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FOR INTERNAL DIS
Charting a
Steady Course
Turning Brazil into a Business and
Investment Hub
Brazil Investments & Business (BRAiN) is a private nonprofit organization whose mission is to
reinforce Brazil’s position as an international business and investment hub through a regional
focus and a global projection, contributing to the sustainable economic and social development
of Brazil and Latin America.
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s
leading advisor on business strategy. We partner with clients from the private, public, and not-for-
profit sectors in all regions to identify their highest-value opportunities, address their most critical
challenges, and transform their enterprises. Our customized approach combines deep in­sight into
the dynamics of companies and markets with close collaboration at all levels of the client
organization. This ensures that our clients achieve sustainable compet­itive advantage, build more
capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with
78 offices in 43 countries. For more information, please visit bcg.com.
APRIL 2013 | The Boston Consulting Group • BRAiN
Charting a Steady
Course
Turning Brazil into a Business and Investment Hub
Andre Xavier
Masao Ukon
Juliana Abreu
Frederick Pierru
Joao Moreira
Paulo Oliveira
Pedro Guerra
2 | Charting a Steady Course
Contents
	 3	 Introduction
	 5	 Investment Attractiveness: The Seven Pillars
Macroeconomic Environment
Institutional Environment
Talent and Human Capital
Physical Infrastructure
Financial Infrastructure
Global Connectivity
Image
	16	 Immense Promise
	17	 For Further Reading
	18	 Note to the Reader
The Boston Consulting Group • BRAiN | 3
If you know whence you came, there are absolutely no limitations to where
you can go. —James Baldwin
Few observers doubt the immense potential of Brazil, one of the
world’s most significant emerging economies. Indeed, Brazil has
great advantages. Compared with its colleagues in the BRIC quartet of
emerging giants, it is richer than India and China and larger and more
democratically stable than Russia.1
It is the largest nation in Latin
America, with one-third of the region’s population generating 44
percent of its GDP.2
Already the sixth largest economy in the world, it
could become the fifth by 2020, according to forecasts by the Econo-
mist Intelligence Unit. But growth, and the investment decisions that
underpin it, doesn’t happen by magic. Substantial growth takes
enlightened government and well-informed decisions by potential
investors.
Decision makers and investors need a compass to guide their choices.
In order to know where Brazil is going, they need to know where it is
now—and how it got there. They need an informed sense of Brazil’s
comparative advantages and disadvantages, as well as how it is chang-
ing—in what direction and how fast. They need a view of Brazil’s so-
ciety as well as its economy that goes beyond clichéd images of bril-
liant football teams, the Rio carnival, and the poverty and crime of
the favelas. They should be aware, for example, that Brazilian finan-
cial regulations set standards that most global banking centers fail to
match.
Investors and decision makers also need authoritative, balanced infor-
mation. Alongside the exuberant forecasts, it is important to know
about Brazil’s limitations—and to be aware of strictures such as Euro-
pean trade commissioner Karel de Gucht’s warning in May 2012 that
“Brazil should be proud of the enormous progress it has made in re-
cent years, but it must also know it cannot stand still if it wishes to
move to the next stage of development.”
We aim to provide that compass and guide. This document has its
foundations in BCG’s support for the development of The Attractive-
ness of Brazil as an Investment and Business Hub, a report published in
October 2012 by Brasil Investimentos e Negócios (BRAiN). In this re-
port, we look at Brazil in terms of seven pillars critical to the aspira-
tions of any country with the potential to establish itself as an attrac-
tive business and investment hub. We provide investors and others
interested in doing business in Brazil with a framework to assist them
in thinking about the relative attractiveness of the country in the con-
Introduction
4 | Charting a Steady Course
text of different business objectives—and how best to explore the op-
portunities Brazil offers.
NOTES
1. The comparison of Brazil’s wealth with India and China is based on GDP per capita.
Its size compared with Russia is based on population and nominal GDP.
2. Numbers are from dataworldbank.org, accessed August 15, 2012.
The Boston Consulting Group • BRAiN | 5
BCG’s analysis identified seven key
pillars that underpin a country’s or
region’s relative attractiveness as a business
or investment hub:
Macroeconomic environment,•• including
economic growth, predictability, and
capital investment
Institutional environment,•• including
political and legal systems, legal security,
level of bureaucracy, and business
operations
Talent and human capital,•• including
demographics, education and training,
and talent mobility and attraction
Physical infrastructure,•• including urban
mobility, logistics connectivity, telecom-
munications, and basic services
Financial infrastructure,•• including funding
for the economy and effective risk
allocation
Global connectivity,•• including trade in
goods and services, capital and invest-
ment flows, international business
operations, and flow of people
Image•• of the country, including percep-
tions of Brazil as a place to do business, to
live, or to visit
We analyzed each pillar of Brazil’s perfor-
mance through a number of indicators—a to-
tal of 57 in all—and weighed these results
against the performance of 13 other coun-
tries. (For a list of these countries, see the
sidebar below.) We chose these countries
from three distinct groups—international
hubs, developed nations, and developing na-
Investment
Attractiveness
The Seven Pillars
Brazil’s performance was compared with the following 13 countries:
International hubs
Hong Kong••
Singapore••
U.K.••
U.S.••
Developed nations
France••
Germany••
Japan••
Korea••
Developing nations
Chile••
China••
India••
Mexico••
Russia••
Brazil Versus the World
6 | Charting a Steady Course
tions—as a means of illustrating Brazil’s cur-
rent position. For each pillar, a dashboard
graphic is used to summarize in what direc-
tion and to what degree Brazil has to progress
in order to become a business and invest-
ment hub, and how it compares with other
existing and potential hubs.
Macroeconomic Environment
Brazil offers an attractive macroeconomic en-
vironment. It has grown steadily, is stable and
predictable, and is increasingly regarded as a
safe place to invest. (See Exhibit 1.) The pri-
mary remaining weaknesses are its income
inequality and low saving and investment
rates. This means Brazil will probably contin-
ue to need foreign investment in order to
achieve its desired growth rates.
While growth slowed in 2011 and 2012, Bra-
zil’s overall economic performance is in
striking contrast to its slower and more er-
ratic growth of the 1980s and 1990s. It is
now economically stable after having grown
rapidly in the second half of the last decade,
when it averaged 4.4 percent annual growth
from 2006 through 2010. Brazil is well be-
hind India and China, but it comfortably
outgrew developed nations such as the U.S.
In spite of the recent slowdown, it is still pro-
jected to grow faster than any of the devel-
oped nations sampled, albeit at slower rates
than China and India.
This growth has been driven by upward so-
cial mobility, which has created a much larger
middle class with greater purchasing power.
In 2011, it was estimated that 55 percent of
Brazilian adults lived in middle-class house-
holds—defined as having a monthly income
of between $1,200 and $5,174—compared
with only 38.6 percent in 2002.
Furthermore, poverty and inequality have
decreased. The World Bank estimates that
the proportion of the population living in
poverty (defined as a per capita daily income
Income distribution
Economic growth1
Monetary stability1
Fiscal solidity1
External vulnerability
Economic volatility
Human development
International hubs Other developed nations Developing nations
Brazil
Chile
ChinaGermany
France
U.K.
Hong Kong
Hong Kong
IndiaJapan
South Korea
Mexico
Russia
Singapore
U.S.
Brazil
Chile
China
Hong KongIndiaSouth Korea
Mexico Russia
Singapore
Brazil
ChileChina
Germany
France
South Korea
U.K.
Hong Kong
India
Japan
Mexico
Russia Singapore U.S.
Russia
India Brazil
China
Mexico
Chile
South Korea
Singapore
U.S.
France
Germany
Japan
Japan
U.S.
Singapore
France
U.K. Germany
India
Brazil
Mexico
Hong Kong
China Russia
Hong Kong
U.S.
U.K. Singapore
France Germany
Japan
Chile
Russia China
South Korea
Mexico
India
Brazil
Brazil
Chile
Mexico
Russia U.S.Singapore
Hong Kong China Japan
India
U.K.
France
South Korea
Germany
Poor Needs improvement Good Excellent
U.K.
South
Korea
Chile
Source: BCG analysis.
Note: Information for some countries was not available for every indicator.
1
Based on projected data.
Exhibit 1 | Brazil Is Increasingly Considered a Safe Place to Invest
The Boston Consulting Group • BRAiN | 7
of less than $2) fell from 21 percent to 11
percent from 2003 through 2009. The num-
ber living in extreme poverty (less than $1.25
per day) fell from 10 percent to 2.2 percent
from 2004 through 2009. Brazil’s poorest 10
percent saw their incomes rise by 7 percent
annually in the first decade of this century,
whereas the richest 10 percent saw income
growth of only 1.7 percent. The result is that
Brazil’s Gini coefficient—a measure of the
equality of income distribution, with 0 ex-
pressing total equality and 100 expressing to-
tal inequality—reached a 50 year low at 51.9
in 2011. This is a sign that Brazil is beginning
to combat the extreme disparities often cited
as a serious drag on its social and economic
potential.
Brazil has shown adeptness
in taming inflation and
managing public finances.
Brazil has also managed to tame inflation. In-
flation targets were introduced in 1999, and
annual rates have been in single figures since
2001. While higher than ideal—and also high-
er than in China—at 5 percent on average,
projected inflation from 2012 through 2016
runs lower than both historic levels and lev-
els held by competitors such as Russia and
India.
In addition, the country has shown adeptness
in managing public finances. Public-sector
debt as a proportion of GDP declined by
more than a third from 2002 through 2011,
falling from 60.4 percent to 36.4 percent.
More important, Brazil has become a net for-
eign creditor since 2006—with reserves and
credits exceeding those held by overseas
countries. This is a significant reversal of Bra-
zil’s previous long-term history as a net for-
eign debtor. And real interest rates, a signifi-
cant factor influencing investment costs for
government and the private sector, are at
their lowest level since tracking began in
1986. The 2012 level of 2.7 percent is in sharp
contrast to an 11.7 percent level six years ago,
and Brazil’s real interest rates are now com-
parable with those of China and Russia.
