XXV SEMANA INTERNACIONAL

July 8-13, 2013

Doing Business in Brazil

Marco Aurlio de S Ribeiro
IBMEC RJ





Agenda
Brazil as usual
1. History
2. Geography and natural environment
3. Cultural traits
4. Socio-demography
5. Politics and legislation
6. Economy
7. Infraestructure
8. Old business landscape
Brazil today
9. New macro environment
10. New business landscape
Agenda for the future
Brazil and Brazilians have long-lived traits from the
past that still persist today and affect business

However, several important changes have recently
taken place, which bear significant impact over the
business landscape

Future prospects indicate quite a few challenges to
be faced, as well as expectations of important
improvements in several aspects

Introduction
B
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B
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A
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Brazil as usual





Brazil as usual
Facts

1. History
Treaty of Tordesillas:
division, between
Portugal and Spain, of
the newly
discovered lands
outside Europe

Brazil: officially
discovered by the
Portuguese in 1500

The country was
named after pau
brasil (reddish
dyewood)


Brazil as usual
Facts 1. History


Along its history, Brazil has
been populated by:
Native Indians
Portuguese: adventurers,
prosecuted (Jews,
outlaws), , and noblemen
Slaves from Africa
French raiders (in the Northeast)
Dutch raiders (in the Northeast)
Japanese farmers (So Paulo
region, 1908+)
European immigrants: Portuguese,
Spaniards and
Italians(Southeast), Germans
and Polish (South)
Brazil as usual
Facts 1. History

The Portuguese
Royal family fled to
Brazil in 1808
Implications for
cultural development
Implications for
work-related habits
Implications for
economic
development
Implications for
infrastructure
development

British influence (in
the economy and
transportation
infrastructure)





Brazil as usual
Facts 1. History

From colony to
independent
country (1822)
First emperor: D.
Pedro I, son of
the king of
Portugal
Second emperor:
D. Pedro II
Arts
Culture
Infrastructure




Brazil as usual
Facts 1. History
Brazil as usual
Facts 1. History
Immigrants
Brazil as usual
Facts 1. History
African Slaves


The power of public
officials

Paternalism

Brazilians have learned
to expect, fear, admire
and respect authority
(Caldas, 2006, emphasis
in the original)
Brazilians have also
learned to expect shelter
and protection from the
powerful






Brazil as usual
Facts 1. History

Brazilian people, as
buyers, were at a
disadvantage in their
relationship with sellers
because:
The colony was not
allowed to
manufacture
Shortage of products
from Portugal
Sellers would provide
credit
Several sellers were
actually awarded that
position by
Portuguese
authorities



Brazil as usual
Facts 1. History

Bureaucracy

Personalism and personal
loyalty

Ambiguity
Gap between norms and
social practice (Caldas,
2006)
Laws that do not stick
Things done just for the
English to see

Brazil as usual
Implications for Business 1. History

Great diversity
of cultures,
accents, habits,
but

A sense of
unified nation

Regional
economic
specificities:
agriculture,
manufacture,
construction,
trade, services,
public
administration
Brazil as usual
Implications for Business 1. History



Brazil as usual
Framework / Cases 1. History









Brazil as usual
Facts 2. Geography and the Natural Environment
North region
Northeast region
Central-West region
Southeast region
South region

A continental country:
Area: 8.5 million km
2
(5
th
largest in the world)
Borders: 23 thousand km


Geo-political regions






Brazil as usual
Facts 2. Geography and the Natural Environment
North region
Northeast region
Central-West region
Southeast region
South region

Natural resources:
Land (but arable?)
Insolation and tropical climate; but also dry lands
Minerals
Oil
Hydropower and wind-generated power

Geographical isolation
Amazon forest
Water lands (Pantanal)
Atlantic Ocean

Geographical barriers to transportation
Long distances
Non-navigable rivers
Hills and mountains





Brazil as usual
Facts 2. Geography and the Natural Environment

Agricultural
productivity
Natural endowment
+ Embrapas research
(www.embrapa.br)
Irrigation projects

High dependence on
natural resources for
exports
A re-primarization of
the economy?
Embedded
technology(agriculture
, oil)

Brazil as usual
Implications for Business 2. Geography and the
natural environment

Biofuels

Logistics infrastructure
Roads and highways vs.
waterways or railways
Harbors
Resulting costs and losses

Psychic distance and the psychic
distance paradox
Brazil as usual
Implications for Business 2. Geography and the
natural environment


Brazil as usual
Framework / Cases 2. Geography and the
natural environment




Brazil as usual
Facts 3. Cultural Traits

A melting pot of sub-cultures

Autonomy (expression of self; I will do it my way) vs.
collective behavior

Religion
Mostly Catholic, but
high growth of protestant-based religions
(Pentecostalism and neo-Pentecostalism Igrejas
Evanglicas)
also Jewish and Islamic influence
and African-originated influences (including Ubanda
practices)
plus some influence from Adventists, Mormons,
Jehovah's Witnesses, Spiritualism as well as Orthodox
churches
Also a growing number of atheists
More:
http://pt.wikipedia.org/wiki/Religi%C3%B5es_no_Brasil
Brazil as usual
Facts 3. Cultural Traits
Empresa na
Economia
Global
25
Brazils position in Hofstedes cultural dimensions
Empresa na
Economia
Global
26
Brazils position in Hofstedes cultural dimensions
Empresa na
Economia
Global
27
Brazils position in Hofstedes cultural dimensions
28
Brazils position in Hofstedes cultural dimensions
29
Brazils position in Hofstedes cultural dimensions
30
Brazils position in Hofstedes cultural dimensions
Cultural types

Hofstedes classification:
http://geert-hofstede.com/brazil.html

Power distance
This dimension deals with the fact that all individuals in societies are not equal it
expresses the attitude of the culture towards these inequalities amongst us.
Power distance is defined as the extent to which the less powerful members of
institutions and organisations within a country expect and accept that power is
distributed unequally.

At a score of 69 Brazil reflects a society that believes hierarchy should be respected
and inequalities amongst people are acceptable. The different distribution of
power justifies the fact that power holders have more benefits than the less
powerful in society. In Brazil it is important to show respect to the elderly (and
children take care for their elderly parents). In companies there is one boss who
takes complete responsibility. Status symbols of power are very important in order
to indicate social position and communicate the respect that could be shown.


