecnologia (INT), Brazilians spent $1.1 billion every year on software licensing fees, and the federal government was the nation’s biggest customer (“Open source could,” 2004). While the average computer cost R$1,200, the cost of Microsoft Windows and Office was R$2,000 (Haffenreffer, 2003). The government accounted for six percent of Microsoft’s 2003 Brazilian revenues of $318 million (Epstein, 2004). Switching to F/OSS would save millions of dollars.    (4Y9)

The decision was bold and controversial. Open source software had long fought the stigma of being less polished than its proprietary counterpart. Although open source software had matured considerably and corporate adoption had grown steadily over the previous decade, Brazilian versions of these tools were still in their infancy. Additionally, the model of open source software development was (and is) still not widely understood. Entrusting a country’s IT infrastructure to a decentralized process that lacked an obvious sustainability model required tremendous faith in emergence and the grassroots. The decision to migrate to open source software on a national scale was not simply a matter of choosing one product over another. It was a political decision that validated open source software as a movement.    (4YA)

What were the circumstances that led to this decision? The desire to cut costs was the most obvious, but not the sole motivation. In many ways, open source was the technological parallel to the grassroots political movement that had thrust Lula into his country’s top office. It was a way to make technology more accessible to the people at large, and as such could help close the digital divide and improve living conditions for Brazil’s many poor workers. This report explores these political circumstances in greater detail by examining Brazil’s social and technological history.    (4YB)

Software and Nationalism    (4YC)

The decision to migrate from proprietary to F/OSS at the national level drew much of its inspiration, political strength, and technical expertise from a number of municipal F/OSS initiatives already underway. Most of these municipalities were strongholds of Lula’s political party, Partidos dos Trabalhadores (PT), or Workers’ Party. The PT’s interest in F/OSS had a strong economic rationale: the zero licensing costs fit well with the party’s agenda of expanding access to information technology among the poor. But there were other affinities as well. In some important respects, the grassroots nature of the F/OSS movement bore a resemblance to the structure and origins of the PT. This made it possible for some actors within the PT to make the case for F/OSS as an extension of PT values and as an eventual cornerstone of PT technology policy. This activism within the PT eventually enabled the national-level embrace of F/OSS.    (4YD)

Founded by Lula and others in 1980, the PT was a grassroots party in every sense of the word, consisting of a loose coalition of union members, Catholics (mostly members of a parallel religious grassroots movement known as Communidades Ecclesiasticas de Base, or CEBs), and the middle class (Fausto 307, 1999). None of the founding members were politicians; in fact politicians were excluded from the party at first (Hudson 285, 1998). Although it was socialist in orientation, PT ideology was far from unified. Lula was part of a moderate faction known as Articulacao, which held a majority in the party for much of the next two decades, and he spent much of his time strengthening the coalition (Hudson 386, 1998). Lula ran for president in 1989, 1994, and 1998, before winning in 2002. Although many aspects of PT politics had become more professionalized (Lula had exchanged his scruffy, open collar look for a trimmed beard, suit, and tie), the Worker’s Party had retained it bottom-up approach to politics, its participatory ethic, and its presumption of outsider status vis a vis national and international capitalism.    (4YE)

Because of this history, Lula and his party were well positioned to appreciate the grassroots model of open source software development and the political implications of its challenge to existing patterns of technology transfer and development. Brazil’s history of technology initiatives also offered an important negative example as the PT began to articulate national-level policy agendas. In the early 1980s, Brazil decided to foster its own domestic personal computer industry by isolating itself from the foreign market. The government established the Market Reserve Policy in 1978, which disallowed imports of foreign goods that competed with domestically-produced offerings and that placed high tariffs on other imports (La Rovere 21, 1992). In some respects, the policy worked. The market for domestic computer hardware grew from $200 million in 1979 to $4 billion in 1990 (Veloso 9, 2003). However, it also left Brazil well behind the worldwide technological growth curve. Brazilian PCs were less sophisticated and more expensive than foreign-made PCs, costing up to five times more. This in turn hurt the country’s exports and fostered a black market that accounted for up to half of total PC sales (La Rovere 22, 1992). Moreover, these policies made the increasingly consequential error of ignoring the software industry, viewing software as a mere subsidiary to hardware production (Duarte 84, 2002).    (4YF)

Following the expiration of the Market Reserve Policy in 1992, the government tried to correct its mistakes by investing R$2.9 billion into research and development, a quarter of which was spent on software. In 1996, several major computer companies formed SOFTEX, Brazil’s Society for the Promotion of Software Excellence. In addition to its high-level goals of building a world class software industry and fostering Silicon Valley-style entrepreneurship, its main goal was to boost software exports. In this regard, SOFTEX was moderately successful. In 2001, exports totaled $100 million (up from $1 million in 1992) (Veloso 10, 2003). However, Brazil still imported $1 billion more in software than it exported (Alerigi, 2003). The previous decade’s policies had given the software industries in other countries a considerable head-start.    (4YG)

