Summary: Brazil in 2013 - Economic and Political Prospects

Keynote Speaker:

• Marco Maia, President, Brazilian Chamber of Deputies

Speakers:

• Marcelo Lyra, Vice President, Braskem
• Antônio Carlos Magalhães Neto, Mayor-elect, Salvador, Bahia
• Susan Segal, President & CEO, Americas Society/Council of the Americas
• Alessandro Teixeira, Executive-Secretary, Brazilian Ministry of Development, Industry, and Trade (MDIC)
• Marcos Troyjo, Director of the BRICLab, Columbia University

Summary

AS/COA hosted panelists from academia, government, and the private sector to discuss political and economic perspectives on Brazil in the coming year. As the growth of the Brazilian economy has recently slowed and the costs for doing business in the country remains high, panelists highlighted the need to increase the efficiency of government spending and lower the costs of doing business.

Panelists also discussed government policies such as Bolsa Familia used to foster social inclusion and create a robust middle class. They mentioned tax reform, improvements in education and infrastructure, more investment in research and development, and modernizing Brazilian industry as some of the key challenges for the country.

Spending on Social Programs

Even after the 2008 recession, Brazil has continued to spend on social programs. The government invested $65 billion in Minha Casa, Minha Vida (My House, My Life), a federal program to build houses for low-income families. As a result, one million houses were built from 2007 to 2010. President of the Brazilian Chamber of Deputies Marco Maia stressed the importance of social policies in expanding the middle class and the country’s domestic consumer market. He said that 105.5 million Brazilians, or 55 percent of the population, now belong to the middle class and that 19.2 million jobs were created since 2003.

Development in the Northeast

Economic growth not only contributed to an expanded middle class but also to increased development in traditionally poorer regions in Brazil. According to Antonio Carlos Magalhães Neto, mayor-elect of Salvador, Bahia, northeastern capitals now have more diversified economies and development has spread to the countryside. Northeastern migrants who moved to São Paulo and other areas in the south are now returning to the Northeast, he explained. Still, the gap between Brazil’s south and northeast remains. But government investment can help decrease disparities between the two regions by improving infrastructure, especially ports and highways. As Salvador prepares to host several games of the 2014 World Cup, Magalhães Neto mentioned the creation of Salvador Negocios, a government agency to attract foreign investment to the city.  

Increasing Competitiveness

Competitiveness and productivity comprise two key challenges for the private sector in Brazil, Braskem’s Marcelo Lyra said. Since the tax burden comprises 38 percent of the GDP, there’s a need to cut taxes, he explained. Congress has played an important role in this regard, recently passing legislation to foster the productivity of the Brazilian industry. The laws included tax reductions for the automobile industry and measures to boost competitiveness. However, Brazil still needs to modernize its industry by investing more in science and technology and improving its education system, panelists agreed. MDIC’s Alessandro Teixeira stressed the importance of making government-owned companies more independent from public money and of increasing efficiency of the Brazilian state. BRICLab’s Director Marcos Troyjo noted that while Brazil has made important strides, the country must continue to make improvements. “We have always said the Brazil is the country of the future,” he said. “We have to go back…to being a country with a vision of the future. Brazil is also going to have to change its DNA.”

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