Brazil as usual
Framework / Cases 3. Cultural Traits
Cultural types

Hofstedes classification:
http://geert-hofstede.com/brazil.html

Individualism
The fundamental issue addressed by this dimension is the degree of
interdependence a society maintains among its members. It has to do with
whether peoples self-image is defined in terms of I or We.
In Individualist societies people are supposed to look after themselves and their
direct family only. In Collectivist societies people belong to in groups that take
care of them in exchange for loyalty.

Brazil has a score of 38 which means that in this country people from birth onwards are
integrated into strong, cohesive groups (especially represented by the extended family;
including uncles, aunts, grandparents and cousins) which continues protecting its members in
exchange for loyalty. This is an important aspect in the working environment too, where for
instance an older and powerful member of a family is expected to help a younger nephew to
be hired for a job in his own company. In business it is important to build up trustworthy and
long lasting relationships: a meeting usually starts with general conversations in order to get to
know each other before doing business. The preferred communication style is context-rich, so
people will often speak profusely and write in an elaborate fashion.


Brazil as usual
Framework / Cases 3. Cultural Traits
Cultural types

Hofstedes classification:
http://geert-hofstede.com/brazil.html

Masculinity / Femininity
A high score (masculine) on this dimension indicates that the society will be driven
by competition, achievement and success, with success being defined by the
winner / best in field a value system that starts in school and continues
throughout organisational behaviour.
A low score (feminine) on the dimension means that the dominant values in society
are caring for others and quality of life. A feminine society is one where quality of
life is the sign of success and standing out from the crowd is not admirable. The
fundamental issue here is what motivates people, wanting to be the best
(masculine) or liking what you do (feminine).

Brazil scores 49 on this dimension, really in the middle. The softer aspects of
culture such as leveling with others, consensus, sympathy for the underdog are
valued and encouraged. Conflicts are avoided in private and work life and
consensus at the end is important. Status is shown, but this comes more out of the
high PDI.


Brazil as usual
Framework / Cases 3. Cultural Traits
Cultural types

Hofstedes classification:
http://geert-hofstede.com/brazil.html

Uncertainty avoidance
The dimension Uncertainty Avoidance has to do with the way that a society
deals with the fact that the future can never be known: should we try to
control the future or just let it happen? This ambiguity brings with it anxiety
and different cultures have learnt to deal with this anxiety in different
ways. The extent to which the members of a culture feel threatened by
ambiguous or unknown situations and have created beliefs and institutions
that try to avoid these is reflected in the UAI score.

At 76 Brazil scores high on UAI and so do the majority of Latin American countries.
These societies show a strong need for rules and elaborate legal systems in order to
structure life. The individuals need to obey these laws, however, is weak. If rules
however cannot be kept, additional rules are dictated. In Brazil, as in all high Uncertainty
Avoidance societies, bureaucracy, laws and rules are very important to make the world a
safer place to live in. Brazilians need to have good and relaxing moments in their
everyday life, chatting with colleagues, enjoying a long meal or dancing with guests and
friends. Due to their high score in this dimension Brazilians are very passionate and
demonstrative people: emotions are easily shown in their body language.
Brazil as usual
Framework / Cases 3. Cultural Traits
Cultural types

Hofstedes classification:
http://geert-hofstede.com/brazil.html

Long term orientation
The long term orientation dimension is closely related to the teachings of
Confucius and can be interpreted as dealing with societys search for
virtue,the extent to which a society shows a pragmatic future-oriented
perspective rather than a conventional historical short-term point of view.

At 65 Brazil places itself amongst the long term oriented societies as the only
non-Asian society. The "jeitinho brasileiro" is really to look for alternatives to
do what in a Western eyes could be regarded as impossible. Like Asians the
Brazilians accept more than one truth. Brazilians easily accept change as a part
of life.
Brazil as usual
Framework / Cases 3. Cultural Traits
Cultural types

GLOBE Projects classification:
1) Assertiveness: How much a society encourages assertiveness
toughness, assertiveness ,and competitiveness vs. tenderness
2) Future orientation: Extent to which a society encourages and
rewards planning for the future over short term results and quick
gratification
3) Uncertainty avoidance: Degree to which members of a society
feel uncomfortable with uncertainty and ambiguity
4) Gender differentiation: Extent to which a society expects gender
role differences
5) Power distance: Degree to which people expect and accept
inequality among one another
6) Societal collectivism: Degree to which practices the society and
its organizations encourage collective action and collective distribution
of resources
7) Individual collectivism: Degree to which individuals take pride in
being members of a family or a close circle of friends, team or
organization.
8) Performance orientation: Emphasis on performance and rewards
for improvements and excellence vs. loyalty belonging and
background.
9) Humane orientation: Degree to which a society encourages and
rewards people for being fair, altruistic, generous, polite and caring
Brazil as usual
Framework / Cases 3. Cultural Traits
Cultural types

GLOBE Projects classification:

The Latin America cluster is made up of Ecuador, El Salvador, Colombia, Bolivia,
Brazil, Guatemala, Argentina, Costa Rica, Venezuela, and Mexico. People in
these countries scored high on in-group collectivism and low on performance
orientation, future orientation, institutional collectivism, and uncertainty
avoidance. People in these countries tend to be loyal and devoted to their
families and similar groups but less interested in overall institutional and
societal groups. (Northouse, 2006:312)
Brazil as usual
Framework / Cases 3. Cultural Traits
Cultural types

Schwartzs cultural values:
Autonomy versus Conservatism, Hierarchy versus
Egalitarianism, Mastery versus Harmony.

Brazil as usual
Framework / Cases 3. Cultural Traits
Cultural map of the world
according to the World Values
Survey describing Brazil as
high in "Traditional Values"
and relatively balanced
between "Survival" and "Self-
Expression values".
Football as a national passion
Initially brought by the British
Soon adopted by the poor (but not the elite)
Politically exploited during dictatorships (1930+, 1970)










Brazil as usual
Facts 3. Cultural Traits
Exemplification of
autonomy and of
expression of self

Carnival as a national holiday



Brazil as usual
Facts 3. Cultural Traits
Rio de Janeiro (sambdromo)
Rio de Janeiro (street Carnival)
Exemplification of
autonomy and of
expression of self

Carnival as a national holiday



Brazil as usual
Facts 3. Cultural Traits
Salvador Recife
Parintins
(Amazonas)

Local adaptations


Brazil as usual
Implications for Business 3. Cultural Traits

Communication styles,
high vs. low context,
implicit vs. explicit

Temporal horizon and
relationship with time

Improvising vs. careful
planning (also on-the-
job training)

