Author: Natália Paiva

Source: Folha de S. Paulo - 20/05/2010

Study highlights poor quality of education and excessive bureaucracy to open businesses; improvement in private management is praised

Institutional bottlenecks (such as outdated laws and tax overload) and infrastructure (logistics and technology) still hamper Brazil's competitiveness on the international stage.

The eighth economy in the world occupies only 38th place in a ranking with 58 countries made by the Swiss faculty International Institute for the Development of Administration, in partnership in Brazil with Fundação Dom Cabral (FDC).

The study, which measures the business environment, considers official data and interviews with entrepreneurs.

The Brazilian position, however, has already been worse. For the third consecutive year, Brazil rose in the ranking. The two positions advanced in 2010 were achieved thanks to the improvement in the management of companies and the resilience of the labor market during the crisis.

Issues such as flexibility in the face of new challenges and adaptability to changes have pushed Brazil to a less uncomfortable position. Economic performance, especially with regard to domestic activity, continued as another point of relative comfort.

The main weaknesses, however, remain in the lack of efficiency of the government in all spheres - in this segment, Brazil is among the lanterns, in 52º- and in the deficient infrastructure, a segment that includes logistics, technology, science, education, health and environment .

Outdated laws, high tax burden, absence of regulatory frameworks, excessive bureaucracy to open companies and sign export contracts are some of the obstacles that “hold” competitiveness.

“In the variable on the ease of doing business in the countries, on a scale of 1 to 7, Brazil is at 2,3. Companies have the perception that Brazil is an important country to be in, but that requires more care and cost. When it comes to opening companies, we are among the worst, ”says Carlos Arruda, professor at Dom Cabral responsible for Brazilian data.

"This is the most critical pillar, which impacts the others, especially the infrastructure, which depends on government actions." During the interview, via Skype, from Arruda to Folha, the connection was cut three times. In terms of technological infrastructure (which measures the quality of services such as the broadband offered in the country), Brazil ranked 53rd.

In infrastructure as a whole, Brazil fell from 46 to 49, affected mainly by the precarious nature of ports and waterways and by the price of cell phone services.

For Juan Quirós, vice president of Fiesp and former president of Apex Brasil (Brazilian Trade and Investment Promotion Agency), the study leads to the conclusion that the most sensitive areas for competitiveness in Brazil are health and education (40th and 53rd positions, respectively) and that it is necessary to “modernize” the legislation.
An example of these problems, he says, are the barriers to foreign investment in health.
“Going up [in the ranking] is positive, but we have to focus on what can take us to 30th position. We are tired of diagnoses. Now, we have to act. ”

Worldwide
For the first time in decades, the USA emerged from the first position of the ranking, surpassed by the small Singapore and Hong Kong, which managed to organize themselves in a more competitive way.
European countries, strongly affected by the global economic crisis, were the ones that lost the most positions, making room for economies with rising middle class, such as Taiwan (from 23rd to 8th) and Malaysia (from 18th to 10th).