Housing for the base of the pyramid in Brazil: a future without slums

Rebecca Rocha & Tatiana Bessarabova – The Guardian, 5/8/2014

Rapid urbanisation has created immense challenges for cities in emerging economies that are unable to deal with the influx of people. Close to 1 billion individuals around the world live in slums and other inadequate housing, and this number is projected to triple by 2050 if the problem remains unaddressed. Considering the enormous need and substantial size of the low-income housing market, which is worth more than $300bn globally, very few market-based approaches exist to provide housing solutions for poor people.

Through a collaborative effort, the Business Call to Action (BCtA) and theAspen Network of Development Entrepreneurs (ANDE) Brazil Chapter set out to explore the issue of affordable housing at the base of the pyramid in Brazil, one of the most rapidly urbanising countries in Latin America, where more than 50 million people have inadequate housing. This report is the result of dialogue involving the city government of São Paulo, civil society, real estate developers, entrepreneurs, private companies and investors, to discuss challenges and solutions for low-income communities in Brazil.

The topic of low-income housing in Brazil is hotly contested as the country races to implement its controversial plan to reduce favelas (slums) before the World Cup this year and the Olympics in 2016.

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What’s holding back Brazil?

Otaviano Canuto – Project Syndicate, 2/21/2014

One often hears that Brazil’s economy is stuck in the “middle-income trap.” Since the debt crisis of the 1980’s, Brazil has failed to revive the structural transformation and per capita income growth that had characterized the previous three decades. But, with the right mix of policies, it could finally change its fortunes.

The prevailing explanation for Brazil’s failure to achieve high-income status lumps the country together with other middle-income economies, all of which transferred unskilled workers from labor-intensive occupations to more modern manufacturing or service industries. While these new jobs did not require significant upgrading of skills, they employed higher levels of embedded technology, imported from wealthier countries and adapted to local conditions. Together with urbanization, this boosted total factor productivity (TFP), leading to GDP growth far beyond what could be explained by the expansion of labor, capital, and other physical factors of production, thereby lifting the economy to the middle-income bracket.

Progressing to the next stage of economic development is more difficult, reflected in the fact that only 13 of 101 middle-income economies in 1960 reached high-income status by 2008. According to the dominant view, success hinges on an economy’s ability to continue raising TFP by moving up the manufacturing, service, or agriculture value chain toward higher-value-added activities that require more sophisticated technologies, higher-quality human capital, and intangible assets like design and organizational capabilities.

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