Brazil as usual
Implications for Business 3. Cultural Traits

Physical and/or eye
contact
Work and (versus?)
personal relationships
and activities
Coordinating modes
and conflict resolution
Incentives/rewards to
employees,
performance
assessment(relationshi
p- vs. results-based)
and feedback,
Gender roles
Brazil as usual
Implications for Business 3. Cultural Traits

Amusement practices and
ways to have fun

Meaning of truth (verbal vs.
written)

Business practices (e.g.,
mono- vs. poli-task, personal
vs. impersonal relationship,
expected profit margins, sale
and purchase practices,
corruption)
Brazil as usual
Implications for Business 3. Cultural Traits


Need for some autonomy
Chief employees relationships
Access to partners for funding

Benefits for foreigners of
partnering with a local
company
Access to social networks
Access to business networks
Brazil as usual
Implications for Business 3. Cultural Traits

Jeitinho brasileiro (Brazilian way to get around
obstacles)



Brazil as usual
Implications for Business 3. Cultural Traits
Z Carioca, who exemplifies
the malandro character, the
smart guy
DAY 2




Brazil as usual
Facts 4. Socio-Demography

Population

Total population: 192 million (IBGE, 2011)
State of So Paulo alone: 41 million








Brazil as usual
Facts 4. Socio-Demography

Demographic pyramid by age and gender


2000 2010












Brazil as usual
Facts 4. Socio-Demography

Income distribution
Average per capita
(nominal): US$ 12,600

Average per capita
(PPP): US$11,600

Average per family /
household:

Enormous regional
differences

Distribution / Equality:
still the 4
th
worst in Latin
America, after Guatemala,
Honduras and Colombia and
the 12
th
worst in the world
but rapidly getting better












Brazil as usual
Facts 4. Socio-Demography

Socio-economic classes
Family-based, not individual-based
Several classification schemes
Classification criteria: Household income vs. family
possession of goods and home facilities
Brazil as usual
Facts 4. Socio-Demography

Socio-economic classes
CCEB - Critrio de Classificao Econmica Brasil


















Brazil as usual
Facts 4. Socio-Demography
in Reais per month
(note: 1 US$ R$ 2)

Socio-economic classes
IBGEs criterion based in family income measured in
terms of minimum salaries


CLASSE SALRIOS MNIMOS (SM) RENDA FAMILIAR (R$) *
A Acima 20 SM R$ 12.440 ou mais
B 10 a 20 SM De R$ 6.220 a R$ 12.440
C 4 a 10 SM De R$ 2.488 a R$ 6.220
D 2 a 4 SM De R$ 1.244 a R$ 2.488
E At 2 SM At R$ 1.244

* In terms of minimum salaries as of end 2012




Brazil as usual
Facts 4. Socio-Demography
in Reais per month
(note: 1 US$ R$ 2)
How to compare families with
similar income but different
number of members?















Brazil as usual
Facts 4. Socio-Demography
Urbanization rate
Brazil 83.8%
Central-West region 87.7%
North region 78.0%
Northeast region 72.4%
South region 83.0%
Southeast region 92.1%
Rio de Janeiro (metropolitan) 99.4%
So Paulo (metropolitan) 94.3%

HDI (Human Development
Index)

Life expectancy at birth: 73.5
years (69.3 for men, 76.8 for women)
Mean years of schooling (of
adults): 7.2 years
Ranking: 85

Child mortality rate: 16 (number of
newborn babies per 1,000 that will
probably die before reaching age of five)

Literacy rate: 88.6% (men =
88.4%, women = 88.8%)


Brazil as usual
Facts 4. Socio-Demography

Additional social indexes

Illiteracy rate: 8.6%
Additional social indexes

Gini coefficient: .54 (as of
2009)




Additional social indexes

Unemployment rate: 7.3%
(IBGE, Oct. 2012)

Urban violence: 30
homicides per 100,000
inhabitants per year (world
average = 5), similar to civil war
rates; mainly from organized
crime actions, specially drug
trafficking

Brazil as usual
Facts 4. Socio-Demography

Large population
Opportunities in the domestic (vs. foreign) market
But what about geographic dispersion and purchasing power?

Low educational level
Low productivity

High rates of urban violence
high costs for the State
discourages inward foreign direct investment
affects tourism prospects

The Belindia (Belgium + India) story (cf. Edmar Bacha)
Brazil as usual
Implications for Business 4. Socio-Demography



Brazil as usual
Framework / Cases 4. Socio-Demography




Brazil as usual
Facts 5. Politics and Legislation

Evolution of political regime:
Colony
Empire
Old Republic
New State
Dictatorship
Liberalization /
Democratization
Populism / Pseudo-
Socialism







Brazil as usual
Facts 5. Politics and Legislation


A politically (and
economically) independent
country

Current Government type:
Federal Republic with a
parliamentary regime

Proportional (vs. district)
voting
Votes to candidates and
votes to parties






Brazil as usual
Facts 5. Politics and Legislation

A politically immature population

Civil Law (vs. Common Law) country

The Constitution and amendments to it

Power distributed among Federal Government, States,
Municipalities and the Federal District (specially, regarding
taxes)

Independence (?) among the legislative, the executive
and the judiciary powers
President of the Republic can issue provisional
measures and delegated laws
A game of compadres
E.g.: Mensalo (big monthly stipend)





Brazil as usual
Facts 5. Politics and Legislation

Consumer protection
Regulatory agencies
CADE
Procom
CONAR

CADE (Conselho Administrativo de Defesa Econmica):
Promotion and defense of (healthy) competition

Procom (Instituto de Defesa do Consumidor)
enforcement of consumers rights

CONAR Conselho Brasileiro de Autorregulamentao
Publicitria
A privately-run institutions whose responsibility is to
guarantee ethics and consumer rights in advertisement
activities

Arbitration as an alternative to the regular slow
judiciary system






Brazil as usual
Facts 5. Politics and Legislation

Fiscal Responsibility Law

1990: Liberalization of the economy to foreign
competition

Industrial Policy
Imports substitution phase
Selection of industries to be (preferentially) developed
Incentives to national champions

Monetary correction of retirement proceeds
Tied to the minimum salary (which rises higher than
inflation), but not to inflation directly

Relationship between unemployment insurance, informal
employment and public pension funding

Profits remittance to foreign countries
Bureaucracy and paperwork. E.g.:
250 laws related to the installation of new telecom antennas
120 documents necessary to import a single container
14 years to close down a legally established firm

