Archive for the ‘Brazil’ Category

Competitive Cities in the 21st Century

December 16, 2011

Professor Brian Roberts has informed us of the release of his latest work, co-authored with the late KyeongAe Choe. The book is basically about clusters inAsia and it is an absolute treasure trove!

The background is that economic challenges in developing Asian countries are now more complex – urban populations are growing at great cost to the environment, climate change has increased risks of natural disasters, and income gaps within and between developing countries are widening. These factors threaten the sustainable growth of urban areas, the drivers ofAsia’s economy. A strategic approach for inclusive growth is therefore needed.

The City Cluster Economic Development approach provides a strategic framework and analytical tools. The approach was developed and tested by the Asian Development Bank to improve the basis for integrated planning and development of urban regions. The chapters include:

  • Factors Shaping the Spatial Agglomeration of Asian Cities.
  • Emerging Factors Accelerating Urban Economic Growth.
  • The Cluster: Theory, Analysis, and Experience in Agglomerated Asian Cities.
  • Building Competitive Local Economies: Approach and Analytical Steps.
  • Cluster-Based City Economic Development in Bangladesh,India and Sri Lanka.
  • A New Paradigm of Local Economic Development for Growing Asian Cities.

Hard copy = $US40 – go to

Latin America’s emerging multinationals

April 15, 2009

“Latin American companies have fallen through the cracks,” says Lourdes Casanova, a lecturer in strategy at INSEAD and author of Global Latinas: Latin America’s emerging multinationals.


“Latin America has been undersold. This book wants to celebrate the success of the region and its multinationals.” Since 2002, Latin American firms have expanded aggressively on a global scale and investment in foreign countries has jumped accordingly. And commodities now account for less than 30%, with a range of products now accounting for the rest – IT services, steel, electricity, wine, cosmetics, oil and gas.

Until 1980, Latin American countries were the emerging market of choice. Brazil and Mexico had China-like growth. But during the 1980s (the ‘lost decade’ due to the debt crisis) the region’s growth stalled as Russia, China and India stepped up. Prompted by the strict policies imposed in the 1990s by the IMF and World Bank, Latin American governments began the privatisation of state companies, deregulation and tariff cuts.  


The deregulation brought a wave of foreign multinationals to compete against domestic firms. Latin American companies had to grow and expand internationally. “These companies had been growing in a protected environment before this,” Casanova says. “Now they felt threatened by foreign multinationals competing against them in their own region. The best defense was to attack.” During the 1990s, Latin American firms grew domestically and expanded into nearby regions and/or with the same language and shared history. NAFTA smoothed the way and enabled cross-border acquisitions. Now they are entrenched.


Source: INSEAD, Paris

Brazil’s a natural?

August 26, 2008

The British think tank Demos has been engaged in a very interesting exercise (‘the Atlas of Ideas’) that examines the new “global geography of innovation.”


Its latest report assesses Brazil’s innovation system, and says it has a “natural knowledge economy” i.e. its competitive advantage is that it links knowledge and innovation with environmental and other natural assets. It argues that Brazil’s innovation trajectory is unique – bridging the chasm between environmental protection and industrial development. Future innovations need to build on this legacy, and overcome growing income inequality and pressures on Brazil’s rain forests and other natural assets.

(This is all uplifting – not having been there, is it valid analysis? – Editor).

Go to Brazil: The Natural Knowledge Economy

Brazil’s footwear cluster – Sinos Valley

April 10, 2008

Alfredo Lopes Neto, A Brazilan expert on economic development, published a very instructive book titled “Notes on Clusters” a couple of years back. It has  chapters with practical examples of clustering in Brazil (in English & Portuguese). We have lost contact with Alfredo recently, but he may be contactable via or Tele/Fax: (085) 224-67-46. He has some particularly useful insights. Excerpts below. 
The footwear cluster of Sinos Valley (Rio Grande Do Sol) enjoyed a growth period in the 1970s & 1980s, promoted by North American importers. But little by little, the importers became dominant, taking over the distribution system and product development – and the increase in production and imports was not matched by the development of entrepreneurial market-oriented consciousness.
The behavioural standards of Brazilian footwear companies were characterised by their submission to North American importers and by their inertia with regards to technology, product development and distribution..
The fragile situation was shaken in the early 1990s by tariff reductions in the local market, and the entry of Chinese footwear. Sales of the entire supply chain were affected and until 1996, the ghosts of lack of investment and of insolvency hunted Sinos Valley, with a dramatic decrease in the number of tanneries, component producers, machinery and equipment manufacturers – and while the Brazilian firms were going bankrupt, the exporting agents left the Valley.


