Porter Diamond of Global Competitiveness

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Factor Conditions
Although Brazil has a large workforce of 100 million people, it was perceived to lack flexibility due to difficult labor regulations, .costly labor requirements and rigid hiring/firing practices. These labor practices were viewed as a barrier in keeping workers in a low-productivity sectors and stifling upward mobility. Inflexible labor market also diminished national productivity, and reduced tax intake. Furthermore, the sub-par education system in the country has contributed to shortages of skilled labor, such as scientists and engineers.

While the physical infrastructure of Brazil is considered to be substandard for such economy, the technological infrastructure is more advanced. Information and communication technologies ranked near the top for the Latin Technology Index. While penetration of personal computers is a competitive advantage, internet coverage and mobile telephone are areas for improvement. On international standards, attraction of foreign direct investments in technology has Brazil outperforming other countries in terms of overall technology readiness. Brazil’s banking system is also perceived as a competitive strength, given the banking system’s sound regulation and financial stability. Another key competitive advantage for Brazil is wealth of natural resources, including recently discovered oil fields off the coast, iron ore, gold, platinum, and other precious metals, as well as timber. Brazil is on track to become one of the largest oil producers. The country as well as private institutions are investing heavily in R&D and further internal business development, as well as international growth and acquisitions to become global players.

Demand Conditions
During global economic slowdown, Brazil was able to fare better than many other countries due to strong private consumption. Domestic demand, led by private consumption, has been rising as the middle-class consumers expanded. According to the report, domestic...
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