Legal dysfunctions. E.g.:
Payment of overtime to employees while in the company bus
(which is a way to circumvent deficiencies in public transportation)
Fine to firms that distribute profits to employees, under the
allegation that it is disguised salary
Controversies across different public institutions / agencies

A quest for breaches in the legislation (and the use of
jeitinho brasileiro)

Importance of political connections

Corruption
Legislative, Executive and Judiciary powers
Police
Brazil as usual
Implications for Business 5. Politics and
Legislation


Very complex tax system
http://www.impostometro.com.br/posts/a-
complexidade-do-sistema-tributario-brasileiro

Taxation substitution (substituio tributria)

Tax incentives and tax wars among states

Economic return (to firms) vs. Social return (to the
Government)

Tax exemption
Zona Franca de Manaus
ZPE Zonas de Processamento de Exportao

Cumulative taxation










Brazil as usual
Implications for Business 5. Politics and
Legislation


Complex labor legislation

Labor charges over salaries
Frias
Adicional de Frias
13 salrio
Adicional de remunerao (hora extra, hora noturna, insalubridade, periculosidade)
Ausncia remunerada
Licenas
Descanso Semanal Remunerado
Feriados
Resciso contratual
Vale-transporte












Brazil as usual
Implications for Business 5. Politics and
Legislation


Social charges over salaries
INSS
Fundo de Garantia do Tempo de Servio (FGTS)
Salrio Educao
Sistema S (Senar, Senac, Sesc, Sescoop, Senai, Sesi, Sest, Senat, Sebrae, DPC, Incra e
Fundo Aerovirio)

Examples of non-compulsory social charges
vale-refeio
assistncia mdica
Gratificaes
participaes no lucro
auxlio creche
. . .

http://www.brasil.gov.br/empreendedor/contas-em-dia-
1/encargos-trabalhistas






Brazil as usual
Implications for Business 5. Politics and
Legislation



Brazil as usual
Framework / Cases 5. Politics and Legislation




Brazil as usual
Facts 6. Economy

1960s and 1970s dictatorship and economic miracle

1980s lost decade (institutional instability, inflation)

1990s democratization and stabilization

2000s redistribution of income and reduction of
inequalities (the inclusive decade)




Brazil as usual
Facts 6. Economy

Still a strong presence of the State in the economy
State-owned enterprises
BNDES (Banco Nacional de Desenvolvimento Econmico e
Social)

Economic policy based in three goals:
Primary surplus of Government accounts and fiscal
responsibility
Floating exchange rate
Maximum inflation target

Taxes
Very high: around 35% of GDP!!! (highest in L.A.)
If all due taxes (personal and corporate) were to be
paid, tax would represent 61% of GDP
high tax burden promotes informality and a
disequilibrium: some pay much, some pay little




Brazil as usual
Facts 6. Economy

Gross domestic product (GDP): US$ 2.5 trillion (2011)

GDP growth







Brazil as usual
Facts 6. Economy

Aggregated value by sector (as % of GDP):
Agriculture and cattle raising: 6%
Manufacture: 23%
Construction: 5%
Trade: 14%
Services: 36%
Public administration: 16%
http://www.ipea.gov.br/portal/images/stories/PDFs/radar/110727_radar14.pdf

The role of R&D
Embrapa
Petrobras
Embraer
. . .








Brazil as usual
Facts 6. Economy
Inflation





http://www.bcb.gov.br/?RI
Impact of
Plano Real
Between 1960 and
1994, Brazil had the
highest inflation in the
world (around avg.
15% per month).
In the year of1989:
1,765%!!!




Brazil as usual
Facts 6. Economy
Interest rates














http://www.bcb.gov.br/?RI
Interest rates are still high
(7.25%) as a way to restrain
credit to consumers and, as such,
to keep inflation under control




Brazil as usual
Facts 6. Economy

Exchange rate (BR Real vs. US Dollar)










Undervalued currency
favors exports
Overvalued currency
favors FDI (foreign direct investment)
favors importation (including capital goods)







Brazil as usual
Facts 6. Economy

Along the 1980s
8 economic stabilization programs
15 wage policies
54 changes in the system of prices control
18 changes in the exchange rate policy
21 proposals for renegotiation of external debt
11 distinct inflation indexes
5 Government policies to freeze up prices and salaries
18 government orders to drastically cut off public expenses








Brazil as usual
Facts 6. Economy

Copom Conselho de Poltica Monetria
http://www.bcb.gov.br/?copom

Government objectives regarding income profile






Queremos ser um pas de classe mdia e temos
tudo para ser um pas de classe mdia (Brazil
should be a middle class country)
President Dilma Rousseff, 24 Ocober 2012)








Brazil as usual
Facts 6. Economy

Exports and imports
xxx






Brazil as usual
Facts 6. Economy

Foreign Direct Investments

Outflows (from Brazil) Inflows (into Brazil)





Brazil as usual
Facts 6. Economy

Taxes: 35% of GDP!!!

Informal economy and tax evasion

Virtually no databases about firms and businesses

Financial health
Government bonds and country rating
Stock exchange perspectives

Access to funding
stock exchange
BNDES
private financing

Uncertainty about the future?

High cost of capital

Governments spasmodic intervention in the economy

Business groups
Diversification
Vertical ingtegration





Brazil as usual
Implications for Business 6. Economy



Brazil as usual
Framework / Cases 6. Economy




Brazil as usual
Facts 7. Infrastructure

Transportation and logistics
railroads, highways, waterways, harbors

Energy
Risk of apago (lack of energy or even black outs)

Telecom
Unreliable and costly
Telecom companies prohibited to sell new lines
unless they invest to improve service

Public health
Anticipation vs. remediation







Brazil as usual
Facts 7. Infrastructure

Education
Questionable quality
Lack of technical training

Academic + Professional Master courses (Mestrado
Acadmico + Mestrado Profissional)





Brazil as usual
Facts 7. Infrastructure

Sistema S a set of institutions, developed and
maintained by firms from several sectors
(manufacturing, trade, agriculture, transports,
cooperatives) for technical training
SEBRAE - Servio Brasileiro de Apoio s Pequenas e Mdias
Empresas
SENAI Servio Nacional de Aprendizagem Industria
SESI Servio Social da Indstria
SENAC Servio Nacional de Aprendizagem Comercial
IEL Instituto Euvaldo Lodi
SESC Servio Social do Comrcio
SENAR Servio Nacional de Aprendizagem Rural
SENAT - Servio Nacional de Aprendizagem em Transportes
SEST Servio Social de Transportes
SESCOOP - Servio Nacional de Aprendizagem do Cooperativismo
http://www.brasil.gov.br/empreendedor/capacitacao/sistema-s


Custo Brasil

Losses in logistics

Stoppages of production

Tax burden

Inefficiencies of judiciary system

Bureaucracy

Deficiencies in infrastructure

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Instability

Funding sources







Brazil as usual
Implications for Business 7. Infrastructure



Brazil as usual
Framework / Cases 7. Infrastructure




Brazil as usual
Implications for Business 8. Old Business
Landscape

Not an easy environment to run a business

Brazil in not for beginners (O Brasil no para
principiantes), allegedly said by Tom Jobim, a famous Brazilian
composer and singer.