All these improvements mean that Brazil is
now widely recognized as a much safer coun-
try in which to invest. Its score in J.P. Mor-
gan’s Emerging Market Bond Index Plus risk
scale has remained at around 200 points
since 2011.1
In 2002, it scored more than
2,000 points but has improved steadily ever
since—reaching investment grade in 2008.
This helps attract foreign capital—an impor-
tant attribute, since domestic savings remains
a weakness. Brazil invested 17.3 percent of
GDP from 2002 through 2011, lower not only
than the 22 percent needed to maintain the 4
to 4.5 percent growth rate seen from 2006
through 2010 but also well behind BRIC
peers India (30 percent) and China (42 per-
cent). Given these low savings ratios, Brazil
cannot expect to finance its future growth on
its own. This opens up space for savvy foreign
investors and businesses willing to bet on
Brazil’s continued growth and prosperity.
Institutional Environment
Investors interested in Brazil will find a stable
democracy and solid rule of law, but they
should include a slow judicial system as well
as cumbersome labor and taxation legislation
when calculating the cost of doing business
there. (See Exhibit 2.)
Brazilian democracy is now firmly ingrained,
and the World Bank’s governance indicators
for stability place it in the same class as long-
time democracies such as the U.K. and the
U.S.—and well ahead of other emerging na-
tions such as Mexico and the other BRICs.
And even though the legal system has not
changed as much as the political system, it
has made real progress in the past 15 years.
The rule of binding precedents has been im-
plemented, bankruptcy laws rationalized, and
the scope for long-running appeals reduced,
although not eliminated. Nevertheless, judi-
cial processes remain slow. The World Bank
calculates that a dispute that takes 280 days
to settle in Hong Kong and 150 days in Singa-
pore would take 731 days in Brazil.
Delays caused by bureaucracy are another in-
tractable fact of Brazilian life. Setting up a
business can be a slow and cumbersome pro-
8 | Charting a Steady Course
cess that demands 15 steps, taking an average
of 120 days. But change is already beginning.
For example, the state of Minas Gerais has pi-
oneered a one-stop interactive system that
simplifies the process to 11 steps and reduces
the number of days to set up a business to an
average of 19. This system is being piloted in
eight other states.
Similar complexities are to be found in the
labor market, as well as in labor taxes and so-
cial-security charges. A Brazilian company
may have to pay nine separate taxes, com-
pared with five in Singapore and three in
Hong Kong.2
It must also deal with copious
new tax requirements and regulations.
Talent and Human Capital
Brazil’s demographics are the envy of many
other countries. (See Exhibit 3.) A 2009 BCG-
World Economic Forum study rated it at the
top when compared with the 13 countries
also considered in this report. Foreign inves-
tors will find a large and relatively young
population. Although most large economies
anticipate labor shortages over the next de-
cade, Brazil projects an average annual sur-
plus of 2.2 percent in the period from 2011
through 2023.
At the same time, Brazil is becoming more at-
tractive to international management talent.
It has risen from number 27 to number 12 in
this criterion in IMD’s World Competitiveness
Yearbook over the past two years, and there
were 15 percent more medium and long-term
visas granted in Brazil in 2011 than in 2008.
While qualified international talent has a
valuable role to play, the real key to
capitalizing on Brazil’s demographic bonus is
improved education. Brazil’s education
participation rates are not bad. Enrollment in
primary and secondary school is 87 percent
and 69 percent, respectively—not far below
global averages. Following recent
amendments to Brazil’s constitution, the
government will be required to offer
universal free access to a high school
International hubs Other developed nations Developing nations
Brazil
Chile
China
Germany
U.K.
Hong Kong
India
South
KoreaMexico
Russia Singapore
U.S.
Brazil
Chile
China
France
U.K.India
JapanSouth
KoreaMexico
Russia
Singapore
U.S.
Brazil
Chile
China GermanyFrance
U.K.India Japan
South Korea
Mexico
Russia
Singapore
U.S.
Brazil
Chile
China Germany
France
U.K.India
Japan
South Korea
Mexico
Russia
Singapore
U.S.
France
Brazil
Germany
Mexico
South Korea
Russia
China
India
Chile Japan U.K.
U.S. Hong
Kong
Singapore
Brazil
Mexico
China
Japan Russia
India
South
Korea
U.K.
France
U.S. Singapore
Hong Kong
Chile
Political stability
Quality of regulations
Legal security
Labor market flexibility
Ease of opening a
business
Ease of paying taxes for
businesses
Poor Needs improvement Good Excellent
Hong
Kong
Hong
Kong
Germany
France Japan
Source: BCG analysis.
Note: Information for some countries was not available for every indicator.
Exhibit 2 | Democracy Is Stable, but Brazil’s Legal and Taxation Systems Can Be a Nuisance
The Boston Consulting Group • BRAiN | 9
education by 2016. And although university
enrollment is, at 27 percent, lower than the
global average, this is a higher rate than in
China and India.
The issue with education is not just quantity
but quality. The Organisation for Economic
Cooperation and Development (OECD) rates
Brazilian basic education at below average.
The country’s students scored 401 on the Pro-
gramme for International Assessment (PISA)
test, compared with the OECD mean of 497
and a global mean of 468. A government
study rates language and math skills at the
lower end of expected performance in prima-
ry schools and below expectations at the sec-
ondary level.
This means Brazil performs very poorly in in-
ternational talent comparisons. The Heidrick
& Struggles Global Talent Index, which proj-
ects performance through 2015, ranks Brazil
Internationalization
of education
(foreign languages
and experience)
Quantity of
higher education
Alignment between
higher education
and the market
Demographic
attractiveness1
Quantity of primary
and secondary
education
Ease of immigration
procedures
Quality of primary
and secondary
education
Availability of qualified
managers and
engineers
Intensity of research
and development
Attractiveness to
international talent
Diaspora management
Poor Needs improvement Good Excellent
International hubs Other developed nations Developing nations
U.K. Germany
Singapore Hong Kong
Chile Russia
India
Brazil
Brazil
Chile
China
GermanyFrance U.K.
Hong Kong
India
Japan
South Korea
Mexico
Russia
Singapore
U.S.
Brazil ChileChina Germany
France
U.K. Hong KongIndia
Japan
South
Korea
Russia SingaporeU.S.
Brazil
ChileChinaGermany
France U.K.Hong Kong India
Japan
South
KoreaMexico Russia
Singapore
U.S.
Brazil
Chile
China Germany
France U.K.
Kong Hong
India
Japan
South Korea MexicoRussia SingaporeU.S.
Brazil
Chile China Germany
France
U.K.Hong Kong
India
Japan
South Korea
Russia
Singapore
Brazil
China
Germany
France
U.K. India
Japan
South Korea MexicoRussia
U.S.
Brazil Chile China
Germany
France U.K.
Hong Kong
India
Japan South KoreaMexico Russia
SingaporeU.S.
Brazil Chile
China
Germany France
U.K.
Hong Kong
India Japan
South Korea
Mexico
Russia Singapore
U.S.
Brazil
Chile
China Germany
France U.K.
Hong
Kong
India
Japan
South
KoreaMexico Russia
Singapore U.S.
Brazil Chile China
Germany
France U.K.
Hong Kong
Japan
South
Korea
Mexico
Russia
Singapore
U.S.
Source: BCG analysis.
Note: Information for some countries was not available for every indicator.
1
Based on projected data.
Exhibit 3 | Brazil’s Demographics Have Great Appeal
10 | Charting a Steady Course
38 out of 60 countries—behind not only its
BRIC peers but also Latin American neigh-
bors Mexico and Argentina. These weakness-
es make it tough for employers to locate staff
with the right skills. For example, Brazil trails
the other 13 countries in availability of quali-
fied engineers and managers.
The good news is that Brazilians are increas-
ingly aware that education matters. More
than 70 percent of middle-class children have
had more education than their parents. Addi-
tionally, there are many initiatives to attack
these deficiencies. For example, nearly
225,000 students from the state of São Paulo
are enrolled in Centro Paulo Souza, which
manages technical schools run by the state
government. In 2011, the national govern-
ment launched Programa Nacional de Acesso
ao Ensino Técnico e ao Empreso (Pronatec), a
program that enables underprivileged stu-
dents to attend private technical schools. This
supplements the Programa Universidade
para Todos (ProUni) university scholarship
program, which supports 195,000 students
from households with incomes of less than
three times the minimum wage.
These improvements are essential if Brazil is
to tackle its impending productivity chal-
lenge. Approximately 75 percent of Brazilian
GDP growth over the past decade was due to
a larger workforce and only 25 percent to pro-
ductivity gains. (For further detail, see “Bra-
zil: Facing the Productivity Challenge,” BCG
article, September 2012.) With the country
close to full employment, future GDP gains
will depend on ensuring that the workforce
has the skills needed to drive increased pro-
ductivity.
Companies investing in Brazil will continue
to be attracted by young and plentiful labor,
but their business plans will nonetheless have
to incorporate the need for training and peo-
ple development. This will allow them to tap
the Brazilian demographic bonus and turn it
into an asset.
Physical Infrastructure
Brazil is, at last, giving serious attention to
strengthening the weakest of its seven pil-
lars, a physical infrastructure that has not
kept pace with economic development and
threatens to choke growth. (See Exhibit 4.)
For starters, Brazil ranks dead last in air
transportation quality compared with the 13
other countries. One reason is that its main
airports are overcrowded and struggling to
Urban mobility
Quality and cost of
telecommunications
Power availability
Basic services
available to the urban
population1
International hubs Other developed nations Developing nations
Brazil
China GermanyFrance
U.K.
India
Mexico Russia U.S.
Brazil
Chile China
Germany
France
U.K.
Hong Kong
India JapanMexico
Russia
Singapore
U.S.