Once the initial impact of the crisis had passed, Sinos Valley showed its capacity to rebound. The cluster underwent market diversification and a radical change in business culture. Businesses turned to the Latin American and domestic market, and invested in product development, constructed their own identity (brand) and made logistical improvements.


Other initiatives included managerial training and trade promotion, including participation at selected international trade fairs, and the establishment of a permanent footwear showroom in Miami in April 2001. The machinery, equipment and component manufacturers have also invested in marketing and promotion and recently launched the brand By Brazil.


The tanneries are thinking about introducing a quality seal. A supply chain program for the leather and footwear industry has been in operation since 1999, and now has participation by 167 firms.


Genetically Modified (GM) crops

February 6, 2008

A huge debate has broken out in Australia with the foreshadowed lifting of the moratorium in NSW and Victoria on the growing of GM canola.

Growers of other crops are concerned about GM crops contaminating their investments. Canola growers themselves are concerned that their traditional export markets will not accept GM canola, and that the market will drop.

ABARE has just released a report ‘Market acceptance of GM canola’ that basically says no problem – go to

People fail to realise that GM crops are now grown by more than 10 million growers in 22 countries. China, India, Brazil and Argentina are involved on a large scale, and the productivity benefits (less herbicides, higher yields) will provide them with a significant competitive advantage in domestic and export markets.

The consumer groups are another story. They are calling for full labeling of GM foods so that consumers can avoid them. The opportunity lies in the emerging global trend towards ‘truth in labeling’ – this includes eco-labeling, country of origin, and region of origin.

We predict that in five years time, the smarter food companies will be advising exactly what we are eating and from where it is sourced. They will be using this product information to strengthen their brand, to differentiate it away from generic brands and low-cost and low-quality imported product, and thus command higher prices.

Rise in R&D tax breaks, says OECD

November 11, 2007

More OECD governments are giving companies tax breaks to drive innovation and cut their direct spending on R&D, while also encouraging public research organisations to commercialise their inventions, according to a new OECD report.

The key findings of the OECD Science, Technology and Industry Scoreboard 2007 are:
·          two thirds of OECD members offer businesses tax subsidies – up from 12 a decade ago.
·          Spain, China, Mexico and Portugal provide the largest tax subsidies.
·          Canada and the Netherlands continue to be more generous to small firms.
·          Emerging economies – Brazil, India, Singapore, South Africa – also offer a generous tax environment for businesses investing in R&D.
·          Sharp rise in globalisation of innovation e.g. international co-authorship of scientific publications.
·          Foreign ownership of domestic patents up 50% between early 1990s and early 2000s.
·          EU countries interact most with each other – less globalised than USA (interesting!).
·          Total gross expenditure on R&D grew 4.6% p.a. in real terms between 1995-2001, but slowed to 2.2% p.a. between 2001-2005.
·          In the USA, 4/5 of researchers work in business sector – in Japan it’s 2/3, and 1/2 in EU.
·          No. of business researchers grew rapidly in smaller OECD countries – NZ, Portugal, Spain, Iceland and Greece (10% p.a. in past decade). In China, 15% p.a.
·          USA has the most biotech firms (2,200), followed by Japan and France (800 each). But biotech patents has been falling – due to more restrictive criteria applied by patent offices, and end of the wave of patenting that followed the decoding of the human genome.
·          80% of Korean households have high-speed broadband access – also has highest surplus in ICT goods trade balance, followed by Finland, Hungary and Japan.

Contact us at for more information.

Shoe cluster – Sinos Valley, Brazil

October 16, 2007

Brazil raised its share of world leather shoe exports from a 0.5% in 1970 to 12.3% in 1990, and became the world’s 3rd biggest exporter of leather shoes in 1992.

Although Brazilian shoe manufacturers are spread over 25 states, the fastest state has been Rio Grande de Sul, where the industry is concentrated in Sinos Valley. It accounts for 30% of national production, but 80% of its shoe exports. This has been possible because an initial cluster of local firms was set up.

The Sinos Valley shoe industry concentration of 400 shoe firms, soon grew to around 1,820 firms. One characteristic of this cluster is that the proportion of small firms declined from 85% in 1971 to 48% 1991. The Sinos Valley’s rapid shift to export was due to the geographical concentration of firms, government incentives and increasing demand from US importers.

With government incentives, local manufacturers took a collective action and organised a national fair, which was promoted overseas, and foreign buyers and journalists were invited with paid airfares. Aggressive marketing also took place where a consortium of producers took their products to Europe and the US. The Sinos Valley manufacturers launched their first contracts because importers recognized the advantages of buying from an established cluster, with specialised local input suppliers.

Once the connection between the Brazilian producers and the US market was established, US manufacturers became importers. But the US retail chains immediately set up offices in the Valley to carry out the intermediary role between the US market and local producers.

