Nearshore Americas

Study: High Cost of Labor and Capital Hinder Brazil’s Emergence


Brazil’s competitiveness in the global marketplace is diminishing due to the rising cost of labor, capital and  shaky infrastructure, according to a study published in December by the National Confederation of Industry.

The Confederation, which put Brazil in 13th place among 14 countries it surveyed to measure socio-economic conditions, has also expressed concern on the country’s weak macro-economic environment and poor transport network.

In the study, Brazil has performed only better than Argentina, which ranked at the bottom. At the top of the list is Canada, followed by South Korea, Australia, China, Spain, India, Chile, South Africa, Poland, Russia, Colombia and Mexico.

Those who conducted the study said they found no improvement in Brazil’s economic competitiveness since a similar survey carried out in 2010.

Surprisingly, Brazil’s industrial sector growth slowed to 0.3% in 2011, after expanding a sizzling 10.5% in 2010. The Latin America’s biggest economy posted a $186 million trade deficit in November, which is a marked difference when viewed against a $571 million surplus it posted for the same month a year before.

“The (global crisis) affected everybody, but impacted Brazilian industry with great intensity. At a time of crisis, competition becomes more acute and it is precisely the moment when the country needs to show strength so as not to lose markets,” reported Folha De, a Sao Paulo-based daily, quoting Renato da Fonseca, CNI executive-manager, as saying.

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The Brazilian government has, in the meanwhile, tried to assuage the investors saying it was confident that its recent measures to boost industry and consumption would fuel growth in the second half of this year.


Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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