Measuring the Performance of a Protected Infant Industry: The Case of Brazilian Micro-Computers

Until the beginnings of the Collor presidency in 1990, the Brazilian government strongly protected domestic producers of electronics goods. Using hedonic methods we analyze systematic evidence of the performance of the Brazilian microcomputer industry and compare it with international standards. Our analysis highlights rapid rates of advance in Brazil but lower rates than potential international competition. Technical frontiers typically lagged price/performance practices in international markets by at least three years and by as much as five. Foregone buyer surplus due to protection had to be quite high, approaching 20% of domestic expenditure on microcomputers.