Brazil
Chile
China GermanyFrance
U.K.
Hong Kong
Hong
Kong
India
Japan
South
Korea
South Korea
South Korea
Mexico Russia
Singapore
U.S.
Brazil
ChileChina
Germany
France
U.K.
India
Japan
Mexico
Russia
Singapore
U.S.
South
Korea
Brazil
Chile
China
Germany
FranceU.K.
India
JapanMexicoRussia
Singapore
U.S.
Poor Needs improvement Good Excellent
Quality of air
transportation
Source: BCG analysis.
Note: Information for some countries was not available for every indicator.
1
Based on projected data.
Exhibit 4 | Physical Infrastructure Lags Behind Economic Development
The Boston Consulting Group • BRAiN | 11
meet growing demand. São Paulo’s interna-
tional airport is currently running at 146
percent of nominal capacity. This capacity is
projected to increase by two-thirds, to 35
million passengers, by 2014, but it will still
fall short of demand, projected at 40 million.
Congonhas, São Paulo’s domestic airport,
plans to expand by a quarter over the same
period, but it will fall further behind de-
mand, forcing it to process 22 million pas-
sengers through facilities designed for a
maximum of 15 million.
Furthermore, travelers are unlikely to enjoy
journeys across Brazil’s major cities to the air-
ports. The 2010 IBM Commuter Pain Index
rated São Paulo the sixth-worst city for tran-
sit, with a daily average (in 2008) of 114 kilo-
meters of traffic jams, and Rio de Janeiro
eighth, with an average of 95 kilometers.
Among the handful of cities rated worse, Bei-
jing and Mexico, which top the list, offer trav-
elers and commuters more alternatives, nota-
bly more extensive subway networks.
These inadequacies are being addressed. In
mid-August 2012, the Brazilian government
announced the Integrated Logistical Plan,
projecting investment over the next five years
of more than $40 billion in roads and rail net-
works, expanding roads by 7,500 kilometers
and railroads by 10,000 kilometers. This fol-
lows the auctioning off to private operators,
in early 2012, of three of Brazil’s most impor-
tant airports—São Paulo International,
Campinas, and Brasília—which handle
around 50 million passengers annually. Air-
ports in Rio de Janeiro and Belo Horizonte
will likely follow suit.
Both the airport concessions and the
Integrated Logistical Plan emphasize the role
of private companies as both builders and
operators, giving the private sector an
overdue role in investing in Brazil’s infra-
structure in order to reduce bottlenecks and
improve efficiency. This fresh investment
comes on top of earlier infrastructural
development. In 2007, the government
introduced the Accelerated Growth Program
(PAC), which put $217 billion into projects
that address issues such as energy, health,
housing, transportation, and sanitation.3
PAC2, running from 2011 to 2014, has more
than double the budget—$471 billion, of
which 34 percent was spent by June 2012.
Brazilian cities are also expanding their met-
ro systems in advance of the 2014 soccer
World Cup and the 2016 Olympics. São Paulo
plans to expand its subway lines from 74 kilo-
meters to 104 kilometers from 2012 through
2014, and Rio de Janeiro intends to provide
55 kilometers by 2015, compared with the
current 42 kilometers.
Companies will find young
and plentiful labor, but
training will be necessary.
All this represents an overdue correction to
one area of economic life in which Brazil has
regressed rather than advanced. During the
1970s, when numerous large projects were
implemented, infrastructure spending was
around 5.4 percent of GDP, but by the first
decade of the twenty-first century, spending
declined to little more than 2 percent. This
contrasts sharply with China, which invested
approximately 11 percent of its GDP in infra-
structure in 2010, and India, which plans to
invest 7.6 percent of its GDP from 2008
through 2012.
Financial Infrastructure
Investors in Brazil know that their money is
protected by a regulatory system equal to the
best in the world. (See Exhibit 5.) The World
Competitiveness Yearbook rates Brazilian finan-
cial regulation ahead not only of other
BRICs—with India the only serious challeng-
er—but also of global financial centers such
as the U.S. and the U.K.
Brazil has entrenched rules requiring that
investment funds disclose their positions to
the regulator, that all derivatives transac-
tions be recorded in a central database, and
that banks adhere to strict guidelines—in-
cluding the maintenance of a Basel Index of
11 percent, compared with the current glob-
al norm of 8 percent. Brazil’s central bank
says that Brazil-based financial institutions
12 | Charting a Steady Course
are well positioned to implement the Basel
Accord III, which raises the bar to 10.5 per-
cent, since their average is already around
16 percent.
As a result, Brazilian banks weathered the
global financial crisis much better than their
counterparts from developed nations. While
Brazilian banks’ average annual shareholder
return of 6.2 percent from 2007 through 2011
looks modest, it compares extremely favor-
ably with annual losses of 13.8 percent in the
U.S. and 16.3 percent in the U.K.
In addition, corporate credit has grown more
than 15 percent annually since 2004, more
than doubling during that period. Market
capitalization of traded companies grew 43
percent per year between 2004 and 2007, re-
maining essentially flat since then. Despite
these improvements, Brazil ranks well below
global benchmarks for corporate credit, listed
company market caps, and, in particular, de-
bentures—with a value in Brazil of only 1
percent of GDP, compared with 9 percent in
China, 10 percent in France, and 36 percent
in South Korea.
Recognizing this deficiency, the government,
in 2011, passed legislation to increase the li-
quidity of secondary bond markets by loosen-
ing restrictive debenture regulations. Al-
though this has not yet unlocked the
secondary market, it has set the stage for fu-
ture increases in liquidity, which should be
aided by lower real interest rates that will
Effectiveness of
financial regulations
Stock
exchange
Availability of financial
services
Debentures
Stock exchange liquidity
Projection as an
international
finance corporation
Corporate
credit
Share of regional and
international companies
in the stock exchange
Poor Needs improvement Good Excellent
International hubs Other developed nations Developing nations
Brazil Chile
China France
U.K.India
Japan
Mexico
Russia Singapore
U.S.
India Russia Brazil Mexico China
South
Korea
South
Korea
South Korea
South
Korea
SouthKorea
South Korea
South Korea
South Korea
France
Japan
Germany
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong
Kong
Hong Kong
Hong Kong
Singapore
U.K.
U.S.
Brazil
ChileChina
Germany
France
U.K. India
Japan
MexicoRussia SingaporeU.S.
BrazilChile China
France
U.K.
India
Japan
Mexico
RussiaSingapore
U.S.
Germany
Brazil China
Germany
FranceU.K.
India
Singapore U.S.
Brazil Chile
China
Germany
FranceU.K.
India Japan
Mexico
Singapore
U.S.
Brazil
Chile
China
Germany
France
U.K.IndiaJapan
Mexico Russia Singapore
U.S.
Brazil ChileChina
GermanyFrance U.K.
India Japan
Mexico
Russia
Singapore
U.S.
Use of
financial
resources
Source: BCG analysis.
Note: Information for some countries was not available for every indicator.
Exhibit 5 | Brazil’s Regulatory System Ranks Among the Best in the World
The Boston Consulting Group • BRAiN | 13
drive investors to other investment vehicles,
such as debentures.
Finally, well-established companies have ac-
cess to international capital markets and lo-
cal stock markets for funding, but Brazil’s
small and medium-sized businesses remain
underrepresented on the country’s stock ex-
change.
Global Connectivity
Potential investors will find Brazil still handi-
capped, to some extent, by the legacy of a pro-
tectionist past, but the country is increasingly
open to foreign investment and other finan-
cial engagements with the wider world. (See
Exhibit 6.) Brazil has made great progress to-
ward full participation in the global economy,
starting in 1991 with the creation of Mercosul,
the Latin American free-trade pact (also
known as Mercosur). Since then, especially be-
tween 2007 and 2011, the country’s globaliza-
tion has moved quickly, as has that of Latin
America as a whole. Latin American trade—
imports and exports of goods and services—
grew faster than the global average, and Bra-
zil outgrew its neighbors. Brazil’s exports of
goods and services grew at an annual rate of
12.5 percent (Latin America’s grew by 12.4
Poor Needs improvement Good Excellent
International hubs Other developed nations Developing nations
Brazil
Chile China Germany
France
U.K.
India JapanMexico
Singapore
U.S.
Brazil Chile
China Germany
France
U.K.
India
Japan
Mexico Russia
Singapore U.S.
Brazil ChileChina
GermanyFrance
U.K.
India
Japan Mexico
Russia SingaporeU.S.
Brazil
Chile
China France
U.K.
India Japan
Mexico
Russia
Singapore
U.S.
Brazil ChileChina
Germany
France
U.K.
India JapanMexico Russia Singapore
U.S.
Mexico
India
Russia U.K.
Chile U.S.Brazil France
China
Japan
Germany
Singapore
Brazil ChileChina
Germany
FranceU.K.
IndiaJapan
Mexico
Russia Singapore
U.S.
Brazil
Chile
China
Germany
France U.K.India
JapanMexico Russia
Singapore
U.S.
Brazil
Chile
China
Germany
France
U.K.
India
Japan
Mexico
Russia
Singapore
U.S.
Brazil
Chile China
Germany
France
U.K.India
JapanMexicoRussia
Singapore
U.S.
Brazil
Chile China
Germany
FranceU.K.Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong
Kong
Hong Kong
IndiaJapan
South Korea
South Korea
South
Korea
South Korea
South Korea
South Korea
South
Korea
South Korea
South
Korea
South Korea
South Korea
Mexico
RussiaSingapore U.S.
Openness to
international
trade in goods
Trade in goods
International
agreements allow-
ing capital flows
Openness to
immigrants
National regu-
lations supporting
international
capital flows
Expansion of
the country's
multinationals
Trade in services
Capital flows
Ease of entry
for foreign
multinationals
Mobility of people
Trade
Capital
Openness to
international
trade in services
Businesses
People
Source: BCG analysis.
Note: Information for some countries was not available for every indicator.