Brazils Cost (Custo Brasil): the increased cost of doing
business in Brazil due to several deficiencies and
anomalies

Losses in transportation
Delays
Damage to the products
Fuel consumption
Cargo theft

Stoppages of production
Delays in delivery of inputs
Lack of energy
Employees health problems

Tax burden
Overload
Complexity and breeches in tax legislation and related evasion

Brazil as usual
Implications for Business 8. Old Business
Landscape


Brazils Cost (Custo Brasil): the increased cost of doing
business in Brazil due to several deficiencies and
anomalies

Inefficiencies of judiciary system
Slowness
Corruption
Lack of independence from the Executive

Bureaucracy
Legal procedures and paperwork
Administrative procedures and paperwork
Legal extortion and related corruption

Deficiencies in infrastructure
Energy blackouts(apages)
Telecom expensive and unreliable
Roads and highways, harbors, airports

Brazil as usual
Implications for Business 8. Old Business
Landscape


Brazils Cost (Custo Brasil): the increased cost of doing
business in Brazil due to several deficiencies and
anomalies

But Brazil is definitely getting better in terms of:

Stability
Politics and legislation (but Government still intervening and
changing rules)
Economy (and related shocks0
Social issues

Funding sources
Stock exchange
Venture capital and private funds
But still scarcity of long-term financing sources role of BNDES

Brazil as usual
Implications for Business 8. Old Business
Landscape

Business practices in urban vs. rural areas
Compadres relationship
Colonels


Personalization

Corruption

Political power of Unions (Sindicatos)


Brazil as usual
Implications for Business 8. Old Business
Landscape



Brazil as usual
Framework / Cases 8. Old Business
Landscape
Brazil today




Brazil today
Facts 9. New Macro-environment

Social aspects

Child mortality rate: 16 (per 1,000)

Life expectancy at birth: 69.3 (men), 76.8 (women)

Children at school: virtually all of them

Average number of children per family: 1.9 (down from
6, in the remote past)
higher per capita income
better education and health

Population growth: ~1%
aa

Less than 50% of the population have access to
improved sanitary facilities





Brazil today
Facts 9. New Macro-environment

Social aspects

Public health
Anticipation vs. remediation

Violence indexes
The role of UPPs (Unidades de Polcia Pacificadora
Pacifying Policy Units) in Rio



Brazil today
Facts 9. New Macro-environment

Social aspects








Brazil today
Facts 9. New Macro-environment
Economic aspects

Positive, but unsteady, evolution of GDP (Gross
Domestic Product)


Source: IBGE (2012)
international
financial crisis
China and
India have
outgrown
Brazil in the
past 20 years




Brazil today
Facts 9. New Macro-environment

Economic aspects

Gross public (internal) debt: less than 50% of GDP (in
several developed countries, it is more than 100% of GDP)

External debt: Brazil is now a net creditor!

Sovereignty credit ratings
Investment grade since 2008 (Standard & Poors and Fitch)
and 2009 (Moodys)
Good, but still around BBB

Huge reduction in the spread of Government bonds

Accounting standards
Brazilian GAAP is converging to IFRS





Brazil today
Facts 9. New Macro-environment

Economic aspects

Stabilized currency: Real
Inflation rates (annual):













1999 = 8,94%
2000 = 5,97%
2001 = 7,67%
2002 = 12,53%
2003 = 9,3%
2004 = 7,6%
2005 = 5,69%
2006 = 3,14%
2007 = 4,46%
2008 = 5,90%
2009 = 4,31%
2010 = 5,91%
2011 = 6.50%
2012 = (estimated)
2,500%
aa
Source:
http://www.ipeadata.gov.b
r/




Brazil today
Facts 9. New Macro-environment

Economic aspects

Nominal interest rates











Banks spread: too high
high cost of credit
higher risk of default



7.25%, Oct 2012
23.28%, Jul 1996
Source:
http://www.ipeadata.gov.b
r/




Brazil today
Facts 9. New Macro-environment

Employment

Unemployment rate: 7.3% (IBGE, Oct. 2012), lowest in
10 years

Formal employment doubled since 2004
More taxes collected
More access to health services
More access to banking services and credit





Brazil today
Facts 9. New Macro-environment

Wages and personal income

Increase in average wages (21%, 2001 2011),
specially for:
Less qualified workers (39%)
Elderly workers (24%)
reduction of inequality

Increase in average income (2001 2011):
For the 10% poorest: 90%
For the 10% richest: 10%
reduction of inequality
social inclusion (e.g., increase of 40% in homes with
internet access)

According to Neri (2001), between 2001 and 2009:
Average per capital income has risen at 2.7% a year
(accumulated 23,7% in eight years) in real terms
good but not an amazingly high increase





Brazil today
Facts 9. New Macro-environment
Wages and personal income

The rise in income has particularities
By geopolitical regions:
While average income rise = +23.7% (2003 2009)
In the Northeastern region (poor) = +41.8%
In the Southeastern region (rich) = +15.8%
In So Paulo = +7.2%
By type of location:
Rural areas > urban areas
By gender:
Women = +38%
Men = +16%
By skin color:
Black and pardo population: +43% and +48%
White population: +20%
By education level:
Lower school level: +46%
Higher school level: +17%




Brazil today
Facts 9. New Macro-environment

Wages and personal income


Interestingly:
Rise in income and purchasing power of the poorest
Without diminishing that of the richest (in absolute terms)

Consumption and social inclusion

by families recently moved to the middle class has been
fueling the economy

But there is a high risk of default on consumers debts






Brazil today
Facts 9. New Macro-environment

Wages and personal income

Income distribution
Average per capita
Average per family
Less unequal distribution (but still the 4
th
worst in Latin
America, and 12
th
worst in the world)

According to Neri (2001),
Family (household) income has been rising more that
GDP per capita (average 4.7% vs. 2.9%, respectively,
2003-2009)


After all, what would be a good measure of a nations
wealth and well-being?






