世界经济论坛-巴西竞争力与包容性增长实验报告（英文）-2018.3-38页-3mb

Summary of Brazil Competitiveness and Inclusive Growth Lab Report (March 2018)

Core Content

The Brazil Competitiveness and Inclusive Growth Lab Report, published by the World Economic Forum in March 2018, analyzes the key challenges to Brazil's economic competitiveness and outlines policy recommendations to foster inclusive growth. The report is part of a broader initiative launched in 2014 to identify and address competitiveness gaps in Latin America.

Main Points

1. Competitiveness Challenge in Brazil

• Brazil's economy has been recovering from a deep recession, but long-term structural issues persist.
• The country lags behind higher-income nations and even some Latin American neighbors in terms of competitiveness.
• The Global Competitiveness Index (GCI) shows Brazil ranked 80th out of 137 economies in 2017, the least competitive among BRICS countries.
• Brazil's total factor productivity (TFP) growth has been negative over the past two decades, indicating inefficiencies in resource allocation and structural change.
• The country's competitiveness is hindered by institutional, legal, and regulatory challenges, as well as a lack of innovation and skilled labor.

2. Business Environment Challenges

• "Custo Brasil" (Brazil Cost): A complex tax system, poor infrastructure, and an inefficient bureaucracy significantly increase the cost of doing business.
• Starting a Business: Brazil ranks poorly in terms of the number of procedures and days required to start a business. It takes an estimated 11 procedures and 80 days, compared to Latin American and OECD averages of 7 days.
• Tax Burden: Brazil has one of the highest corporate tax rates in the world at 68.4%, which is 134th out of 137 countries. The time spent on tax preparation and payment is also among the highest globally.
• Regulatory Environment: Brazil ranks 130th out of 137 countries in terms of the perceived burden of non-tariff barriers, and 136th in terms of the perceived restrictions on foreign investment.

3. Innovation and Technology Readiness

• Innovation is a key driver of productivity and competitiveness.
• Brazil's innovation output, as measured by patent applications, is very low compared to leading economies.
• Despite being the leader in Latin America with 670 patent applications in 2014, Brazil's share of global patent applications is only 0.003%.
• The country's R&D expenditures as a percentage of GDP remain low, at 1.17% in 2014, compared to the OECD average of 2.5%.
• Brazil's technological readiness is below OECD and other advanced economies, and it has not significantly improved in this area over the past decade.

4. Labor Market and Skills Gap

• Brazil's workforce is relatively well-educated compared to other Latin American countries, but still lags behind OECD averages.
• Only 21.6% of the workforce is employed in knowledge-intensive sectors, the second-highest in Latin America.
• A significant portion of firms (61%) struggle to fill vacancies due to a lack of skilled workers.
• The automotive and machinery sectors face the most acute skill shortages, which limits their potential for innovation and productivity growth.

5. Trade and Global Value Chain (GVC) Integration

• Brazil's trade openness is limited, with exports and imports representing less than a quarter of GDP.
• The country is among the least integrated into global value chains, limiting its access to intermediate goods and knowledge spillovers.
• High nominal tariff rates (13.6% in 2016) and complex customs procedures hinder trade and GVC integration.
• Non-tariff barriers, such as health and product standards, also limit domestic competition and foreign investment.

6. Public Policy and Governance

• The Brazilian government has initiated several reforms to improve competitiveness and productivity, including fiscal and labor reforms.
• However, the effectiveness of these policies is undermined by poor design, lack of transparency, and inadequate monitoring and evaluation.
• Institutional weaknesses and inefficiencies in the public sector are major obstacles to sustainable growth and inclusive development.

Key Recommendations

• Simplify the regulatory and legal framework to reduce the burden on businesses and improve the business environment.
• Enhance the tax system by reducing complexity and lowering corporate tax rates to encourage investment and productivity.
• Boost innovation and R&D investment by increasing public and private sector funding and improving the innovation ecosystem.
• Improve the labor market through better alignment of education and training programs with industry needs.
• Promote trade liberalization and GVC integration by reducing tariffs, improving customs procedures, and addressing non-tariff barriers.
• Institutionalize monitoring and evaluation mechanisms to ensure policy effectiveness and accountability, and to reallocate resources to more productive sectors.

Conclusion

The report emphasizes the need for a comprehensive and sustainable approach to improving Brazil's competitiveness. It calls for a focus on innovation, trade, and institutional reform, with an emphasis on inclusive growth to address the country's deep-rooted challenges of poverty and inequality. The Competitiveness and Inclusive Growth Lab aims to support the development and implementation of actionable agendas to achieve these goals.