Exhibit 6 | Brazil Has Opened Itself to the Global Economy but Still Has Some Way to Go
14 | Charting a Steady Course
percent annually), and imports expanded at
19.7 percent (16.7 percent for Latin America).
This growth took off, however, from a very
low base. Brazil’s share of global trade in
goods and services is still only 1 percent, well
below its 3 percent share of the world’s GDP.
Latin America as a whole continues to lag
behind, accounting for only 6 percent of
global trade in goods and 4 percent in servic-
es, compared with 8 percent of global GDP.
One reason is that tariffs remain high. Bra-
zil’s import tariffs average 22.1 percent,
compared with a global average of 14.1 per-
cent. Duties imposed on Brazilian goods are
also just above the global norm of 12.1 per-
cent. A further handicap is Brazil’s limited
participation in the General Agreement on
Trade in Services (GATS). The country has
only 17 GATS agreements, compared with
regional leader Mexico’s 30 and world lead-
er Vietnam’s 50. It rates 105 out of 141 coun-
tries in the Fraser Institute’s Openness to In-
ternational Trade rankings—behind China,
Mexico, India, and Chile, which ranks ninth
worldwide.
Brazil suffers from a lack of
effort to promote it as a place
to live or do business.
Brazil receives more foreign investment than
any other Latin American economy, but this
reflects the country’s size rather than its
openness to capital flows. When investment
is weighted by GDP, Brazil is far outpaced by
Chile, whose regional lead reflects participa-
tion in 51 bilateral investment treaties—with
partners including the U.S., Canada, and In-
dia. Brazil participates in only 14 investment
treaties, all with Mercosul partners.
The broader context is formed by limited Lat-
in American investment participation. The re-
gion’s share of investments both by outsiders
in Brazil and by Brazil in other countries has
increased since 2007, but these levels are still
small compared with other regions and com-
pared with the country’s contribution to glob-
al GDP. Investors are hampered by a lack of
standardized continentwide regulatory prac-
tices, but this is being addressed—in account-
ing, at least. In 2011, Brazil adopted the Inter-
national Financial Reporting Standards. This
move should facilitate comparison and inte-
gration with the global competitive landscape.
Image
Brazil has an open, welcoming image that ap-
peals to the rest of the world. Among the
countries we compared it with, not one is
more open to new ideas, according to interna-
tional executives surveyed for the World Com-
petitiveness Yearbook. The country ranks
among the best in terms of culture and at-
tractiveness to tourists—scoring tenth and
thirteenth, respectively, out of the 50 coun-
tries included in the Anholt-GfK Roper Na-
tion Brands index.
That positive image is reflected in the coun-
try’s success in attracting international events.
(See Exhibit 7.) It hosted 304 international
congresses and events in 2011, up from 133 in
2003—an increase of 11 percent per year that
makes it seventh in the world overall. It will
stage the 2014 soccer World Cup, and Rio will
be the host city for the 2016 Olympic
Games—events projected to attract 600,000
and 380,000 foreign visitors, respectively.
But Brazil’s image is weaker in other respects.
Despite its high scores for culture and tour-
ism, its overall Nation Brands rating is below
average, reflecting low international opinion
of Brazilian goods and of the country as a
place to live. The Economist Intelligence
Unit’s study of the best cities to live in 2012
rated São Paulo and Rio de Janeiro 42 and 43,
respectively, out of 70, well below Latin
American peers Buenos Aires, Santiago, and
Lima. For personal safety and asset security,
the World Competitiveness Yearbook rated Bra-
zil low, not far ahead of Mexico and well be-
hind India, Chile, and the U.S.
Not all of these misgivings about Brazil are
ill-founded, but they are compounded by the
lack of a concerted attempt to promote the
country as a place to live or do business. Im-
ages of poverty and violence go unchal-
lenged. São Paulo has reduced its murder
The Boston Consulting Group • BRAiN | 15
rate by 82 percent in the past ten years to 8.9
homicides per 100,000 inhabitants, a level
comparable with large cities in the U.S.—but
this news has received little publicity. Inves-
tors and immigrants will find that Brazil
does have problems, but the country’s image
as an appealing spot for international events
reveals more than images of unrelieved pov-
erty and violence.
notes
1. EMBI+, an index maintained by J.P.Morgan, tracks
returns on each country’s traded external debt
instruments.
2. According to the World Bank’s Doing Business
database (2010).
3. The $217 billion figure is derived from an exchange
rate of 2.03 Brazilian reais per $1.00 (July 5, 2012).
Image as a place
to do business
Foreign interest in the
country’s investment
and business
Attractiveness for
international events
Sustainability
Quality of life
Cultural openness
Personal safety and
asset security
Tourism and leisure
Volume of tourism
Poor Needs improvement Good Excellent
International hubs Other developed nations Developing nations
BrazilChile China
Germany
France
U.K. India
Japan
Mexico
Russia
Singapore
U.S.
BrazilChile
China
Germany
France
U.K.India
JapanMexico
Russia
Singapore
U.S.
BrazilChile ChinaGermany France
U.K.Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
India
Japan South Korea
South Korea
South Korea
South Korea
South
Korea
South Korea
South Korea
South Korea
South Korea
Mexico
Russia
Singapore U.S.
Brazil
ChileChina GermanyFrance
U.K.India
JapanMexico
Russia SingaporeU.S.
Brazil
ChileChinaGermanyFrance
U.K.
IndiaJapan
MexicoRussia SingaporeU.S.
Brazil
ChileChina
GermanyFrance
U.K.
India
JapanMexico
Russia
Singapore
U.S.
BrazilChile China
Germany
France
U.K.
India
Japan
Mexico Russia Singapore
U.S.
BrazilChile
China Germany
France
U.K.
India
JapanMexico Russia
Singapore U.S.
BrazilChile
China
Germany
France
U.K.India
Japan
MexicoRussia
Singapore U.S.
Source: BCG analysis.
Note: Information for some countries was not available for every indicator.
Exhibit 7 | A Welcoming Image Has Attracted International Events
16 | Charting a Steady Course
Immense Promise
The Brazil of today is an increasingly
attractive place to do business. The
country has vastly improved political and
legal systems and appealing demographic
dynamics, all of which offer huge opportuni-
ties to employers willing to invest in training
their employees. Its infrastructure is still
subpar, but the government’s increased
openness to private investment bodes well
for future development in this area. The
financial market as a whole is solid, very
profitable, and underpinned by world-class
regulation. The country is increasing its
connections with the world and has shown
growing receptivity to foreign investment and
other forms of engagement. Culturally, it is
seen as possessing unmatched openness to
new ideas and, as it hosts the World Cup and
Olympics, it will have the chance to further
improve that perception.
Even though Brazil is starting to attack its
chronic bureaucratization, its creaking infra-
structure, and the relics of a protectionist
past, these challenges will not be eliminated
overnight and must be reckoned with by any-
one planning to work or invest in Brazil. The
bottom line is that investing in Brazil is not
for the uncommitted or faint-hearted but of-
fers immense promise to the well-informed
investor.
The Boston Consulting Group • BRAiN | 17
The Boston Consulting Group pub-
lishes other publications that may
be of interest to decision makers
and investors interested in under-
standing the Brazilian economic
and business environment. Recent
examples are listed here.
Allies and Adversaries: 2013 BCG
Global Challengers
A report by The Boston Consulting
Group, January 2013
Brazil: Confronting the
Productivity Challenge
A report by The Boston Consulting
Group, January 2013
From Wealth to Well-Being:
Introducing the BCG Sustainable
Economic Development
Assessment
A report by The Boston Consulting
Group, November 2012
Capturing Payments
Opportunities in Rapidly
Developing Economies: Lessons
From Brazil and India
An article by The Boston Consulting
Group, October 2012
for further reading
18 | Charting a Steady Course
note to the reader
About the Authors
André Xavier is a partner and
managing director in the São Paulo
office of The Boston Consulting
Group. You may contact him by
e-mail at xavier.andre@bcg.com.
Masao Ukon is a partner and
managing director in the firm’s São
Paulo office. You may contact him
by e-mail at ukon.masao@bcg.com.
Juliana Abreu is a principal in
BCG’s São Paulo office. You may
contact her by e-mail at abreu.
juliana@bcg.com. Frederick Pierru
is a principal in the firm’s Mexico
City office. You may contact him by
e-mail at pierru.frederick@bcg.com.
João Moreira is a project leader in
BCG’s São Paulo office. You may
contact him by e-mail at moreira.
joao@bcg.com. Paulo Oliveira is
the CEO and Pedro Guerra a
director of Brasil Investments
and Business (BRAiN). You may
contact them by e-mail at
poliveira@brainbrasil.org and
pguerra@brainbrasil.org.
Acknowledgments
We would like to thank many cur-
rent and former BCG colleagues
without whom this report would not
be possible: Antonio Riera, Bruno
Antunes, Camila Penazzo, Carlo Ca-
labro, Cristiana Oashi, Daniel Zon-
enschein, David Michael, Débora
Mayer, Diana Gerbase, Duncan
Martin, Flavio Magalhaes, Frankie
Leung, Giuliano Giordano, Henrique
Sinatura, Ignacio Pena, Jorge Becer-
ra, José Shintate, Juliana Barbosa,
Luis Figueira, Marcos Aguiar, Paulo
Nakamura, Philippe Dutheil,
Philippe Morel, Rafael Zuana, Sil-
mara Costa, Thiago Miskulin, Tjun
Tang, V. Chandrashekhar, and Wal-
ter Piacsek.
We extend further thanks to
BRAiN’s executives and staff mem-
bers: Luiz Roberto Calado, André
Luiz Sacconato, José Manoel
Moulin Ribeiro Netto, Daniel Peres
Rosenfeld, Eduardo Oliveira Limei-
ra, Filipe de Oliveira Pelepka, Dani-
lo Corrêa Vivan, Juliana Dib
Rezende, and Sandra de Souza
Lima.