Brazil today
Facts 9. New Macro-environment
Wages and personal income
Brazils micro-social picture is evolving better than its
macroeconomics

Government Programs that influenced the distribution of
income
Bolsa Famlia (Family Allowance Program)
Bolsa Escola (School Allowance Program)
Fome Zero (Zero Hunger)
Brasil sem Misria (Brazil without Poverty)
Minha Casa, Minha Vida (My Home, My Life)
PAC (Programa de Acelerao do Crescimento - Acceleration of
Growth Program)

Benefits from social assistance programs tied up to
school attendance and health care participation

Quotas for minorities (black people, poor, disabled, )




Brazil today
Facts 9. New Macro-environment

Reduction of (still high) inequalities

In 1989, the 50% poorest had 10% of total income,
while the 10% richest had 50%

From 1992 to 2011 (and projections for 2014):
Class E: 35% 13% (9%)
Class D: 28% 20% (16%)
Class C: 33% 55% (60%)
Class A+B: 5% 12% (15%)

This is different from (and better than) what can be
observed in several developed and emerging countries




Brazil today
Facts 9. New Macro-environment

Reduction of (still high) inequalities

From 1992 to 2009:
Sewage services: 36.0% 51.0%
Garbage collection: 58.8% 81.9%
Washing machine: 23.1% 44.4%
Refrigerator: 69.9% 93.9%
TV set: 73.1% 96.5%

As of 2007, middle class had a better life:
1/3 had a bank account
had a computer at home
5% had broadband internet access at home
34% had a car
Bought 40% of the computers, 40% of new cellular
lines, 70% of newly issued credit cards

Reduction of (still high) inequalities

Source: IPEA
Brazil today
Facts 9. New Macro-environment




Brazil today
Facts 9. New Macro-environment

Reduction of (still high) inequalities

But severe inequalities still persist:














Source: IBGE (2009) Pnad
Class A/B Class C Class D Class E
Internet access at home 75.8% 33.9% 9.7% 6.7%
Mobile phone 95.9% 86.2% 77.2% 62.8%
Average years of education 12.0 7.2 5.5 5.0
College education 47.7% 10.5% 2.1% 2.4%
Sewage services 72.0% 57.8% 40.5% 30.7%
Garbage collection 91.9% 87.5% 77.0% 64.2%
Washing machine 85.7% 53.2% 25.0% 16.5%
Refrigerator 99.7% 97.5% 92.5% 79.8%
TV set 99.5% 97.6% 96.0% 91.2%

The new role of the State

Few state-owned companies

Regulatory agencies

The role of BNDESPar (BNDES Participaes)
Long-term financing at reasonable cost
Equity capital
Participation on the board and strategic guidance

Power of pension funds
Current State-owned companies
Former state-owned companies
Brazil today
Facts 9. New Macro-environment

Political and institutional stability

Soft transition from a Liberal party to a Labor party
(2002-2003)



Brazil today
Facts 9. New Macro-environment

Sustainable progress

Low unemployment rate and higher formal employment
leads to
Higher disposable income
Higher access to credit
Higher consumption
Higher production (or imports)
(possibly) More jobs
Higher tax revenues for Government




A sustainable
virtuous cycle?
Brazil today
Facts 9. New Macro-environment




Brazil today
Facts 9. New Macro-environment

Sustainable progress

Indications of sustainability of the new state of affairs:
Salary vs. welfare programs:
Income from labor correspondents to 76% of
average income of Brazilians
Income from labor has risen more than income from
other sources (e.g., assistencialist / welfare
Government programs)

Rise in formal employment

Rise in average number of years of formal education
From 5.0 (2993) to 7.3 (2009)








Brazil today
Facts 9. New Macro-environment

Brazilians state to have a high degree of satisfaction
with life (17
th
across 144 nations, Gallup World Pool,
2009)

Brazilians present the highest positive future outlook
(Future Felicity Index, across more than 150 countries)

Higher evaluation regarding future prospects (highest
across 146 nations) vs. current situation a continuing
sense of optimism



Money in
the pocket
Happiness
+




Brazil today
Facts 9. New Macro-environment

Liberalization of the economy

End of restrictions to imports in 1991 Liberalized
market
But several requirements for national content and
technology transfer
Bureaucratic impediments to free trade

Privatization
Started in 1997 (e.g., Vale) during Fernando
Henrique Cardosos mandate
But several new state-owned enterprises were
created during Lulas mandate

From a state-owned economy to a privatized economy
with regulatory agencies









Liberalization of the economy

Regulatory agencies
The State does not run the companies directly
anymore, but regulatory agencies (expectedly) make
sure that consumers are not exploited by quasi-
monopoly of by oligopolistic power by the new
owners of the companies
ANATEL - telecom
ANP oil & gas
Aneel electrical energy
ANS health
Anvisa sanitary vigilance
ANA hydric resources
Ancine cinema
Antaq water transports
ANTT land transports
ANAC civil aviation

Brazil today
Facts 9. New Macro-environment




Brazil today
Facts 9. New Macro-environment

Liberalization of the economy

Mercosur, still a promise?

PAC: only 7% of the projects have been concluded (in
seven years)

Green and slow

Patents and industrial property
Full compliance with TRIPS agreement
But INPI (National Institute of Industrial Property) is
understaffed and slow





Brazil today
Facts 9. New Macro-environment

Politics and legislation

National, State and Municipal Elections
Electronic voting
Counting is published real time
Final results announced with hours
reduced uncertainty
virtually no risk of fraud

Labor relations
Too rigid laws
Too costly to hire (payroll charges are typically between 50% and
100% of gross salary)
Too costly and difficult to fire

Import tariffs still a bit high

The quality of Brazils growth is better than that of
China:
Environmental concerns
Reduction of inequality

Brazil has been following the mid-way path, that is a
balance and complementation between:
Social programs promoted by the State
Market rules
Brazil today
Facts 9. New Macro-environment

What made it possible for Brazil to navigate well through
the world financial crisis of 2008-2009?
Strength of the internal consumer market
International monetary reserves
(high) Tax inflow coupled with fiscal responsibility
Long history of regulation of the financial system
Exports still heavily dependent on agricultural and food products
(but also a reasonably diversified export basket)
High State investment (mainly in logistics and sanitary facilities)
Self-sufficience in oil needs
Persistent optimism and adaptability of its people

A macro-economic tripod:
Inflation targets
Floating currency exchange rate
Primary surplus targets and fiscal responsibility

