Experts give their prescriptions for Brazil as the commodity boom ends

March 27, 2015

Joe Leahy – Financial Times, 3/25/2015

Brazil’s economy has slowed sharply. The brakes were applied by the end of the commodity supercycle that occurred in the first decade of the 21st century combined with rapid credit growth.

The debate in Brazil has returned to the vexed question of how to make one of the world’s most inward-looking economies more competitive.

The answer lies in improving education, streamlining taxation, simplifying bureaucracy in general, and fixing infrastructure. But beneath these concepts are complex questions that run as deep as Brazilian politics and culture itself.

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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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Private equity circles Brazilian projects amid Petrobras fallout

January 21, 2015

Joe Leahy – Financial Times, 01/21/2015

Brazilian construction groups’ inability to raise finance for large-scale projects, after being caught up in the Petrobras corruption scandal, is creating unprecedented opportunities for private equity investment in oil, gas and infrastructure deals.

Many of the country’s leading construction companies have struggled to access capital markets since state prosecutors alleged that they paid bribes to the state oil company and certain politicians in return for contracts.

But private equity groups are claiming that the companies’ resulting capital shortages could force them to retreat from projects to build oil and gas facilities, airports and hydropower dams.

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FIFA is giving Brazil $100 million after the country spent $15 billion on the World Cup

January 21, 2015

Stephen Wade – AP/Business Insider, 01/20/2015

Football’s world governing body FIFA said Tuesday it had set up a $100 million World Cup Legacy Fund for Brazil, aimed at sports facilities, youth and women’s football, and medical and health projects.

FIFA President Sepp Blatter pledged two years ago to give some of the revenue from the 2014 World Cup back to grassroots programs in the South American country, which spent about $15 billion organizing last year’s World Cup.

Spending on the Rio de Janeiro 2016 Olympics is expected to top $15 billion.

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Brazil crowds up but stadium usage still problematic

December 23, 2014

Andrew Downie – Reuters, 12/23/2014

The average attendance at Brazil’s new arenas in the five months since the World Cup was higher than the league mean but stadiums in cities without major clubs are in danger of becoming white elephants, studies and experts said.

The average attendance at all games in the 12 stadiums was 18,300, just above the 16,562 recorded over the season in Brazil’s Serie A, statistics compiled by the Folha de S.Paulo and Lance! newspapers showed.

Although the attendance at first division games in new arenas is twice that in older stadiums, only three of the new venues, in Sao Paulo, Belo Horizonte and Manaus, were consistently more than half full.

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Brazil trying to make good use of new stadiums

December 22, 2014

Tales Azzoni – AP/SunHerald.com, 12/21/2014

It’s white elephant time for World Cup stadiums — again.

When the World Cup ended, Brazil was left with a sense of pride after successfully hosting soccer’s showcase tournament. It was also left with 12 modern facilities that officials said would help revitalize the sport in the country.

Now, Brazil’s brand new arenas are having to host weddings, children’s parties and religious events to generate revenue.

Read more…

Correcting Brazil’s police violence: the case of Rio’s Pacifying Police Units

December 19, 2014

Layne Vandenberg – Brazil Institute, 12/18/2014

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Widespread protests against police violence and racism have recently scattered the United States after the release of the Ferguson (Michael Brown) and Eric Garner grand jury decisions. While Americans grapple with the reality of police violence, other countries live deeply entrenched in this reality. Scholar Ignácio Cano says there is “a Ferguson every day” in Brazil, and the state of Rio de Janeiro has been trying out a new policing strategy in hopes of improving community-police relations in its slums, called favelas.

Between 2009 and 2013, Brazilian police killed more than 11,000 people, or about six people per day. The 2014 edition of the Brazil Public Security Yearbook also found that 53,646 homicides occurred in 2013, or one person every 10 minutes.

With the highest per capita rate of killing of any Brazilian state and 6,826 homicides per year between 1991 and 2007, the state of Rio de Janeiro is “comparable with urban areas of countries in civil war.” But Rio needed a quick solution for its violent reputation among the international crowd. Rio is home to Maracanã stadium, where several 2014 FIFA World Cup matches, including the final, were held and the city is the host of the upcoming 2016 Olympic games. So how do you change the face of a city and a state in time for the world’s two largest sporting events?

The Rio state government’s solution: pacification.

Read the rest of this entry »


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