The ascendancy of the PT created an opportunity to rethink the relationship between the nationalist agenda of building Brazilian knowledge capacities and the globalization agenda, which saw Brazil increasingly engaged in international markets for technology and knowledge goods. In his inaugural speech on January 1, 2003, Lula signaled his departure from the older import-substitution model of technology development, making it clear that he did not equate nationalism with isolationism. He explained:    (4YH)

In my government, Brazil will be at the center of attention. What Brazil needs to do, in all areas, is to plunge within itself in order to create forces to enable it to expand its horizons.    (4YI)

Taking such a plunge does not imply closing doors and windows to the world. Brazil can and must have a development plan that consists, at the same time, of a national and universal approach…. The principal characteristic of the model that we wish to work towards is an expansion of domestic savings and of our own investment capacity. Likewise, Brazil must enhance the status of its human capital by investing in knowledge and technology.    (4YJ)

At one level, this signaled an affirmation of the earlier strategy of investment in technology research and development, which had helped create a stable of talented programmers and engineers. The rapid international growth of the Internet in the mid-1990s created new opportunities for Brazilian software companies, and placed them in a position of greater international competitiveness. But the growth of this capacity also allowed, by 2003, for an alternative interpretation of Lula’s “nationalist and universal” approach, at least in the field of software production. As Brazilian software capacities increased, some of these talented programmers began to participate in the F/OSS movement.    (4YK)

One of these programmers was Arnaldo Carvalho de Melo, a college student who discovered the Linux operating system in 1995, and who soon became an active contributor (Genoni 12, 2002). Carvalho’s initial interest was on Linux’s networking code, but he soon began working on Portuguese language support for Linux. Later that year, he and Sandro Nunes Henrique founded Conectiva, a company based in Curitiba, Parana, that created Portuguese and Spanish Linux distributions (“Conectiva,” 2004). Conectiva grew rapidly, and quickly became the leading distributor of Linux in Latin America. In addition to Carvalho, Conectiva employed several other key Linux developers from all over the world.    (4YL)

Other Brazilian programmers became active in other high-profile open source projects — notably the GNOME desktop platform and the OpenOffice application suite — leading to Portugese versions of these tools. Largely on the basis of these contributions, Brazil became a developing-world leader in open source software development. In 1999, the city of Porto Alegre — a PT stronghold — began hosting the International Free Software Forum, an annual world gathering of F/OSS developers and evangelists.    (4YM)

The growing availability of portuguese versions of popular open source software made F/OSS, for the first time, a viable alternative to proprietary software. The economic advantage of open source software was no longer theoretical; it could be tested in practice. One of the first to do so was Sergio Amadeu da Silveira, a sociologist at the University of Sao Paolo. Amadeu was from the region where Lula and the PT first rose to prominence, and he had co-authored a 1991 history of the party. A decade later, his interests had shifted toward technology policy. Digital Exclusion: Misery in the Information Era warned that the ‘digital divide’ in access to technology would exacerbate the broader economic divisions between rich and poor. He argued that addressing this wider range of economic ills required a technology policy that made IT more accessible to its citizens (Clendenning, 2003). Here, information technology was seen not primarily as a market, but as a social and economic enabler.    (4YN)

Amadeu had a chance to test his thesis firsthand in 2001, when he led the electronic government initiative for the city of Sao Paolo. One of the projects to emerge from this initiative was the Telecentros, a network of community computer centers built in the poorest neighborhoods in Sao Paolo. Each center had between 10 and 20 computers, an Internet connection, and a library. The computers ran on open source software, which was estimated to have lowered costs by some 80% compared to proprietary solutions (Greve 92, 2004). Each center was run by community residents, and each offered courses that for local residents. The Telecentros were wildly successful. By 2004, there were 108 centers in Sao Paolo, offering a total of 85,000 courses and regularly catering to 370,000 residents (Cadina, 2004). Despite being located in neighborhoods with high crime rates, the majority of these centers did not have guards, and only five had been broken into — three before they opened. Residents tended to protect their Telecentros, because they were seen as important parts of the community (Greve 92, 2004).    (4YO)

The Telecentros helped bolster the political fortunes of F/OSS. Other grassroots efforts also contributed: In 2000, the state of Pernambuco passed the world’s first law requiring the use of F/OSS in state offices (Epstein, 2004). The municipalities of Belo Horizonte and Porto Alegre soon followed suit with their own initiatives to convert their offices to Linux (Goertzel, 2002; “Porto,” 2003). These initiatives created a base of support for F/OSS that proved able to pressure on the national government on issues of technology policy. In 2001, the federal government finished the specifications for the installation of 290,000 computers in 13,000 public schools nationwide — all to be equipped with Microsoft Windows. Academics and the PT protested vigorously, and eventually won the inclusion of Linux as a listed alternative (“Brazil,” 2001).    (4YP)