We would also to acknowledge Huw
Richards for his writing support, as
well as Katherine Andrews, Gary
Callahan, Sarah Davis, Angela
DiBattista, Belinda Gallaugher, and
Sara Strassenreiter for contribu-
tions to the editing, design, and pro-
duction of this report.
For Further Contact
André Xavier
Partner and Managing Director
BCG São Paulo
+55 11 3046 3533
xavier.andre@bcg.com
Masao Ukon
Partner and Managing Director
BCG São Paulo
+55 11 3046 3533
ukon.masao@bcg.com
Juliana Abreu
Principal
BCG São Paulo
+55 11 3046 3533
abreu.juliana@bcg.com
Frederick Pierru
Principal
BCG Mexico City
+52 55 5258 9999
pierru.Frederick@bcg.com
João Moreira
Project Leader
BCG São Paulo
+55 11 3046 3533
moreira.joao@bcg.com
Paulo Oliveira
CEO BRAiN
+55 11 2529-7040
poliveira@brainbrasil.org
Pedro Guerra
Director BRAiN
+55 11 2529-7040
pguerra@brainbrasil.org
© The Boston Consulting Group, Inc. 2013. All rights reserved.
For information or permission to reprint, please contact BCG at:
E-mail: 	 bcg-info@bcg.com
Fax: 	 +1 617 850 3901, attention BCG/Permissions
Mail: 	 BCG/Permissions
	 The Boston Consulting Group, Inc.
	 One Beacon Street
	 Boston, MA 02108
	 USA
To find the latest BCG content and register to receive e-alerts on this topic or others, please visit bcgperspectives.com.
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201305 Brazil: Charting a steady Course

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201305 Brazil: Charting a steady Course

  • 1. Galley 2, 4/15/2013 FOR INTERNAL DIS Charting a Steady Course Turning Brazil into a Business and Investment Hub
  • 2. Brazil Investments & Business (BRAiN) is a private nonprofit organization whose mission is to reinforce Brazil’s position as an international business and investment hub through a regional focus and a global projection, contributing to the sustainable economic and social development of Brazil and Latin America. The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for- profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep in­sight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable compet­itive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 78 offices in 43 countries. For more information, please visit bcg.com.
  • 3. APRIL 2013 | The Boston Consulting Group • BRAiN Charting a Steady Course Turning Brazil into a Business and Investment Hub Andre Xavier Masao Ukon Juliana Abreu Frederick Pierru Joao Moreira Paulo Oliveira Pedro Guerra
  • 4. 2 | Charting a Steady Course Contents 3 Introduction 5 Investment Attractiveness: The Seven Pillars Macroeconomic Environment Institutional Environment Talent and Human Capital Physical Infrastructure Financial Infrastructure Global Connectivity Image 16 Immense Promise 17 For Further Reading 18 Note to the Reader
  • 5. The Boston Consulting Group • BRAiN | 3 If you know whence you came, there are absolutely no limitations to where you can go. —James Baldwin Few observers doubt the immense potential of Brazil, one of the world’s most significant emerging economies. Indeed, Brazil has great advantages. Compared with its colleagues in the BRIC quartet of emerging giants, it is richer than India and China and larger and more democratically stable than Russia.1 It is the largest nation in Latin America, with one-third of the region’s population generating 44 percent of its GDP.2 Already the sixth largest economy in the world, it could become the fifth by 2020, according to forecasts by the Econo- mist Intelligence Unit. But growth, and the investment decisions that underpin it, doesn’t happen by magic. Substantial growth takes enlightened government and well-informed decisions by potential investors. Decision makers and investors need a compass to guide their choices. In order to know where Brazil is going, they need to know where it is now—and how it got there. They need an informed sense of Brazil’s comparative advantages and disadvantages, as well as how it is chang- ing—in what direction and how fast. They need a view of Brazil’s so- ciety as well as its economy that goes beyond clichéd images of bril- liant football teams, the Rio carnival, and the poverty and crime of the favelas. They should be aware, for example, that Brazilian finan- cial regulations set standards that most global banking centers fail to match. Investors and decision makers also need authoritative, balanced infor- mation. Alongside the exuberant forecasts, it is important to know about Brazil’s limitations—and to be aware of strictures such as Euro- pean trade commissioner Karel de Gucht’s warning in May 2012 that “Brazil should be proud of the enormous progress it has made in re- cent years, but it must also know it cannot stand still if it wishes to move to the next stage of development.” We aim to provide that compass and guide. This document has its foundations in BCG’s support for the development of The Attractive- ness of Brazil as an Investment and Business Hub, a report published in October 2012 by Brasil Investimentos e Negócios (BRAiN). In this re- port, we look at Brazil in terms of seven pillars critical to the aspira- tions of any country with the potential to establish itself as an attrac- tive business and investment hub. We provide investors and others interested in doing business in Brazil with a framework to assist them in thinking about the relative attractiveness of the country in the con- Introduction
  • 6. 4 | Charting a Steady Course text of different business objectives—and how best to explore the op- portunities Brazil offers. NOTES 1. The comparison of Brazil’s wealth with India and China is based on GDP per capita. Its size compared with Russia is based on population and nominal GDP. 2. Numbers are from dataworldbank.org, accessed August 15, 2012.
  • 7. The Boston Consulting Group • BRAiN | 5 BCG’s analysis identified seven key pillars that underpin a country’s or region’s relative attractiveness as a business or investment hub: Macroeconomic environment,•• including economic growth, predictability, and capital investment Institutional environment,•• including political and legal systems, legal security, level of bureaucracy, and business operations Talent and human capital,•• including demographics, education and training, and talent mobility and attraction Physical infrastructure,•• including urban mobility, logistics connectivity, telecom- munications, and basic services Financial infrastructure,•• including funding for the economy and effective risk allocation Global connectivity,•• including trade in goods and services, capital and invest- ment flows, international business operations, and flow of people Image•• of the country, including percep- tions of Brazil as a place to do business, to live, or to visit We analyzed each pillar of Brazil’s perfor- mance through a number of indicators—a to- tal of 57 in all—and weighed these results against the performance of 13 other coun- tries. (For a list of these countries, see the sidebar below.) We chose these countries from three distinct groups—international hubs, developed nations, and developing na- Investment Attractiveness The Seven Pillars Brazil’s performance was compared with the following 13 countries: International hubs Hong Kong•• Singapore•• U.K.•• U.S.•• Developed nations France•• Germany•• Japan•• Korea•• Developing nations Chile•• China•• India•• Mexico•• Russia•• Brazil Versus the World
  • 8. 6 | Charting a Steady Course tions—as a means of illustrating Brazil’s cur- rent position. For each pillar, a dashboard graphic is used to summarize in what direc- tion and to what degree Brazil has to progress in order to become a business and invest- ment hub, and how it compares with other existing and potential hubs. Macroeconomic Environment Brazil offers an attractive macroeconomic en- vironment. It has grown steadily, is stable and predictable, and is increasingly regarded as a safe place to invest. (See Exhibit 1.) The pri- mary remaining weaknesses are its income inequality and low saving and investment rates. This means Brazil will probably contin- ue to need foreign investment in order to achieve its desired growth rates. While growth slowed in 2011 and 2012, Bra- zil’s overall economic performance is in striking contrast to its slower and more er- ratic growth of the 1980s and 1990s. It is now economically stable after having grown rapidly in the second half of the last decade, when it averaged 4.4 percent annual growth from 2006 through 2010. Brazil is well be- hind India and China, but it comfortably outgrew developed nations such as the U.S. In spite of the recent slowdown, it is still pro- jected to grow faster than any of the devel- oped nations sampled, albeit at slower rates than China and India. This growth has been driven by upward so- cial mobility, which has created a much larger middle class with greater purchasing power. In 2011, it was estimated that 55 percent of Brazilian adults lived in middle-class house- holds—defined as having a monthly income of between $1,200 and $5,174—compared with only 38.6 percent in 2002. Furthermore, poverty and inequality have decreased. The World Bank estimates that the proportion of the population living in poverty (defined as a per capita daily income Income distribution Economic growth1 Monetary stability1 Fiscal solidity1 External vulnerability Economic volatility Human development International hubs Other developed nations Developing nations Brazil Chile ChinaGermany France U.K. Hong Kong Hong Kong IndiaJapan South Korea Mexico Russia Singapore U.S. Brazil Chile China Hong KongIndiaSouth Korea Mexico Russia Singapore Brazil ChileChina Germany France South Korea U.K. Hong Kong India Japan Mexico Russia Singapore U.S. Russia India Brazil China Mexico Chile South Korea Singapore U.S. France Germany Japan Japan U.S. Singapore France U.K. Germany India Brazil Mexico Hong Kong China Russia Hong Kong U.S. U.K. Singapore France Germany Japan Chile Russia China South Korea Mexico India Brazil Brazil Chile Mexico Russia U.S.Singapore Hong Kong China Japan India U.K. France South Korea Germany Poor Needs improvement Good Excellent U.K. South Korea Chile Source: BCG analysis. Note: Information for some countries was not available for every indicator. 1 Based on projected data. Exhibit 1 | Brazil Is Increasingly Considered a Safe Place to Invest
  • 9. The Boston Consulting Group • BRAiN | 7 of less than $2) fell from 21 percent to 11 percent from 2003 through 2009. The num- ber living in extreme poverty (less than $1.25 per day) fell from 10 percent to 2.2 percent from 2004 through 2009. Brazil’s poorest 10 percent saw their incomes rise by 7 percent annually in the first decade of this century, whereas the richest 10 percent saw income growth of only 1.7 percent. The result is that Brazil’s Gini coefficient—a measure of the equality of income distribution, with 0 ex- pressing total equality and 100 expressing to- tal inequality—reached a 50 year low at 51.9 in 2011. This is a sign that Brazil is beginning to combat the extreme disparities often cited as a serious drag on its social and economic potential. Brazil has shown adeptness in taming inflation and managing public finances. Brazil has also managed to tame inflation. In- flation targets were introduced in 1999, and annual rates have been in single figures since 2001. While higher than ideal—and also high- er than in China—at 5 percent on average, projected inflation from 2012 through 2016 runs lower than both historic levels and lev- els held by competitors such as Russia and India. In addition, the country has shown adeptness in managing public finances. Public-sector debt as a proportion of GDP declined by more than a third from 2002 through 2011, falling from 60.4 percent to 36.4 percent. More important, Brazil has become a net for- eign creditor since 2006—with reserves and credits exceeding those held by overseas countries. This is a significant reversal of Bra- zil’s previous long-term history as a net for- eign debtor. And real interest rates, a signifi- cant factor influencing investment costs for government and the private sector, are at their lowest level since tracking began in 1986. The 2012 level of 2.7 percent is in sharp contrast to an 11.7 percent level six years ago, and Brazil’s real interest rates are now com- parable with those of China and Russia. All these improvements mean that Brazil is now widely recognized as a much safer coun- try in which to invest. Its score in J.P. Mor- gan’s Emerging Market Bond Index Plus risk scale has remained at around 200 points since 2011.1 In 2002, it scored more than 2,000 points but has improved steadily ever since—reaching investment grade in 2008. This helps attract foreign capital—an impor- tant attribute, since domestic savings remains a weakness. Brazil invested 17.3 percent of GDP from 2002 through 2011, lower not only than the 22 percent needed to maintain the 4 to 4.5 percent growth rate seen from 2006 through 2010 but also well behind BRIC peers India (30 percent) and China (42 per- cent). Given these low savings ratios, Brazil cannot expect to finance its future growth on its own. This opens up space for savvy foreign investors and businesses willing to bet on Brazil’s continued growth and prosperity. Institutional Environment Investors interested in Brazil will find a stable democracy and solid rule of law, but they should include a slow judicial system as well as cumbersome labor and taxation legislation when calculating the cost of doing business there. (See Exhibit 2.) Brazilian democracy is now firmly ingrained, and the World Bank’s governance indicators for stability place it in the same class as long- time democracies such as the U.K. and the U.S.—and well ahead of other emerging na- tions such as Mexico and the other BRICs. And even though the legal system has not changed as much as the political system, it has made real progress in the past 15 years. The rule of binding precedents has been im- plemented, bankruptcy laws rationalized, and the scope for long-running appeals reduced, although not eliminated. Nevertheless, judi- cial processes remain slow. The World Bank calculates that a dispute that takes 280 days to settle in Hong Kong and 150 days in Singa- pore would take 731 days in Brazil. Delays caused by bureaucracy are another in- tractable fact of Brazilian life. Setting up a business can be a slow and cumbersome pro-
  • 10. 8 | Charting a Steady Course cess that demands 15 steps, taking an average of 120 days. But change is already beginning. For example, the state of Minas Gerais has pi- oneered a one-stop interactive system that simplifies the process to 11 steps and reduces the number of days to set up a business to an average of 19. This system is being piloted in eight other states. Similar complexities are to be found in the labor market, as well as in labor taxes and so- cial-security charges. A Brazilian company may have to pay nine separate taxes, com- pared with five in Singapore and three in Hong Kong.2 It must also deal with copious new tax requirements and regulations. Talent and Human Capital Brazil’s demographics are the envy of many other countries. (See Exhibit 3.) A 2009 BCG- World Economic Forum study rated it at the top when compared with the 13 countries also considered in this report. Foreign inves- tors will find a large and relatively young population. Although most large economies anticipate labor shortages over the next de- cade, Brazil projects an average annual sur- plus of 2.2 percent in the period from 2011 through 2023. At the same time, Brazil is becoming more at- tractive to international management talent. It has risen from number 27 to number 12 in this criterion in IMD’s World Competitiveness Yearbook over the past two years, and there were 15 percent more medium and long-term visas granted in Brazil in 2011 than in 2008. While qualified international talent has a valuable role to play, the real key to capitalizing on Brazil’s demographic bonus is improved education. Brazil’s education participation rates are not bad. Enrollment in primary and secondary school is 87 percent and 69 percent, respectively—not far below global averages. Following recent amendments to Brazil’s constitution, the government will be required to offer universal free access to a high school International hubs Other developed nations Developing nations Brazil Chile China Germany U.K. Hong Kong India South KoreaMexico Russia Singapore U.S. Brazil Chile China France U.K.India JapanSouth KoreaMexico Russia Singapore U.S. Brazil Chile China GermanyFrance U.K.India Japan South Korea Mexico Russia Singapore U.S. Brazil Chile China Germany France U.K.India Japan South Korea Mexico Russia Singapore U.S. France Brazil Germany Mexico South Korea Russia China India Chile Japan U.K. U.S. Hong Kong Singapore Brazil Mexico China Japan Russia India South Korea U.K. France U.S. Singapore Hong Kong Chile Political stability Quality of regulations Legal security Labor market flexibility Ease of opening a business Ease of paying taxes for businesses Poor Needs improvement Good Excellent Hong Kong Hong Kong Germany France Japan Source: BCG analysis. Note: Information for some countries was not available for every indicator. Exhibit 2 | Democracy Is Stable, but Brazil’s Legal and Taxation Systems Can Be a Nuisance
  • 11. The Boston Consulting Group • BRAiN | 9 education by 2016. And although university enrollment is, at 27 percent, lower than the global average, this is a higher rate than in China and India. The issue with education is not just quantity but quality. The Organisation for Economic Cooperation and Development (OECD) rates Brazilian basic education at below average. The country’s students scored 401 on the Pro- gramme for International Assessment (PISA) test, compared with the OECD mean of 497 and a global mean of 468. A government study rates language and math skills at the lower end of expected performance in prima- ry schools and below expectations at the sec- ondary level. This means Brazil performs very poorly in in- ternational talent comparisons. The Heidrick & Struggles Global Talent Index, which proj- ects performance through 2015, ranks Brazil Internationalization of education (foreign languages and experience) Quantity of higher education Alignment between higher education and the market Demographic attractiveness1 Quantity of primary and secondary education Ease of immigration procedures Quality of primary and secondary education Availability of qualified managers and engineers Intensity of research and development Attractiveness to international talent Diaspora management Poor Needs improvement Good Excellent International hubs Other developed nations Developing nations U.K. Germany Singapore Hong Kong Chile Russia India Brazil Brazil Chile China GermanyFrance U.K. Hong Kong India Japan South Korea Mexico Russia Singapore U.S. Brazil ChileChina Germany France U.K. Hong KongIndia Japan South Korea Russia SingaporeU.S. Brazil ChileChinaGermany France U.K.Hong Kong India Japan South KoreaMexico Russia Singapore U.S. Brazil Chile China Germany France U.K. Kong Hong India Japan South Korea MexicoRussia SingaporeU.S. Brazil Chile China Germany France U.K.Hong Kong India Japan South Korea Russia Singapore Brazil China Germany France U.K. India Japan South Korea MexicoRussia U.S. Brazil Chile China Germany France U.K. Hong Kong India Japan South KoreaMexico Russia SingaporeU.S. Brazil Chile China Germany France U.K. Hong Kong India Japan South Korea Mexico Russia Singapore U.S. Brazil Chile China Germany France U.K. Hong Kong India Japan South KoreaMexico Russia Singapore U.S. Brazil Chile China Germany France U.K. Hong Kong Japan South Korea Mexico Russia Singapore U.S. Source: BCG analysis. Note: Information for some countries was not available for every indicator. 1 Based on projected data. Exhibit 3 | Brazil’s Demographics Have Great Appeal
  • 12. 10 | Charting a Steady Course 38 out of 60 countries—behind not only its BRIC peers but also Latin American neigh- bors Mexico and Argentina. These weakness- es make it tough for employers to locate staff with the right skills. For example, Brazil trails the other 13 countries in availability of quali- fied engineers and managers. The good news is that Brazilians are increas- ingly aware that education matters. More than 70 percent of middle-class children have had more education than their parents. Addi- tionally, there are many initiatives to attack these deficiencies. For example, nearly 225,000 students from the state of São Paulo are enrolled in Centro Paulo Souza, which manages technical schools run by the state government. In 2011, the national govern- ment launched Programa Nacional de Acesso ao Ensino Técnico e ao Empreso (Pronatec), a program that enables underprivileged stu- dents to attend private technical schools. This supplements the Programa Universidade para Todos (ProUni) university scholarship program, which supports 195,000 students from households with incomes of less than three times the minimum wage. These improvements are essential if Brazil is to tackle its impending productivity chal- lenge. Approximately 75 percent of Brazilian GDP growth over the past decade was due to a larger workforce and only 25 percent to pro- ductivity gains. (For further detail, see “Bra- zil: Facing the Productivity Challenge,” BCG article, September 2012.) With the country close to full employment, future GDP gains will depend on ensuring that the workforce has the skills needed to drive increased pro- ductivity. Companies investing in Brazil will continue to be attracted by young and plentiful labor, but their business plans will nonetheless have to incorporate the need for training and peo- ple development. This will allow them to tap the Brazilian demographic bonus and turn it into an asset. Physical Infrastructure Brazil is, at last, giving serious attention to strengthening the weakest of its seven pil- lars, a physical infrastructure that has not kept pace with economic development and threatens to choke growth. (See Exhibit 4.) For starters, Brazil ranks dead last in air transportation quality compared with the 13 other countries. One reason is that its main airports are overcrowded and struggling to Urban mobility Quality and cost of telecommunications Power availability Basic services available to the urban population1 International hubs Other developed nations Developing nations Brazil China GermanyFrance U.K. India Mexico Russia U.S. Brazil Chile China Germany France U.K. Hong Kong India JapanMexico Russia Singapore U.S. Brazil Chile China GermanyFrance U.K. Hong Kong Hong Kong India Japan South Korea South Korea South Korea Mexico Russia Singapore U.S. Brazil ChileChina Germany France U.K. India Japan Mexico Russia Singapore U.S. South Korea Brazil Chile China Germany FranceU.K. India JapanMexicoRussia Singapore U.S. Poor Needs improvement Good Excellent Quality of air transportation Source: BCG analysis. Note: Information for some countries was not available for every indicator. 1 Based on projected data. Exhibit 4 | Physical Infrastructure Lags Behind Economic Development
  • 13. The Boston Consulting Group • BRAiN | 11 meet growing demand. São Paulo’s interna- tional airport is currently running at 146 percent of nominal capacity. This capacity is projected to increase by two-thirds, to 35 million passengers, by 2014, but it will still fall short of demand, projected at 40 million. Congonhas, São Paulo’s domestic airport, plans to expand by a quarter over the same period, but it will fall further behind de- mand, forcing it to process 22 million pas- sengers through facilities designed for a maximum of 15 million. Furthermore, travelers are unlikely to enjoy journeys across Brazil’s major cities to the air- ports. The 2010 IBM Commuter Pain Index rated São Paulo the sixth-worst city for tran- sit, with a daily average (in 2008) of 114 kilo- meters of traffic jams, and Rio de Janeiro eighth, with an average of 95 kilometers. Among the handful of cities rated worse, Bei- jing and Mexico, which top the list, offer trav- elers and commuters more alternatives, nota- bly more extensive subway networks. These inadequacies are being addressed. In mid-August 2012, the Brazilian government announced the Integrated Logistical Plan, projecting investment over the next five years of more than $40 billion in roads and rail net- works, expanding roads by 7,500 kilometers and railroads by 10,000 kilometers. This fol- lows the auctioning off to private operators, in early 2012, of three of Brazil’s most impor- tant airports—São Paulo International, Campinas, and Brasília—which handle around 50 million passengers annually. Air- ports in Rio de Janeiro and Belo Horizonte will likely follow suit. Both the airport concessions and the Integrated Logistical Plan emphasize the role of private companies as both builders and operators, giving the private sector an overdue role in investing in Brazil’s infra- structure in order to reduce bottlenecks and improve efficiency. This fresh investment comes on top of earlier infrastructural development. In 2007, the government introduced the Accelerated Growth Program (PAC), which put $217 billion into projects that address issues such as energy, health, housing, transportation, and sanitation.3 PAC2, running from 2011 to 2014, has more than double the budget—$471 billion, of which 34 percent was spent by June 2012. Brazilian cities are also expanding their met- ro systems in advance of the 2014 soccer World Cup and the 2016 Olympics. São Paulo plans to expand its subway lines from 74 kilo- meters to 104 kilometers from 2012 through 2014, and Rio de Janeiro intends to provide 55 kilometers by 2015, compared with the current 42 kilometers. Companies will find young and plentiful labor, but training will be necessary. All this represents an overdue correction to one area of economic life in which Brazil has regressed rather than advanced. During the 1970s, when numerous large projects were implemented, infrastructure spending was around 5.4 percent of GDP, but by the first decade of the twenty-first century, spending declined to little more than 2 percent. This contrasts sharply with China, which invested approximately 11 percent of its GDP in infra- structure in 2010, and India, which plans to invest 7.6 percent of its GDP from 2008 through 2012. Financial Infrastructure Investors in Brazil know that their money is protected by a regulatory system equal to the best in the world. (See Exhibit 5.) The World Competitiveness Yearbook rates Brazilian finan- cial regulation ahead not only of other BRICs—with India the only serious challeng- er—but also of global financial centers such as the U.S. and the U.K. Brazil has entrenched rules requiring that investment funds disclose their positions to the regulator, that all derivatives transac- tions be recorded in a central database, and that banks adhere to strict guidelines—in- cluding the maintenance of a Basel Index of 11 percent, compared with the current glob- al norm of 8 percent. Brazil’s central bank says that Brazil-based financial institutions
  • 14. 12 | Charting a Steady Course are well positioned to implement the Basel Accord III, which raises the bar to 10.5 per- cent, since their average is already around 16 percent. As a result, Brazilian banks weathered the global financial crisis much better than their counterparts from developed nations. While Brazilian banks’ average annual shareholder return of 6.2 percent from 2007 through 2011 looks modest, it compares extremely favor- ably with annual losses of 13.8 percent in the U.S. and 16.3 percent in the U.K. In addition, corporate credit has grown more than 15 percent annually since 2004, more than doubling during that period. Market capitalization of traded companies grew 43 percent per year between 2004 and 2007, re- maining essentially flat since then. Despite these improvements, Brazil ranks well below global benchmarks for corporate credit, listed company market caps, and, in particular, de- bentures—with a value in Brazil of only 1 percent of GDP, compared with 9 percent in China, 10 percent in France, and 36 percent in South Korea. Recognizing this deficiency, the government, in 2011, passed legislation to increase the li- quidity of secondary bond markets by loosen- ing restrictive debenture regulations. Al- though this has not yet unlocked the secondary market, it has set the stage for fu- ture increases in liquidity, which should be aided by lower real interest rates that will Effectiveness of financial regulations Stock exchange Availability of financial services Debentures Stock exchange liquidity Projection as an international finance corporation Corporate credit Share of regional and international companies in the stock exchange Poor Needs improvement Good Excellent International hubs Other developed nations Developing nations Brazil Chile China France U.K.India Japan Mexico Russia Singapore U.S. India Russia Brazil Mexico China South Korea South Korea South Korea South Korea SouthKorea South Korea South Korea South Korea France Japan Germany Hong Kong Hong Kong Hong Kong Hong Kong Hong Kong Hong Kong Hong Kong Singapore U.K. U.S. Brazil ChileChina Germany France U.K. India Japan MexicoRussia SingaporeU.S. BrazilChile China France U.K. India Japan Mexico RussiaSingapore U.S. Germany Brazil China Germany FranceU.K. India Singapore U.S. Brazil Chile China Germany FranceU.K. India Japan Mexico Singapore U.S. Brazil Chile China Germany France U.K.IndiaJapan Mexico Russia Singapore U.S. Brazil ChileChina GermanyFrance U.K. India Japan Mexico Russia Singapore U.S. Use of financial resources Source: BCG analysis. Note: Information for some countries was not available for every indicator. Exhibit 5 | Brazil’s Regulatory System Ranks Among the Best in the World
  • 15. The Boston Consulting Group • BRAiN | 13 drive investors to other investment vehicles, such as debentures. Finally, well-established companies have ac- cess to international capital markets and lo- cal stock markets for funding, but Brazil’s small and medium-sized businesses remain underrepresented on the country’s stock ex- change. Global Connectivity Potential investors will find Brazil still handi- capped, to some extent, by the legacy of a pro- tectionist past, but the country is increasingly open to foreign investment and other finan- cial engagements with the wider world. (See Exhibit 6.) Brazil has made great progress to- ward full participation in the global economy, starting in 1991 with the creation of Mercosul, the Latin American free-trade pact (also known as Mercosur). Since then, especially be- tween 2007 and 2011, the country’s globaliza- tion has moved quickly, as has that of Latin America as a whole. Latin American trade— imports and exports of goods and services— grew faster than the global average, and Bra- zil outgrew its neighbors. Brazil’s exports of goods and services grew at an annual rate of 12.5 percent (Latin America’s grew by 12.4 Poor Needs improvement Good Excellent International hubs Other developed nations Developing nations Brazil Chile China Germany France U.K. India JapanMexico Singapore U.S. Brazil Chile China Germany France U.K. India Japan Mexico Russia Singapore U.S. Brazil ChileChina GermanyFrance U.K. India Japan Mexico Russia SingaporeU.S. Brazil Chile China France U.K. India Japan Mexico Russia Singapore U.S. Brazil ChileChina Germany France U.K. India JapanMexico Russia Singapore U.S. Mexico India Russia U.K. Chile U.S.Brazil France China Japan Germany Singapore Brazil ChileChina Germany FranceU.K. IndiaJapan Mexico Russia Singapore U.S. Brazil Chile China Germany France U.K.India JapanMexico Russia Singapore U.S. Brazil Chile China Germany France U.K. India Japan Mexico Russia Singapore U.S. Brazil Chile China Germany France U.K.India JapanMexicoRussia Singapore U.S. Brazil Chile China Germany FranceU.K.Hong Kong Hong Kong Hong Kong Hong Kong Hong Kong Hong Kong Hong Kong Hong Kong Hong Kong Hong Kong IndiaJapan South Korea South Korea South Korea South Korea South Korea South Korea South Korea South Korea South Korea South Korea South Korea Mexico RussiaSingapore U.S. Openness to international trade in goods Trade in goods International agreements allow- ing capital flows Openness to immigrants National regu- lations supporting international capital flows Expansion of the country's multinationals Trade in services Capital flows Ease of entry for foreign multinationals Mobility of people Trade Capital Openness to international trade in services Businesses People Source: BCG analysis. Note: Information for some countries was not available for every indicator. Exhibit 6 | Brazil Has Opened Itself to the Global Economy but Still Has Some Way to Go
