Brazil falls in competitiveness ranking despite low unemployment

Brazil dropped seven positions in this year's world competitiveness ranking, moving from 58th to 65th place in a survey that evaluates 70 countries. The result raises an alarm about the country's ability to attract investments, companies and create jobs.

According to analyst Lucinda Pinto, on CNN Prime Time, the ranking measures around 300 aspects, including quality of education, cost of capital, government and company performance.

An aspect that draws attention, according to Lucinda Pinto, is the fact that the drop occurred in a period of economic growth and a warming job market, with the unemployment rate reaching historically low levels. "This is not enough to guarantee this competitiveness, because the country has not yet managed to develop these other aspects", he stated.

"This competitiveness ranking is nothing more than a way of measuring the ability of countries to attract investment, attract companies, generate business and generate employment", he explained.

The first placed in the ranking are Singapore, Hong Kong, Switzerland, Taiwan and the United Arab Emirates, followed by Denmark, Ireland, the Netherlands, Sweden and the United States.

According to Lucinda Pinto, these countries have in common quality education, strong investment in technology and innovation, as well as a significantly lower cost of capital. "These are all points of weakness in the country today", highlighted the analyst.

At the bottom of the ranking, Brazil appears behind countries such as Ghana, Slovakia and next to Mexico, Botswana, Mongolia, Nigeria, Namibia and Venezuela.

Cost of capital and the negative spiral
For Lucinda Pinto, the cost of capital represents a strategic and structural problem. The analyst described the phenomenon as a kind of negative spiral: the absence of quality education prevents sustainable growth and, without efficient growth, the country begins to depend on higher interest rates to attract investors. "It's a negative wheel that has been difficult to break", he summarized.

The analyst also highlighted that the most competitive countries have predictability and a clear vision of the future, characteristics that, according to her, Brazil often lacks.

In an interview with CNN Money, Hugo Tadeu, from the Center for Innovation, Artificial Intelligence and Digital Technologies at Fundação Dom Cabral, corroborated this assessment. "The data brings the perspective that the cost of doing business in Brazil is increasingly high, and this has made it difficult not only for industries, but also for start-up companies", stated Hugo Tadeu.

Hugo Tadeu also cited gross fixed capital formation as a second worrying indicator. According to him, industries that would like to invest to promote growth point to the cost of capital as a hindering factor.

Lucinda Pinto complemented the analysis by observing that this scenario helps to explain why the foreign capital that reaches the Brazilian stock exchange does not convert into long-term productive investment in the national economy. At a time when countries are competing fiercely globally to attract artificial intelligence and technology companies, Brazil runs the risk of falling behind in this process.

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Source: CNN