Schumpeter: Brazil’s business Belindia

February 26, 2015

The Economist (print edition), 2/28/2015

BRAZILIANS make up almost 3% of the planet’s population and produce about 3% of its output. Yet of the firms in Fortune magazine’s 2014 “Global 500” ranking of the biggest companies by revenue only seven, or 1.4%, were from Brazil, down from eight in 2013. And on Forbes’s list of the 2,000 most highly valued firms worldwide just 25, or 1.3%, were Brazilian. The country’s biggest corporate “star”, Petrobras, is mired in scandals, its debt downgraded to junk status. In 1974 Edmar Bacha, an economist, described its economy as “Belindia”, a Belgium-sized island of prosperity in a sea of India-like poverty. Since then Brazil has done far better than India in alleviating poverty, but in business terms it still has a Belindia problem: a handful of world-class enterprises in a sea of poorly run ones.

Brazilian businesses face a litany of obstacles: bureaucracy, complex tax rules, shoddy infrastructure and a shortage of skilled workers—to say nothing of a stagnant economy (see article). But a big reason for Brazilian firms’ underperformance is less well rehearsed: poor management. Since 2004 John van Reenen of the London School of Economics and his colleagues have surveyed 11,300 midsized firms in 34 countries, grading them on a five-point scale based on how well they monitor their operations, set targets and reward performance. Brazilian firms’ average score, at 2.7, is similar to that of China’s and a bit above that of India’s. But Brazil ranks below Chile (2.8) and Mexico (2.9); America leads the pack with 3.3. The best Brazilian firms score as well as the best American ones, but its long tail of badly run ones is fatter.

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Diplomatic row heightens as Indonesia recalls ambassador from Brazil

February 23, 2015

Ben Otto – The Wall Street Journal, 02/22/2015

The government recalled its newly appointed ambassador to Brazil, the latest sign of deteriorating relations after Indonesia last month executed a Brazilian citizen convicted of drug smuggling.

In recalling the ambassador, Indonesia cited a perceived diplomatic slight, as Brazil declined to accept the credentials of Jakarta’s incoming ambassador during a ceremony in Brasília, the capital, on Friday.

“The manner in which the foreign minister of Brazil suddenly informed the postponement when the ambassador-designate was already at the palace, is unacceptable to Indonesia,” the Indonesian Ministry of Foreign Affairs said on Saturday.

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Brazil’s foreign policy is in the dark

February 20, 2015

Robert Muggah – Open Democracy, 2/20/2015

If ever there was a good time for Brazil to assume more global responsibility in foreign affairs now would be it. Dangerous armed conflicts, health pandemics and climate change warrant assertive engagement from the world´s major players, including South America´s powerhouse. Brazil could play a critical role in promoting stability in an uncertain world. Worryingly, the country is nowhere to be seen.

Brazilian foreign policy is in the dark. Part of the problem is that its leaders are distracted. This is maybe not altogether surprising: the country’s economy is in the doldrums. Brazil’ new finance minister, Joaquim Levy, described Brazil´s economic prospects in 2015 as “almost flat”. Brazil is now one of the Fragile Five, alongside Indonesia, Russia, South Africa and Turkey. Unprecedented bribery scandals involving the national oil company, Petrobras, and a host of construction firms, will likely tip the already damaged economy into a recession.

Some Brazilian commentators resist a more activist foreign policy. They are understandably preoccupied with making critical reforms at home to increase productivity and competitiveness rather than promoting Brazilian interests abroad. But this is a false choice: domestic reform should not come at the expense of foreign policy. On the contrary. Brazil urgently needs to bolster its strategic interests in its own neighborhood and beyond.

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Brazil-US Relations: Common Ideas, Little Dialogue

February 20, 2015

Monica de Bolle – The Huffington Post, 2/20/2015

It is unfortunate that Brazilian-American relations have become strained in recent years. This sense of frustration is further enhanced by the fact that the two largest countries in the Americas have very similar agendas when it comes to tackling inequality and income disparity. President Obama’s proposals towards “middle-class economics” and the recently released Economic Report of the President for 2015 highlight just how close the two countries are in their thinking about these issues and on how to make economic policies work more equitably for everyone. And yet, rather than coming together, the distance between the two countries has widened.

President Dilma Rousseff’s newly reelected government has vowed to rebalance Brazil’s economy – plagued by fiscal disarray and mounting inflation – in a way that preserves the legacy of the PT (Brazil’s Workers’ Party) achieved over last twelve years: the impressive social inclusion that has raised millions from the lowest ranks of the income distribution to the middle class. Aided by the macroeconomic stabilization of the 1990s and the unprecedented favorable external conditions that dominated the economic landscape between 2004 and 2010, the PT governments have set in motion their own version of “middle-class economics.” Remarkable social mobility took hold, and many were able to raise their overall quality of life as a result of targeted cash transfer programs such as “Bolsa-Família,” as well as specific programs aimed at allowing working mothers to remain in the marketplace and programs to help small and medium entrepreneurs tap into credit markets, among many other initiatives.

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Brazil has the best nutritional guidelines in the world

February 20, 2015

Julia Belluz – Vox, 2/20/2015

The way we talk about nutrition in this country is absurd. And you only need to look as far as Brazil to understand why.

Yesterday, a US-government appointed scientific panel released a 600-page report that will inform America’s new dietary guidelines. These guidelines only come out every five years, and they matter because they truly set the tone for how Americans eat: they’re used by doctors and nutritionists to guide patient care, by schools to plan kids’ lunches, and to calculate nutrition information on every food package you pick up, to name just a few areas of impact.

But this panel and their guidelines too often over-complicate what we know about healthy eating. They take a rather punitive approach to food, reducing it to its nutrient parts and emphasizing its relationship to obesity. Food is removed from the context of family and society and taken into the lab or clinic.

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Brazil’s scandalous boom to bust story

February 19, 2015

Patrick Gillespie – CNN Money, 2/19/2015

Five years ago its economy grew three times faster than the United States. In 2011 its economic size surpassed Great Britain’s. Millions of Brazilians moved from poverty to the middle class, and the president at the time, Luiz Inácio Lula da Silva, had an 83% approval rating.

Eike Batista, once Brazil’s richest person, told “60 Minutes” that his nation was realizing its potential.

“Brazil has put its act together,” Batista told 60 minutes in 2010. “We’re walking into a phase of almost full employment…It’s unbelievable.” It certainly was unbelievable.

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Brazil finally gets some rain, but rationing still looms

February 19, 2015

Jeb Blount – Reuters, 2/18/2015

Heavy rains during Brazil’s four-and-a-half-day Carnival holiday offered the first relief in months for the country’s drought-stricken and economically crucial southeast, but was unlikely to end fears of water and electricity shortages.

A cold front along Brazil’s southeastern coast near the two principal cities of Sao Paulo and Rio de Janeiro brought heavy rains on Sunday, Monday and Tuesday to most of the region and the neighboring center-west, home to much of the country’s farm belt.

The southeast is Brazil’s most populous and economically developed industrial region. The southeast and center-west together produce the bulk of such key Brazilian export crops as soybeans, coffee, sugar and orange juice.

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