São Paulo 2012: Brazil's Competitiveness
During the first part of the 2012 Latin American Cities Conferences: São Paulo conference, speakers discussed challenges to Brazil's competitiveness, as well as its economic advantages.
To open the conference, AS/COA President Susan Segal highlighted President Dilma Rousseff's new infrastructure privatization plan, saying it could “result in deeper and more productive public-private partnerships” and increase competitiveness. She also pointed to Brazil’s growing middle class as a source of opportunity for Brazilian and U.S. companies. Segal discussed the importance of entrepreneurship, and creating an environment in Brazil in which new business owners can flourish. Maurício Borges, president of the Brazilian Trade and Investment Promotion Agency gave welcoming remarks as well, briefly describing the opportunities for U.S.-Brazil partnerships.
As the keynote speaker, President of the Inter-American Development Bank Luis Alberto Moreno discussed Brazil’s position vis-à-vis the uncertain international economic climate. “Recovery is not a 100-meter sprint but rather a marathon,” he said. Despite the recent pessimism in the international press about Brazil’s economy, Brazil has “plenty of room for maneuver and sound institutions.” With inflation under control, macroeconomic stability, and strong fiscal and monetary institutions, Brazil has come a long way, Moreno said. Social change is also important for the economy, he explained. In 2012, Brazil had the lowest level of income inequality since 1960, and 40 million people joined the middle class in the last decade. In addition, the strengthening of Brazil’s private sector and successful multinational corporations like Embraer has created opportunities for expanding the country’s exports.
However, infrastructure deficits prove one of Brazil’s challenges to growth, Moreno said. While Brazil spent around 2 percent of GDP on infrastructure in 2010, countries like Chile and China spent around 7.5 percent. The country must also improve the quality of education to create jobs in higher value-added sector. He also pointed to “distortions in the public retirement and benefits system.” Finally, he explained that raising productivity and increasing innovation are key for Brazil and all of Latin America.
The first panel featured a discussion about Brazil’s competitiveness in the global economy. Moderated by Brazilian journalist William Waack, speakers identified some of the main barriers to Brazil’s development. Robson Braga Andrade, president of Brazil’s National Confederation of Industry (CNI), said Brazil’s challenge is to be on a level of global competitiveness. He pointed out education and management as areas for improvement. Nevertheless, the country has competitive advantages. Innovation and technology are relatively new areas of growth in Brazil, and these were “never part of Brazil’s development,” he explained. He also said that one of the important things Brazil has to offer to investors are the “immense amount” of possibilities in the growing economy.
Mauro Borges, president of Brazil’s Industrial Development Agency (ABDI), listed Brazil’s “three cursed inheritances” that are challenges to growth: its complex tax system, physical and human infrastructure, and the import system. The country’s tax system is a “shot in the foot,” he said. In addition, Brazil must reduce inequality and poverty in order to be competitive, he explained. On the other hand, Brazil’s demographic transition and scientific community represent advantages, since there’s a large youth base to train and integrate into the workforce, as well as opportunity for innovative industries. Dr. Kenneth Herd, general manager for General Electric’s Brazil Technology Center, also assessed areas for improvement to competitiveness. GE came to Brazil for “the talent and the opportunity for growth,” Herd said, not because it’s inexpensive. Import tax policies may not be sustainable in the long run, and a transition to a “market-driven, sustainable balance” must be achieved to compete globally, he explained. Also, Brazil must do more to protect intellectual property in order for foreign companies to expand and invest in Brazil.
Watch the video of the first portion of the conference: