Synthesis
The synthesis summarizes the productivity levels and causal factors in each of the case studies for this report. These findings are then used to assess potential productivity growth rates for the overall economy.
Objectives and Approach
The purpose of this study is to assess the outgrowth potential for Brazil over a 10 year period. Based on eight case studies, MGI seeks to understand the factors that stymied Brazil's growth in the last 15 years.
Aggregate Analysis
Low levels of capital inputs appear to be a factor in explaining Brazil's low output at the aggregate level. While Brazil has traditionally been successful in creating new jobs, many of them are in marginal sectors raising questions about the quality of employment.
Airlines Sector
Despite strong improvements in operations over the last 5 years, Brazilian carriers still show low productivity relative to the US carriers. The main reasons for the shortfall are less efficient organization of labor organization in the non-flying groups, lack of technology in ticketing, yield management, and scale.
Automotive Sector
The automotive sector is one of Brazil's more modern industries yet labor productivity is about one-third that of the US level. The gap is partly due to capital-related issues, such as automation and technology, but also partly due to labor-related issues, such as organization of functions and tasks, and product innovation.
Food Processing Sector
Labor productivity in Brazil's food processing sector is about one-fifth that in the US. Lack of scale and automation is the source of much of the problems, pointing to the need for restructuring and consolidation as more productive players take over market share.
Food Retail Sector
Large format stores, with better productivity, are the minority in a nation dominated by minimarts, counter stores, and street vendors. This latter group is nine times less productive than the US in this sector. However, macroeconomic instability has created a low competitive environment where financial management rather than operations management has been the key to success.
Residential Construction Sector
Inefficiencies in design for manufacturing and in organization of functions and tasks are the main causes for poor labor productivity. Low competitive intensity, macroeconomic instability, lack of construction financing, and an underdeveloped supply chain are the main culprits.
Retail Banking Sector
Low levels of credit penetration, favorable demographic shifts, and economic growth all put Brazil's retail banking sector in a good position. With economic stability and an increase in sector competition, the retail banking industry could consolidate rapidly.
Steel Sector
Labor productivity in the steel industry is due mainly to the way the production process is organized, although weaknesses in automation and technology also play a role. Capital productivity is low because of the low share of minimills and the suoptimal scale at which integrated plants have been built.
Telecommunications Sector
The constraints of state ownership have created orgnizational inefficiencies in Brazil's telecommunications sector. Important investments in technology, including network digitization and IT-related process automation, would pave the way for significant labor productivity gains.
