1. CIC Competitiveness Conference The Case of Brazil Werner Baer (University of Illinois)

2. THE CASE OF BRAZIL 1.ISI in Brazil: achieved through -protection -attracting multinational enterprises -creation of state enterprises -development bank 2. Result: high growth rates and structural changes in the economy

3. 3. Negative aspects of ISI: -High cost industries -Low employment generation -Import coefficient problem -Worsening income distribution 4. Neo-Liberalism -Results of 1980s debt crisis -Lowering protection -Privatization -Stabilization -Attempts at export diversification

4. 5. Benefits of neo-liberalism: increased industrial efficiency through upgraded technology; presence of multinationals again in public utilities and rise of public utilities’ efficiency 6. End of inflation in the mid-1990s with the introduction of the REAL plan 7. Recent positive developments: growth in different sectors: -emergence of Brazilian multinationals, such as Embraer, Gerdau Group, Vale, Ambev/Inbev

5. 8. Motive for emergence of Brazilian multinationals: both access to markets and to foreign technology 9. Despite favorable press, performance of Brazil has not been as great as many imagined: - growth rate low until 2005, and high growth rate 2005-8 of 5% was not spectacular - low investment/GDP ratio and low investment in infrastructure

6. 10. Growth with equity? Gini coefficient declined – is that due to cash transfers (bolsa familia)? 11. Has distribution of assets improved??? 12. Low R & D in proportion of GDP 13. Low technology performance: as witnessed by low patent registration 14. The problem of education

7. 15. Can Brazil overcome these challenges? To what extent do the forthcoming World Cup and Olympics tend to have us overlook them?