Software industry: An opportunity for Latin America?

Abstract

Many developing countries are looking for entry points to the expanding informatics market. Software has been viewed in some of them as offering an opportunity to exploit low wage and capital requirements. This paper presents the main characteristics of the software market and industry in Latin America. It analyzes the local supply of (traded) software, including the origin, scope of activities and size of firms, their main products and technology in use. Export experiences from several Latin American countries are also briefly presented, recognizing that further research on the issue is still required. On the basis of this empirical evidence, the comparative advantages and obstacles that the region faces to establish a solid software industry are discussed. It is argued that considerable efforts would be required to transform current expectations into reality. A basic point is that even if good software can be developed, marketing and distribution barriers, particularly for packaged software, are difficult to penetrate. The main policy issues relating to the building up of a software industry are summarized, taking the heterogeneity of markets and products into account.