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Only with the implementation of such measures will Brazil be able, at least in the medium and long term, to extricate itself from the ‘quagmire’ of being almost the ‘last’ in the world competitiveness ranking, where it fell from 58th to 65th position, among 70 nations evaluated by the Institute for Management Development (IMD), in partnership with the Fundação Dom Cabral (FDC). This convergence of actions is hindered by political polarization, which paralyzes structural reforms in favor of ideological disputes.
Standards compatible with the 10th largest economy on the planet
Next, we will detail each of the topics necessary for the reorientation of the Brazilian economy to efficiency standards compatible with the 10th largest economy on the planet.
Human capital and education: poor professional training continues to be Brazil’s greatest Achilles’ heel, frequently placing it at the bottom of global rankings in this regard.
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A city with 8,000 inhabitants will receive R$ 25 billion to host the largest single-stage pulp mill in the world, with a production of 3.5 million tons per year and a cost of R$ 45 million.
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He left India for Oman in 1976, entered through the door of luxury finishes, and took Sobha to the premium real estate market in the Middle East.
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China wants to impress the world once again with a mega canal featuring giant locks, deep waters, and space for the largest ships, in a project aimed at shortening journeys, reducing queues, and rivaling the Panama Canal in global trade.
Basic education: low quality in primary and secondary education.
Professional qualification: lack of qualified workforce, deficit in language proficiency and financial skills.
Government efficiency and business environment: public management and national market rules hinder the operation and survival of companies.
Quality of public spending: low efficiency in converting taxes into structural investments, keeping the country in the last position in this pillar.
Legal environment: regulatory insecurity, complex laws, and institutional uncertainties that deter long-term planning.
Cost of capital and corporate debt: the cost of financing and operating in the country is a huge burden for the productive sector.
Interest rates and indebtedness: Brazil scores at the maximum limit of fragility (70th position) in the cost of capital and corporate debt indicator, exacerbated by record levels of business default.
Determinants of Brazil’s delay
Focus on short-term electoral gains: use of the public budget for spending expansion without fiscal responsibility, which raises inflation and interest rates.
Commercial isolation and protectionism: maintenance of high tariffs and lack of new free trade agreements.
Excessive bureaucracy: creation of logistical and regulatory hurdles that stifle the productive sector.
When ‘dissecting’ the country’s four Achilles’ heels (primary and secondary education; labor productivity; professional qualification and cost of capital), the director of the Innovation, AI and Digital Technologies Center at Fundação Dom Cabral, Hugo Tadeu, evaluates that, despite the country having a ‘significant agenda’ for basic and secondary education, there is still much to be developed, as we cannot transfer knowledge to the economy at the necessary speed.” Positive points include: improvement in the ability to attract investments, job creation, entrepreneurship, and sustainability.
PTF Concept Brings Together Productivity Factors
Regarding the dismal levels of productivity, Tadeu emphasizes that it is not just about considering the ability to produce more with fewer resources. According to him, this involves Total Factor Productivity (TFP), a concept that takes into account the “economy’s efficiency in obtaining capital, technology, innovation, and professional qualification, and then producing wealth.”
As if the national shame of the country being in the last position in the ranking for primary and secondary education, language skills, financial skills, and workforce productivity wasn’t enough, corporate default reached catastrophic levels, with 9 million CNPJs being negatively listed last January, 1.5 million more than the same month last year and the highest level in the historical series.
A lamentable finding that accounts for the almost absolute appropriation of resources by the State is the fact that the largest ‘slice’ of these is directed towards financing the public sector, to the detriment of private companies, which face high levels of debt and financial costs. “Brazil has a lot of money, but it is being channeled to the government. From the companies’ perspective, corporate debt is very high,” points out Tadeu.
Confusing Legal Environment is a Trademark
Another serious consequence can be found in the ‘business efficiency’ category, which fell 11 positions and six positions in the case of economic performance. A similar situation concerns the ‘capital’ topic, where corporate debt occupies the last place in the study, a position resulting, to a greater extent, from a confusing legal environment, regulatory uncertainties, and the cost of doing business, rather than from high interest rates (see Selic rate, now at 14.25% per year). “We have a confusing legal environment, regulatory uncertainties, and a high cost of doing business in Brazil,” he concludes.
List of countries with the worst competitiveness
63rd Slovakia
64th Ghana
65th Brazil
66th Mexico
67th Botswana
68th Mongolia
69th Nigeria
70th Namibia
70th Venezuela
See the Top 10 in competitiveness
1st Singapore
2nd Hong Kong
3rd Switzerland
4th Taiwan
5th United Arab Emirates
6th Denmark
7th Ireland
8th Netherlands
9th Sweden
10th United States
