Brazil

This chapter summarises the main findings and policy recommendations for the full report. Each section reflects the main messages of each thematic chapter: i) small- and medium-sized enterprise (SME) performance and entrepreneurial dynamics; ii) the business environment for SMEs and entrepreneurship; iii) the governance of SME and entrepreneurship policy; iv) federal programmes for SMEs and entrepreneurship; v) SME export policies; vi) the innovative start-up ecosystem; and vii) The local dimension of SME and entrepreneurship policy.

This chapter presents on overview of the main findings and recommendations resulting from the OECD review of the external quality assurance system in the federal higher education system in Brazil. The analysis has assessed the relevance, effectiveness and efficiency of the external quality assurance procedures applicable to undergraduate and postgraduate programmes and higher education institutions (HEIs) in the federal higher education system. The chapter summarises findings and recommendations in relation to the different components of the external quality assurance systems: a) procedures to regulate the “market entry” of new HEIs and new undergraduate programmes; b) procedures for the ongoing monitoring and evaluation of existing undergraduate programmes and related feedback and corrective measures; c) external quality procedures governing academic postgraduate programmes; d) ongoing monitoring and evaluation of higher education institutions (institutional evaluation) and; e) governance and administrative bodies and arrangements that have been created to implement and oversee the processes above.

Brazil’s Digital Governance Strategy (2016-19) is the main strategy on digital government policy providing a framework for programmes and actions. Approved in 2016, the strategy is aligned with the desired goal to shift from e-government to digital government. Updated in 2018, the strategy defines priorities such as promoting the availability of open government data, boosting the use of digital technologies for transparency purposes, improving the delivery and use of public digital services, securing the take-up of digital identity, developing evaluation and services’ satisfaction mechanisms, integrating digital services through interoperable public information technology (IT) systems and data, and increasing citizen participation through digital platforms.

Skill needs are shaped by structural and cyclical factors affecting the demand for and supply of skills. Economic growth, financial crisis, changes in the composition of economic output, as well as the so-called mega-trends (globalisation, population ageing and technological progress), are all important factors influencing the demand for skills. On the other hand, skill supply is influenced by labour market trends (namely participation rate, employment rate, duration of unemployment, average number of hours worked), education outcomes and investment in training activities.

The economy is gradually emerging from the recessionInflation has declined but financial intermediation could be improvedFiscal outcomes need to improve to ensure the sustainability of public debtImproving governance and reducing corruptionRaising investment is a key policy prioritySupporting the integration with the region and the world economyGreen growth challenges

Recent and ongoing droughts in Brazil create a momentum to think about different policy instruments that can contribute to water security and sustainable growth now and in the future. Water abstraction and pollution charges are among the instruments that can help the country to transition from water crisis management to water risk management, while setting incentives to use water efficiently and reducing the qualitative pressure on water resources.

The Assessment and Recommendations present the main findings of the Environmental Performance Review of Brazil and identify 53 recommendations to help Brazil make further progress towards its environmental policy objectives and international commitments. The OECD Working Party on Environmental Performance reviewed and approved the Assessment and Recommendations at its meeting on 17 June 2015.

The report focuses on two questions that have been at the core of the policy dialogue with Brazilian stakeholders over the past 18 months: 1) how is the multi-level governance system performing in terms of co-ordinating state and federal water policies and priorities? 2) are current water allocation regimes robust enough to cope with future water risks?

Brazil has moved up the ranks of the world’s largest economies. Growth has been stronger than in the OECD, but has fallen short of other BRIICS except for South Africa (). Perhaps even more importantly, Brazil has achieved a significantly more inclusive growth than in the past. Labour market informality has receded, unemployment is at a record low of 5.3% (August 2013), and poverty and inequality have fallen substantially.

Brazil has achieved remarkable progress since the mid-1990s, largely owing to a strengthening of public institutions, in particular the inflation targeting framework coupled with exchange rate flexibility and the Fiscal Responsibility Law. Improvement in the social area has also been impressive, with a remarkable fall in poverty and inequality. Most product markets have been opened up, and labour market informality has receded. The country is now reaping the benefits of economic stability and increasing resilience, which, together with a timely macroeconomic policy response combining monetary easing, some fiscal stimulus and credit expansion, allowed Brazil to withstand the 2008-09 global financial crisis well. Real GDP growth of 7.5% in 2010 was the highest since 1986 and the fifth-best performance amongst the G20 countries (Table 1). This robust growth is estimated to have removed all remaining slack from the economy.

In Brazil, total government employment (federal, state and municipality) accounts for a relatively limited percentage of total employment.1 In 2008, it represented approximately 10-11% of total employment2 compared to about 20% for the OECD average.3 When taking state-owned enterprises into account, the percentage increases slightly to about 11-12%,4 compared to an OECD average of about 22%. These percentages are small in comparison to other Latin American countries such as Argentina and Chile.