  • 16. 14 | Charting a Steady Course percent annually), and imports expanded at 19.7 percent (16.7 percent for Latin America). This growth took off, however, from a very low base. Brazil’s share of global trade in goods and services is still only 1 percent, well below its 3 percent share of the world’s GDP. Latin America as a whole continues to lag behind, accounting for only 6 percent of global trade in goods and 4 percent in servic- es, compared with 8 percent of global GDP. One reason is that tariffs remain high. Bra- zil’s import tariffs average 22.1 percent, compared with a global average of 14.1 per- cent. Duties imposed on Brazilian goods are also just above the global norm of 12.1 per- cent. A further handicap is Brazil’s limited participation in the General Agreement on Trade in Services (GATS). The country has only 17 GATS agreements, compared with regional leader Mexico’s 30 and world lead- er Vietnam’s 50. It rates 105 out of 141 coun- tries in the Fraser Institute’s Openness to In- ternational Trade rankings—behind China, Mexico, India, and Chile, which ranks ninth worldwide. Brazil suffers from a lack of effort to promote it as a place to live or do business. Brazil receives more foreign investment than any other Latin American economy, but this reflects the country’s size rather than its openness to capital flows. When investment is weighted by GDP, Brazil is far outpaced by Chile, whose regional lead reflects participa- tion in 51 bilateral investment treaties—with partners including the U.S., Canada, and In- dia. Brazil participates in only 14 investment treaties, all with Mercosul partners. The broader context is formed by limited Lat- in American investment participation. The re- gion’s share of investments both by outsiders in Brazil and by Brazil in other countries has increased since 2007, but these levels are still small compared with other regions and com- pared with the country’s contribution to glob- al GDP. Investors are hampered by a lack of standardized continentwide regulatory prac- tices, but this is being addressed—in account- ing, at least. In 2011, Brazil adopted the Inter- national Financial Reporting Standards. This move should facilitate comparison and inte- gration with the global competitive landscape. Image Brazil has an open, welcoming image that ap- peals to the rest of the world. Among the countries we compared it with, not one is more open to new ideas, according to interna- tional executives surveyed for the World Com- petitiveness Yearbook. The country ranks among the best in terms of culture and at- tractiveness to tourists—scoring tenth and thirteenth, respectively, out of the 50 coun- tries included in the Anholt-GfK Roper Na- tion Brands index. That positive image is reflected in the coun- try’s success in attracting international events. (See Exhibit 7.) It hosted 304 international congresses and events in 2011, up from 133 in 2003—an increase of 11 percent per year that makes it seventh in the world overall. It will stage the 2014 soccer World Cup, and Rio will be the host city for the 2016 Olympic Games—events projected to attract 600,000 and 380,000 foreign visitors, respectively. But Brazil’s image is weaker in other respects. Despite its high scores for culture and tour- ism, its overall Nation Brands rating is below average, reflecting low international opinion of Brazilian goods and of the country as a place to live. The Economist Intelligence Unit’s study of the best cities to live in 2012 rated São Paulo and Rio de Janeiro 42 and 43, respectively, out of 70, well below Latin American peers Buenos Aires, Santiago, and Lima. For personal safety and asset security, the World Competitiveness Yearbook rated Bra- zil low, not far ahead of Mexico and well be- hind India, Chile, and the U.S. Not all of these misgivings about Brazil are ill-founded, but they are compounded by the lack of a concerted attempt to promote the country as a place to live or do business. Im- ages of poverty and violence go unchal- lenged. São Paulo has reduced its murder
  • 17. The Boston Consulting Group • BRAiN | 15 rate by 82 percent in the past ten years to 8.9 homicides per 100,000 inhabitants, a level comparable with large cities in the U.S.—but this news has received little publicity. Inves- tors and immigrants will find that Brazil does have problems, but the country’s image as an appealing spot for international events reveals more than images of unrelieved pov- erty and violence. notes 1. EMBI+, an index maintained by J.P.Morgan, tracks returns on each country’s traded external debt instruments. 2. According to the World Bank’s Doing Business database (2010). 3. The $217 billion figure is derived from an exchange rate of 2.03 Brazilian reais per $1.00 (July 5, 2012). Image as a place to do business Foreign interest in the country’s investment and business Attractiveness for international events Sustainability Quality of life Cultural openness Personal safety and asset security Tourism and leisure Volume of tourism Poor Needs improvement Good Excellent International hubs Other developed nations Developing nations BrazilChile China Germany France U.K. India Japan Mexico Russia Singapore U.S. BrazilChile China Germany France U.K.India JapanMexico Russia Singapore U.S. BrazilChile ChinaGermany France U.K.Hong Kong Hong Kong Hong Kong Hong Kong Hong Kong Hong Kong India Japan South Korea South Korea South Korea South Korea South Korea South Korea South Korea South Korea South Korea Mexico Russia Singapore U.S. Brazil ChileChina GermanyFrance U.K.India JapanMexico Russia SingaporeU.S. Brazil ChileChinaGermanyFrance U.K. IndiaJapan MexicoRussia SingaporeU.S. Brazil ChileChina GermanyFrance U.K. India JapanMexico Russia Singapore U.S. BrazilChile China Germany France U.K. India Japan Mexico Russia Singapore U.S. BrazilChile China Germany France U.K. India JapanMexico Russia Singapore U.S. BrazilChile China Germany France U.K.India Japan MexicoRussia Singapore U.S. Source: BCG analysis. Note: Information for some countries was not available for every indicator. Exhibit 7 | A Welcoming Image Has Attracted International Events
  • 18. 16 | Charting a Steady Course Immense Promise The Brazil of today is an increasingly attractive place to do business. The country has vastly improved political and legal systems and appealing demographic dynamics, all of which offer huge opportuni- ties to employers willing to invest in training their employees. Its infrastructure is still subpar, but the government’s increased openness to private investment bodes well for future development in this area. The financial market as a whole is solid, very profitable, and underpinned by world-class regulation. The country is increasing its connections with the world and has shown growing receptivity to foreign investment and other forms of engagement. Culturally, it is seen as possessing unmatched openness to new ideas and, as it hosts the World Cup and Olympics, it will have the chance to further improve that perception. Even though Brazil is starting to attack its chronic bureaucratization, its creaking infra- structure, and the relics of a protectionist past, these challenges will not be eliminated overnight and must be reckoned with by any- one planning to work or invest in Brazil. The bottom line is that investing in Brazil is not for the uncommitted or faint-hearted but of- fers immense promise to the well-informed investor.
  • 19. The Boston Consulting Group • BRAiN | 17 The Boston Consulting Group pub- lishes other publications that may be of interest to decision makers and investors interested in under- standing the Brazilian economic and business environment. Recent examples are listed here. Allies and Adversaries: 2013 BCG Global Challengers A report by The Boston Consulting Group, January 2013 Brazil: Confronting the Productivity Challenge A report by The Boston Consulting Group, January 2013 From Wealth to Well-Being: Introducing the BCG Sustainable Economic Development Assessment A report by The Boston Consulting Group, November 2012 Capturing Payments Opportunities in Rapidly Developing Economies: Lessons From Brazil and India An article by The Boston Consulting Group, October 2012 for further reading
  • 20. 18 | Charting a Steady Course note to the reader About the Authors André Xavier is a partner and managing director in the São Paulo office of The Boston Consulting Group. You may contact him by e-mail at xavier.andre@bcg.com. Masao Ukon is a partner and managing director in the firm’s São Paulo office. You may contact him by e-mail at ukon.masao@bcg.com. Juliana Abreu is a principal in BCG’s São Paulo office. You may contact her by e-mail at abreu. juliana@bcg.com. Frederick Pierru is a principal in the firm’s Mexico City office. You may contact him by e-mail at pierru.frederick@bcg.com. João Moreira is a project leader in BCG’s São Paulo office. You may contact him by e-mail at moreira. joao@bcg.com. Paulo Oliveira is the CEO and Pedro Guerra a director of Brasil Investments and Business (BRAiN). You may contact them by e-mail at poliveira@brainbrasil.org and pguerra@brainbrasil.org. Acknowledgments We would like to thank many cur- rent and former BCG colleagues without whom this report would not be possible: Antonio Riera, Bruno Antunes, Camila Penazzo, Carlo Ca- labro, Cristiana Oashi, Daniel Zon- enschein, David Michael, Débora Mayer, Diana Gerbase, Duncan Martin, Flavio Magalhaes, Frankie Leung, Giuliano Giordano, Henrique Sinatura, Ignacio Pena, Jorge Becer- ra, José Shintate, Juliana Barbosa, Luis Figueira, Marcos Aguiar, Paulo Nakamura, Philippe Dutheil, Philippe Morel, Rafael Zuana, Sil- mara Costa, Thiago Miskulin, Tjun Tang, V. Chandrashekhar, and Wal- ter Piacsek. We extend further thanks to BRAiN’s executives and staff mem- bers: Luiz Roberto Calado, André Luiz Sacconato, José Manoel Moulin Ribeiro Netto, Daniel Peres Rosenfeld, Eduardo Oliveira Limei- ra, Filipe de Oliveira Pelepka, Dani- lo Corrêa Vivan, Juliana Dib Rezende, and Sandra de Souza Lima. We would also to acknowledge Huw Richards for his writing support, as well as Katherine Andrews, Gary Callahan, Sarah Davis, Angela DiBattista, Belinda Gallaugher, and Sara Strassenreiter for contribu- tions to the editing, design, and pro- duction of this report. For Further Contact André Xavier Partner and Managing Director BCG São Paulo +55 11 3046 3533 xavier.andre@bcg.com Masao Ukon Partner and Managing Director BCG São Paulo +55 11 3046 3533 ukon.masao@bcg.com Juliana Abreu Principal BCG São Paulo +55 11 3046 3533 abreu.juliana@bcg.com Frederick Pierru Principal BCG Mexico City +52 55 5258 9999 pierru.Frederick@bcg.com João Moreira Project Leader BCG São Paulo +55 11 3046 3533 moreira.joao@bcg.com Paulo Oliveira CEO BRAiN +55 11 2529-7040 poliveira@brainbrasil.org Pedro Guerra Director BRAiN +55 11 2529-7040 pguerra@brainbrasil.org
  • 21. © The Boston Consulting Group, Inc. 2013. All rights reserved. For information or permission to reprint, please contact BCG at: E-mail: bcg-info@bcg.com Fax: +1 617 850 3901, attention BCG/Permissions Mail: BCG/Permissions The Boston Consulting Group, Inc. One Beacon Street Boston, MA 02108 USA To find the latest BCG content and register to receive e-alerts on this topic or others, please visit bcgperspectives.com. Follow bcg.perspectives on Facebook and Twitter. 4/13