On reaching office, Lula appointed Amadeu as president of the Instituto Nacional de Tecnologia, which made him the top technology officer in the government. Amadeu quickly made open source software the centerpiece of his national technology strategy. On announcing the government’s decision to adopt open source software, Amadeu stated, “We are not opting for a product, we are opting for a software-use development model. This is a political decision, and I cannot emphasize this enough, based on an economic reason — a reduction in the remittance of royalties. It also expands Brazil’s technological autonomy and strengthens our collective intelligence” (Cadina, 2004).    (4YQ)

Conclusion    (4YR)

This declaration did not immediately change the facts on the ground, but rather began a process of investigating transition paths and shifting incentives. In October 2004, the government announced that it had spent R$768,000 on open source software, a savings of R$24 million over the equivalent proprietary licenses from the previous year. The government also announced that 68% of federal organizations had begun exploring open source adoption in some form (“Government,” 2004). Programs of grants and tax abatements have also been developed to encourage nation-wide adoption of open source, not just within government agencies but also in the private sector (“Open source forum,” 2004). These efforts helped forge an important alliance with SOFTEX, the main representative of the Brazilian software industry, which announced its support for the government’s F/OSS initiative. Mario Girao, president of SOFTEX, got on board by stating that F/OSS was the best way for Brazilian software companies to compete with foreign companies like Microsoft (Luiz, 2004). By October 2004, mid-sized and large companies had invested 38.5% of their total IT budgets on open source solutions, and 78% of Brazil’s largest companies had adopted at least one open source solution (“Study,” 2004). The government’s new policy also drew support from IBM, which pledged $1 million to help build a new center in Brazil (CDTC) for promoting and developing open source software (“IBM,” 2004).    (4YS)

As F/OSS becomes a national policy issue, it also becomes the subject of more traditional forms of political contestation. One of F/OSS’s earliest strongholds was the state of Rio Grande do Sul and its capital, Porto Alegre, both of which were controlled by the PT between 1998 and 2002 (“Unisinos,” 2004). Porto Alegre’s F/OSS mandate was unambiguously a PT achievement. The 2003 PT victory at the national level, however, was accompanied by the loss of Rio Grande do Sul to the Brazilian Social Democratic Party (PSDB) (“Open source forum,” 2004). In 2004, the Liberal Front Party (PFL) challenged the constitutionality of the state F/OSS mandate, on the grounds that it did not give equal opportunity to all bidders. The Supreme Court upheld the challenge, issuing the new state government an injunction to overturn the mandate (“Supreme,” 2004).    (4YT)

Brazil’s F/OSS stance has drawn similar criticism internationally. In December 2003, the United Nations held the World Summit on the Information Society. Brazil — acting in increasingly common alignment with India, South Africa, and China — pushed participants to endorse F/OSS software as a strategy for mitigating the digital divide. Representatives from the industrialized nations, however, rejected any explicit endorsement, on the grounds that it would signal not an equal playing field but a different kind of monopoly that excluded proprietary software makers (Schenker, 2003).    (4YU)

The company that receives the brunt of the blame for the inequities of the global software market and the coercive global politics that maintain it is Microsoft. In March 2004, Amadeu was quoted in Carta Capital, a Brazilian financial magazine, as comparing Microsoft’s business practices to those of a drug dealer (Lessig, 2004). Microsoft filed a suit three months later, demanding an explanation and retraction of the comments (McMillan, 2004). International response to the suit was immediate. Three weeks after the suit, a petition supporting Amadeu had garnered over 10,000 signatures. Amadeu himself wrote:    (500)

In response to national and international inquiries from the press, which have been supportive of the Brazilian government in this unprecedented moment in which the president of an important public institution in this country suffers personally the action of those interested in maintaining an hegemonic model, I come forward, after listening to my lawyers and federal solicitors, to say that the judicial provocation against me is, on its own, so unusual and improper that it deserves no answer.    (4YV)

On the other hand, I would like to note that the purchase of software that preserves the values of openness and freedom is, for the Brazilian government, a subject unavoidably connected to the democratic principle. And as it has been a long and painful path to reach our current stage of democratic development in this country, we will not walk out on our fight.    (4YW)

If democracy is a value full of ideology, it will never be an insignificant value. If democracy is a dream, it’s the one dream this country will never wake up from. The future is free. (Pinheiro, 2004)    (4YX)

While F/OSS’s grassroots nature and positioning in debates about globalization provided a point of ideological entry into the PT, it was broader growth of the software development community in Brazil that made it a feasible large-scale alternative to proprietary software. Unlike many other developing countries, Brazil was able to both sustain a grassroots software movement and produce the technology leaders who could implement shifts in policy. Furthermore, Brazil’s past experiences with protectionist technology policy had demonstrated the importance of competing with the international market, rather than hiding from it. F/OSS offered a way to do so on a level playing field. As in other contexts, heavy-handed Microsoft tactics have the potential to create a shift in the form and visibility of these debates. Amadeu’s response to Microsoft suggests the ways in which broader values can be attached to relatively technical government policies. Migrating to open source software was not just about saving money. It was about freedom.    (4YY)

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