Institutional stability of rules and regulations
Brazil today
Facts 9. New Macro-environment

More information about countries can be found on several
public databases:

World Bank, World Development Indicators,
http://www.worldbank.org/,
http://ddp-ext.worldbank.org/ext/DDPQQ/member.do?method=getMembers
World Bank, financial indicators,
http://ddp-
ext.worldbank.org/ext/DDPQQ/member.do?method=getMembers&userid=1&query
Id=5
CIA World Factbook,
https://www.cia.gov/library/publications/the-world-factbook/
Euromonitor International, Global Market Information
Database
U.S. Census Bureau Foreign Trade Division, Country
Trade Data
Brazil today
Facts 9. New Macro-environment

More information about countries can be found on several
public databases:

Euromoney, Country Risk Survey
United Nations, http://hdr.undp.org/en/statistics/
World Trade Organization, www.wto.org/
The Heritage Foundation (www.heritage.org) (economic
freedom index)
Freedom House (www.freedomhouse.org) (political
freedom)
The Economist
http://graphics.eiu.com/PDF/Democracy_Index_2010_we
b.pdf (Democracy Index)
Fraser Institute (http://www.fraserinstitute.org/)
(economic freedom)
. . .


Brazil today
Facts 9. New Macro-environment



Brazil today
Framework / Cases 9. New Macro-environment




Brazil today
Facts 10. New Business Landscape

Typical types of firms in Brazil
Family businesses
Family-run
Professionally-run
State-owned enterprises
Privatized firms
Corporations
Privately-held
Publicly-held
Conglomerates and Business Groups





Brazil today
Facts 10. New Business Landscape

The new middle class

A healthy combination of:
Income growth
More equality in distribution of income

But a somewhat worrying:
Low savings rate

A signed carteira de trabalho (workers booklet) as a
symbol of the upward movement in the social strata

A position of public officer as a platonic dream


The strength of the middle class
People in classes A + B + C raised 49MM (2003 2011;
13MM only between 2009 - 2011)
Now 55% of the population are in the middle class
they could decide any election!

The size of BoP (base of the pyramid)
Classes D + E: from 96MM to 64MM people (2003 2011)

Proportional purchasing power (as of 2011):
Classes A + B = 46.6%
Class C (middle class) = 45.6%
Classes D + E = 7.8%




Brazil today
Facts 10. New Business Landscape




Brazil today
Facts 10. New Business Landscape

The new middle class

Opportunity of access to (conceptually public) services
offered by private firms:
School
Health plan
Pension funds











Need for smarter market segmentation. E.g.,
Beleza Natural
Unilever and their Seda shampoo line

Differences in consumer behavior and practices of the
new middle class vs. traditional upper classes and
traditional middle class
Objects of desire
Functional illiteracy
Word-of-mouth
Engrained sense of inferiority and related
complaining practices

New markets and lack of resources to carter to all
markets

Brazil today
Implications for Business 10. New Business
Landscape






Micro-finance and
Beyond pawn shops, loans from friends and relatives,
or the informal (and extortive) market
Long tail analogy
Group dynamics

Brazil today
Implications for Business 10. New Business
Landscape





Need for new business models and monetization
practices

Possible inspiring examples:
Professor Mohammad Yunus Grameen Bank (India)
micro-credit program
(small) group financing in which each participant is
conjointly responsible the payment of installments of
the whole group
social pressure and control implies low default risk
but there is risk of misappropriation (e.g., women
getting loans for husbands)
financing of consumption vs. of production
Cemex (Mexico)
Remittance of money by Mexicans living in the US is
tied to purchase of goods
Financing of wedding gifts (personal importance of
gifts + group financing)
Brazil today
Implications for Business 10. New Business
Landscape






Banco do Nordeste
Crediamigo program (elected by BID as best micro-
credit program of Latin America)
Sinaf (Brazil)
Funeral insurance
Traditional agricultural credit, livestock credit, fisheries
credit, cooperative credit

Brazil today
Implications for Business 10. New Business
Landscape






Other opportunities
Better credit analysis (e.g., Casas Bahia in Brazil)
Basic health care
Micro-insurance and group insurance
Health
Unemployment
Installments
Automobiles
Real state and production goods
Retirement pensions
Life
Social assistance initiatives by private firms
How to bring benefits for the local community,
the employees, the shareholders, the country?
Economic rate of return vs. social rate of return

Brazil today
Implications for Business 10. New Business
Landscape






Religious behavior and practices (specially evangelist)

Expansion of production capacity

Capillarity in distribution

Need to conciliate economic growth with environmental
issues and equality issues

Brazil today
Implications for Business 10. New Business
Landscape


If personal income continues to rise at 4.6%
a.a.
while
GDP rises at 1.6%
a.a
, in 2014 there will be:
Additional 12 million consumers in Class C
7 million consumers migrating from Class C to Classes A + B

When a consumer moves from Class D to Class B:
Consumption of basic products/services (e.g., food, clothes,
furniture) less than doubles
Consumption of luxurious products/services (e.g., fuel, IT and
telecom products and services, tourism) more that triples (Neri,
2011)


Brazil today
Implications for Business 10. New Business
Landscape

Ease of doing business in Brazil:



Brazil today
Implications for Business 10. New Business
Landscape
TOPIC RANKINGS DB 2013 Rank DB 2012 Rank Change in Rank
Starting a Business 121 122 1
Dealing with Construction Permits 131 130 -1
Getting Electricity 60 61 1
Registering Property 109 105 -4
Getting Credit 104 97 -7
Protecting Investors 82 79 -3
Paying Taxes 156 154 -2
Trading Across Borders 123 123 No change
Enforcing Contracts 116 120 4
Resolving Insolvency 143 139 -4
Source: World Bank
http://www.doingbusiness.org/data/exploreeconomies/brazil/
Out of 185 nations
(the higher, the worse)

Ease of doing business in Brazil:
Starting a business



Brazil today
Implications for Business 10. New Business
Landscape
Indicator Brazil
Latin America &
Caribbean OECD
Procedures (number) 13 9 5
Time (days) 119 53 12
Cost (% of income per
capita)
4.8 33.7 4.5
Paid-in Min. Capital (% of
income per capita)
0.0 3.7 13.3

Ease of doing business in Brazil:
Dealing with Construction Permits:



Brazil today
Implications for Business 10. New Business
Landscape
Indicator Brazil
Latin America &
Caribbean OECD
Procedures (number) 17 13 14
Time (days) 469 225 143
Cost (% of income
per capita)
36.0 143.7 78.7

