Changes in Latitudes, Changes in Attitudes
In each of my meetings I like to ask local experts what changed in Brazil to spur its growth in Foreign Direct Investment. Based on the diverse array of industry and private sector leaders with whom I've met, I expected a diverse array of responses. Yet, within this diversity of answers was a common theme - a change in the national attitude.
It's estimated that 39 million Brazilians joined the middle class in the last 10 years. Last year's Eisenhower Fellow to Brazil and Chancellor of Rutgers University, Wendell Pritchett, mentioned that on all of his flights within Brazil, on each plane he was seated next to someone who had never flown before. This class movement, of a portion of the country larger than the entire population of Canada, has had a profound impact on the national psyche. One official described not being able to get a telephone without standing in line for hours in 1995, but in 1999, his maid had a cellphone. A Brazilian lawyer described it as follows. Brazilians began moving out of poverty. They looked around and said I have better clothes, more food, a nicer home with a tv. I also pay more taxes but outside my house nothing has changed. Roads are bad. Schools are bad. Healthcare is bad. As a result, the people began to demand more from government. This is in part a cause of the recent protests in Brazil. The people began to change their attitude about what their country needs and began to demand it.
As part of demanding more results from government, the people also began to demand less corruption. Foreign executives and foreign diplomats both cited significant improvements in this area. The US Commercial Service in Rio went so far as to say that, as far as those in my meeting were aware, they had not had any reports by US companies of bribery requests in the last decade. Many individuals also credited foreign anti-corruption laws with helping the situation in Brazil. Brazilians know that foreigners can have significant costs and/or criminal penalties at home for paying bribes in Brazil, and so Brazilian officials simply stopped asking foreign companies to participate in corruption. The Brazilian government also yielded to public pressure (and perhaps international peer pressure) and has a new anti-corruption law pending that could even force the dissolution of a Brazilian company if its employees engage in bribery.
With this demand for better government, and better infrastructure in particular, seemed to come another attitude shift -- if Brazil couldn't get these improvements at home, they should look abroad. I was surprised to learn about Decision Rio. Decision Rio is a project of FIRJAN (the Federation of Industries in Rio). Essentially all major projects for the next 3 years are posted for any interested party, domestic or foreign, to bid and participate in their development. Seehttp://www.firjan.org.br/main.jsp?lumPageId=2C908CEC32686D3D01326EBA0FEF52DD. By going to the website interested parties can learn about the project and even see it via links on Google Earth. I was surprised to learn that not only is there no public outcry over the use of foreign companies on these major infrastructure projects, it's welcome. Perhaps our preference for "made in America" actually stifles our growth since ultimately the better the infrastructure project the better able it is to propel the local economy forward - regardless of the nationality of the provider. That has been the attitude in Brazil, and it seems to be working.
Overall, a decrease in corruption, improvements in infrastructure and the huge movement out of poverty have had profound effects on the overall economy in Brazil, and on FDI. As I reflect on what we could learn from this in Philadelphia, I note that we have our own Flavellas (impoverished areas), but do we do enough to try and get those individuals out of poverty? Are we comfortable enough to seek the best infrastructure regardless of the country of origin? Do we take corruption in our own public sector seriously enough? As Brazil has demonstrated, a change in these attitudes can have a profound change in one's economic "latitude".
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