World Economic Forum2018 – All rights reserved. No part of this publication may be reproduced or Transmitted in any form or by any means, includingPhotocopying and recording, or by any information Storageand retrieval system. REF 140318 - case 43923 3Brazil Competitiveness and Inclusive Growth Lab Report Contents 3 Preface 4 Introduction 5 The Competitiveness Challenge inBrazil 14 Methodology and Framework 17 The Competitiveness andInclusive Growth Lab Findings 17 Work stream 1: GVCintegration and innovation 25 Work stream 2: A newgeneration of public policies 27 Work stream 3: Institutional,legal and regulatoryframework 32 Concluding Remarks 33 Annex – Members of the BrazilCompetitiveness and InclusiveGrowth Lab 36 Endnotes Preface The factors determining a country’s level of economicgrowth are numerous and complex. The World EconomicForum has pioneered assessments of the level and patternof growth in an ongoing effort to better identify, measureand monitor these factors under the System Initiative onShaping the Future of Economic Progress. The Forum’sannual fagship Global Competitiveness Report highlightshow countries have progressed or fallen behind on each ofthe factors, and compares their performance at the regionaland global levels. Building on this long tradition of competitivenessresearch and benchmarking, the Forum designed theCompetitiveness and Inclusive Growth Lab initiative tohelp bridge gaps in competitiveness through focusedpublic-private work that is facilitated by the Forum andleads to agendas with achievable reform. Based on thereport’s results, and under a mandate from the businessand government partners meeting at the Forum’s AnnualMeeting 2014 in Davos-Klosters, the Forum identifedthe factors on which Latin America lags the most: skills,technological readiness and innovation. Following this initialdiagnosis, detailed analysis and policy recommendationswere presented at the World Economic Forum AnnualMeeting 2015 and validated at the World Economic Forumon Latin America 2015 in Riviera Maya, Mexico. Since the recent recession, the Government of Brazil hasmade a concerted effort to implement a series of reformsto modernize its policies and institutions with the objectiveof increasing productivity and jump-starting the economy.It is in this context that the Ministry of Industry, ForeignTrade and Services of Brazil and the World Economic Forumhave partnered to implement the Competitiveness andInclusive Growth Lab as part of a broader strategy to boostcompetitiveness and improve the business environment. The model builds on previous experience in Colombiaand Mexico, contributes to the identifcation andselection of priority areas and promotes the formation ofmultistakeholder working groups and steering committeesfor structured dialogue and solutions designed to closecompetitiveness gaps. The success of this initiative restson mobilizing resources and commitments across a broadspectrum of stakeholders from the public and privatesectors at all levels. This report provides a detailed overviewof the Brazil Competitiveness and Inclusive Growth Lab.The plan has been incorporated into the competitivenessagendas under steering board member leadership. TheForum looks forward to implementing the jointly developedwork plan and to collaborating with Brazil, and other LatinAmerican countries, within the Competitiveness Lab modelin the future. Marisol Arguetade Barillas Head of RegionalStrategies - LatinAmerica, Memberof the ExecutiveCommittee MargaretaDrzeniek-Hanouz Head of Futureof EconomicProgress, Memberof the ExecutiveCommittee 4Brazil Competitiveness and Inclusive Growth Lab Report Introduction Context and objectiveAfter two years of deep recession, Brazil’s economyis currently on a path to recovery as a result of highercommodity prices and rising consumption and investment(IMF, 2018). However, the severity of the recentrecession and the modest growth of the past decadeshave highlighted the need to enhance productivity andcompetitiveness.As it is generally easier to fx the roof while the sun is shining,the current rebound provides a window of opportunity topropose forward-looking solutions to strengthen Brazil’scompetitiveness in the world economy. Such improvementswould not only help to pave a sustainable and inclusive pathto prosperity, but also to build resilience to future economicshocks. This will depend mainly on the proper functioning ofits institutions, the quality of its infrastructure, the allocationof production factors, a coherent regulatory environment, athriving workforce and a healthy innovation environment. The World Economic Forum’s region-wide Competitivenessand Inclusive Growth Lab initiative in Latin America waslaunched in 2014. With the help of the experts and leadersfrom the Forum’s multistakeholder communities in LatinAmerica, the initiative aimed to identify the underlyingfactors behind the gaps in competitiveness in the regionin comparison to higher-income countries and to developa set of recommendations to bridge these gaps. Movingbeyond diagnosis, the Forum spearheaded country-level labinitiatives in Colombia and Mexico to develop and implementagendas to improve the innovation environment throughpublic-private collaboration, based on regional-level fndings.While the fndings and recommendations from the LatinAmerica lab remain relevant, Brazil’s priorities extendedbeyond the scope of those established regions. To addressthe country’s needs, Brazil’s Ministry of Industry, ForeignTrade and Services (MDIC) and the World Economic Forumcollaborated on the Lab initiative to shape the country’scompetitiveness agenda.The objective of the Competitiveness and Inclusive GrowthLab – Brazil and this report is to support the design, launchand implementation of an achievable agenda to increasecompetitiveness by addressing some of the vital challengesidentifed by the stakeholders participating in this initiative. Structure of the report Section 2 of this report presents an in-depth analysis of thecurrent state of competitiveness challenges in Brazil. Section3 details the methodology and the prioritization processused to determine the scope of the lab. Section 4 highlights the fndings and policyrecommendations elaborated by the Working Groupwithin the topics prioritized by the Steering Committee –innovation and trade for global value chain (GVC) integration,promoting a new generation of policies and addressingBrazil’s institutional, legal and regulatory framework. Foreach proposal, a detailed implementation plan is presentedto guide policy-makers forward. Lastly, section 5 providesconcluding remarks.Expected outcome Implementing the proposals presented in the Lab has thepotential to further narrow Brazil’s competitiveness gapswith higher-income countries. Promoting innovation andincreasing trade fows to support technology spilloversand create skilled job opportunities, enhancing policyeffectiveness and accountability, and simplifying regulationsfor businesses are all viable strategies to achievesustainable increases in productivity growth rates. Theserecommendations are part of a continuous effort to maketangible progress in addressing critical issues affectingproductivity in Brazil.。。。。。。