Domestic financial conditions tightened considerably as the global financial and economic outlook deteriorated from mid-September 2008. The supply of foreign credit to Brazilian enterprises, including exporters, had been abundant before the crisis but dried up rapidly. The cost of domestic borrowing rose sharply, and the real depreciated by over 40% from the highs of mid-2008 through year-end. Activity plummeted in the last quarter, dragged down by a collapse in industrial production, especially in credit-sensitive sectors, such as the motor industry, and a run-down in inventories, albeit from high levels. Demand for Brazilian exports also began to weaken later in the year. However, pressures were notably lower than those experienced by other large emerging-market economies. This is due essentially to the continued consolidation of macroeconomic adjustment following the floating of the real in 1999 – based on a policy framework combining inflation targeting, a floating exchange rate, rules-based fiscal policymaking and prudent public-debt management. This policy framework has delivered gradually falling inflation and public indebtedness, and has reduced external vulnerabilities. These factors have been essential for increasing resilience to external shocks and have laid the groundwork for raising the economy’s growth potential. Another reason for relatively good performance in spite of the crisis is that the banking sector is in good shape, and the non-financial corporate and household sectors do not suffer from the balance-sheet weaknesses that are at the heart of financial distress elsewhere. Indeed, there are signs that the economy is recovering, although the global economic outlook remains extremely uncertain.

The 2005 Survey argued that the foundations for sustained economic growth were by and large in place. This assessment remains valid. The macroeconomic environment continues to improve: fiscal policy has stayed on track; the public debt-to-GDP ratio has trended down since 2003, although it remains comparatively high by emerging-market standards; and inflation has been tame at its lowest level since the adoption of inflation targeting in 1999 and well anchored around the current target of 4.5%. Ongoing external adjustment is making the economy increasingly resilient to external shocks, and asset prices are performing well in the face of the current tightening of global liquidity. Efforts to reduce external vulnerability, particularly with respect to public external indebtedness, are paying off: Brazil’s sovereign credit has been upgraded, and interest premia are at historically low levels. The outlook for inflation and growth remains benign. At the same time, income inequality, which is high in Brazil, is coming down as a result of rising earnings and the successful implementation to date of targeted income support initiatives for the poor under the Bolsa Família programme. Continuous growth is the key to maintaining progress on this front. But there are some macroeconomic and structural problems, which, unless addressed, will continue to act as a drag on growth, preventing Brazil from reaping the full benefits of macroeconomic stabilisation. Against this background, the overarching medium-term policy objective for Brazil is to raise the economy’s growth potential so as to close the gap in income per capita with the OECD area, which has widened since the 1980s.

In the 30 years since the inception of a universal health system in Brazil through the creation of its Unified Health System, there has been significant improvement in population health indicators and increased access to health care. However, a number of key challenges remain, including persistent inefficiencies in the use of resources in the Brazilian health system, insufficient collection, linkage and analysis of health data and growing risk factors for health. At the same time, the path towards universal health coverage offering high-quality services has been unequal across socio‑economic groups and geographic regions, suggesting some gaps to provide effective coverage. This chapter assesses the performance of the health system in Brazil. It considers four topics in detail: improving efficiency and sustainability of financing, upgrading its health data infrastructure, and addressing major population risk factors such as overweight and harmful alcohol consumption. It provides a set of recommendations on improving the performance of the health system in the country.

This chapter presents the assessment and recommendations for the development of a successful better regulation policy in Brazil. The findings derive from interviews with stakeholders from the Brazilian administration, civil society and private sector; desk research and information provided by the main actors. The issues described in this section focus on aspects related to regulatory policy, namely: policies and institutions, regulatory impact assessment and stakeholder engagement; revision of the regulatory stock; and regulatory coherence and regulatory policy at the sub‑national level.

This chapter examines the processes in place in the federal higher education system in Brazil to monitor the quality of established undergraduate programmes and take action in the event of poor performance. As currently designed, the cycle of ongoing quality monitoring involves the use of large-scale student testing, administered through the National Examination of Student Performance (ENADE), the results of which feed, with other indicators, into a composite indicator of programme performance – the Preliminary Course Score (CPC). When programmes score poorly on the CPC measure, they are subjected to an on-site peer review visit and may ultimately face sanctions imposed by the Ministry of Education. The chapter provides a critical assessment of these processes and provides recommendations for their improvement.

Like the external quality assurance systems in many other OECD and partner countries, the National System for Evaluation of Higher Education (SINAES) in Brazil evaluates both higher education institutions and individual study programmes within those institutions. Private and public institutions are subject to periodic re-accreditation, based on on-site reviews coordinated by INEP. Whereas for private institutions, re-accreditation is a pre-requisite for their continued operation, legally protected public institutions the process is essentially a formality. In both cases, the period for which re-accreditation is granted varies depending on the status and institutional quality score awarded to the institution. Institutions are also subject to annual monitoring, based on the average performance of their programmes in relation to SINAES programme-level indicators and the results of CAPES evaluations for “stricto sensu” postgraduate programmes. This chapter examines these processes and provides recommendations for the future development of the systems in place.