Ease of doing business in Brazil:
Getting Electricity



Brazil today
Implications for Business 10. New Business
Landscape
Indicator Brazil
Latin America &
Caribbean OECD
Procedures (number) 6 5 5
Time (days) 57 66 98
Cost (% of income
per capita)
116.7 559.0 93.0

Ease of doing business in Brazil:
Registering Property



Brazil today
Implications for Business 10. New Business
Landscape
Indicator Brazil
Latin America &
Caribbean OECD
Procedures (number) 14 7 5
Time (days) 34 67 26
Cost (% of property
value)
2.6 6.0 4.5

Ease of doing business in Brazil:
Getting Credit



Brazil today
Implications for Business 10. New Business
Landscape
Indicator Brazil
Latin America
& Caribbean OECD
Strength of legal rights index (0-10) 3 6 7
Depth of credit information index (0-6) 5 3 5
Public registry coverage (% of adults) 46.8 11.1 10.2
Private bureau coverage (% of adults) 62.2 33.8 67.4

Ease of doing business in Brazil:
Protecting Investors



Brazil today
Implications for Business 10. New Business
Landscape
Indicator Brazil
Latin America
& Caribbean OECD
Extent of disclosure index (0-10) 6 4 6
Extent of director liability index (0-10) 7 5 5
Ease of shareholder suits index (0-10) 3 6 7
Strength of investor protection index
(0-10)
5.3 5.0 6.1

Ease of doing business in Brazil:
Paying Taxes



Brazil today
Implications for Business 10. New Business
Landscape
Indicator Brazil
Latin America &
Caribbean OECD
Payments (number per year) 9 30 12
Time (hours per year) 2,600 367 176
Profit tax (%) 24.6 21.5 15.2
Labor tax and contributions (%) 40.8 14.4 23.8
Other taxes (%) 3.8 11.3 3.7
Total tax rate (% profit) 69.3 47.2 42.7

Ease of doing business in Brazil:
Trading across Borders



Brazil today
Implications for Business 10. New Business
Landscape
Indicator Brazil
Latin America &
Caribbean OECD
Documents to export (number) 7 6 4
Time to export (days) 13 17 10
Cost to export (US$ per container) 2,215 1,268 1,028
Documents to import (number) 8 7 5
Time to import (days) 17 19 10
Cost to import (US$ per container) 2,275 1,612 1,080

Ease of doing business in Brazil:
Enforcing Contracts



Brazil today
Implications for Business 10. New Business
Landscape
Indicator Brazil
Latin America &
Caribbean OECD
Time (days) 731 727 510
Cost (% of claim) 16.5 30.8 20.1
Procedures (number) 44 40 31

Ease of doing business in Brazil:
Resolving Insolvency



Brazil today
Implications for Business 10. New Business
Landscape
Indicator Brazil
Latin America
& Caribbean OECD
Time (years) 4.0 3.1 1.7
Cost (% of estate) 12 16 9
Outcome (0 as piecemeal sale and 1 as going
concern)
1 0 1
Recovery rate (cents on the dollar) 15.9 34.1 70.6




Brazil today
Framework / Cases 10. New Business
Landscape
Agenda for the future

At current rates of growth and reduction of inequalities:
Middle class will grow from 50.5% of the population to 60.2% in
2014

What about propensity of consumption vs. savings by
the population?



Agenda for the future
Continued rise of the middle class?

Urgent need for structural reforms:
Fiscal and Tributary
Political
Judiciary
Labor relations
Retirement rules and Pension funds
Agrarian
. . .

Bureaucracy, red tape, paperwork

Corruption (still high, although diminishing)

Quantity and quality in basic, elementary and technical
education

Agenda for the future
Reforms

Need of clear and long-term industrial policy

Size of the State
Breaches for political favors
High cost and inefficient allocation of public resources


Agenda for the future
Reforms

Important upcoming events
FIFA World Cup
Olympic Games

Important changes
Exploitation of pre-salt oil reserves
Upward mobility of consumers
Where is the infrastructure???



Agenda for the future
Opportunities
Porters Diamond model (before and after 1990)
Demanding buyers?
Competitive suppliers?
Rivalry among competitors and push for innovation
Supporting industries and infrastrucutre
The role of Government and the place for national champions

17 ports are expected to be improved until 2015

Electrical energy supply ???

Railroads
Transnordestina

Capital markets
Still less than 500 firms publicly listed
BNDES as virtually the sole external source of long-term funding at
reasonable rates

PPP Public Private Partnerships
Agenda for the future
Infrastructure

Still low educational levels and achievements, but
education is now reported to be the 2
nd
highest priority
of Brazilians (vz. 7
th
until recently)
Need for better and more motivated teachers
Need for technical and professionalizing courses
but how to fight the prejudice against technical (vs. academic)
education, possibly a cultural heritage?

Low productivity of Brazilian workforce

Technology parks and incubators

Venture capital and private funding



Agenda for the future
Supporting structure

Government expenses (as a proportion of GDP) in social
programs and infrastructure for the population are
similar to those of developed countries, but results are
still poor in terms of improvement of the well-being of
the population

Quantitative (e.g., all children now go to school, but it is
not easy to see a doctor or to receive treatments from
public hospitals) vs. qualitative results (e.g.,
performance in international school tests, level of
services by public hospitals)

Agenda for the future
Social Policies

Five main issues:

1. Pension funds
From pension funds to a few elderly supported by lots of youths
to equitable and fair pensions (public and private) to an aging
population.
Today, aprox 11% of GDP (way too high for a country with a young
population)
Change in the age pyramid: by 2050 the age distribution of the
Brazilian population will be similar to todays European countries

2. Social assistance and income distribution
From simple solutions based in migration from rural areas to major
cities and social programs to increase the income of the very poor
to effectively incorporating this population into the formal job
market
teaching how to fish rather than just giving out the fish freely

Agenda for the future
Social Policies

Five main issues (cont.):

3. Health
Not only reduction in child mortality and in infectious diseases
but access to quality medical service to the whole population
(from private as well as public institutions).
Today, aprox. 9% of GDP

4. Education
From more elementary schools and more teachers
to quality intermediary school formation and technical formation
provided by private as well as public schools

5. Public safety (violence control)
From regular police activities
to war-like attitude against traffic dealers and related crimes



Agenda for the future
Social Policies

Inward FDI
Historic pattern
Rio de Janeiro as currently the third destination of IFDI (after
Beijing and London)

Outward FDI







Agenda for the future
Foreign Direct Investment (FDI)