Other foreign agents set up business to carry out similar roles, provide technical assistance organise transport etc. This is why Brazilian shoe exports to the US increased remarkably. 

Source: Etienne B. Yehoue, IMF

New emphases in aid field

October 16, 2007




The Annual World Bank Conference on Development Economics (ABCDE) in Tokyo in May 2006 highlighted some VERY timely issues worthy of contemplation by economic development practitioners.     

§          A call for new analytical and evaluation tools to help infrastructure choices in energy, transportation, water. ”Our approach to infrastructure must focus not just on economic growth or human growth,” said Bank President Paul Wolfowitz in his opening address “It must also focus on ‘smart’ growth…growth that is economically sound, environmentally friendly, socially acceptable, locally desirable, and most important, growth that makes a difference in people’s lives.

§          Infrastructure investments have often failed the test, said Japanese Finance Minister Tanigaki. “Hasn’t donor support simply left ‘white elephants’ behind? Have we paid enough attention to adverse environmental and social impacts? Have we had sufficient dialogue with stakeholders?”

§          WB Chief Economist Bourguignon argued for better understanding of linkages between infrastructure investments and growth; getting the right balance between public and private involvement; dealing with cross-border issues and externalities – shared road and rail links, shared pollution; establishment of systems to deliver better data and evaluation.

§          JICA will merge with the ODA lender Japan Bank for International Cooperation in 2008, forming “the world’s second-largest integrated development agency after the World Bank.” 

§          Richard Manning (DAC Chairman) noted that “emerging donors” – Russia, Korea, Poland, Turkey, Brazil, China, South Africa, India – are using aid to position themselves to transform their relations with other countries. This could result in a slowdown in developing-country reform efforts.

§          Manning applauded moves by the UK, Ireland, Norway, and Australia to untie 100% of their aid, and Canada’s decision to allow 50% of its food aid to be procured in the beneficiary region.  


Alternative energy – time to get serious

October 16, 2007

Our middle-aged citizens trudge around Europe and the USA living like back-packers, muttering about our pathetic Aussie dollar. Now Geoscience Australia says we have only seven years of crude oil left, and the Australian Petroleum Exploration and Production Association confirms that our oil self-sufficiency is tracking to 50%, widening Australia’s trade deficit by $30 billion per year.   

It was thus refreshing to see the NRMA hosting the Alternative Fuels Summit in Sydney in October 2006. NRMA President, Alan Evans, is performing the role of Minister for Alternative Energies. The Summit speakers highlighted Europe, Brazil & USA embracing alternative energies.

Opposition Leader Beazley promised his C1 vehicle would run on alternative energy and, once elected, he will remove import tariffs on hybrid cars.  Federal Minister Truss stressed the need for consumer confidence and reliable supplies, and said he’d used ethanol fuel (E10) in his car for years. But he mostly restated government policy, and the mood of the Summit was that the feds might now sit on their hands.  

David Lamb (CSIRO) summed things up by arguing that someone needs to urgently draw up a road map for the alternative energy industry. Alan Evans thus proposed the establishment of the ‘Jamison Group’ (the hotel where summit was held) – 6 to 10 wise people plot the way forward over the next 5 years. He also announced a NRMA commitment of $250k towards it, and asked for others to chip in.  

There is a clear role for local government. It could seize the moment and commit all their fleets to using ethanol and biodiesel blends! Tony Kelly (NSW Minister for Rural Affairs) said his government is going to do this with its 26,000 vehicle fleet. Local councils in Sweden offer free parking to owners of hybrid-fuel cars.  Ethanol and biodiesel provide a potential lifeline for regional communities.

On behalf of some companies, we are working on a plan for a series of grower hubs and processing plants from the Darling Downs, down through western NSW and to the Mallee-Wimmera. Each plant would create 28-35 regional jobs and significant opportunity for further value-adding. 

Please email us for more information.

Cooperatives – reinvention required

June 6, 2001

Professor Mike Cook of University of Missouri-Columbia (USA) gave a thought-provoking address to the Australian Agricultural Economics Society meeting in Canberra in March.

H has over a decade of industry experience with Tenneco, Inc. (Houston), Farmland Industries (Kansas City) and the Rice Growers Association (SacramentoSome of his points were:

 ·          Most agricultural cooperatives in Australia were set up for defensive reasons, around State legal frameworks, between 1900-1940 – to address market failure of various types. Similar timing and trends in other British-influenced places (US, Canada, South Africa) and Argentina, Brazil, Paraguay etc.
·          Co-operatives can ‘tie you up’ because they make producers think horizontally. But the world in now operating very vertically as well – international VI supply chains etc. They have other flaws – free rider problem, short/long-term horizon differences, difficulty of exit.
·          Will see the slow death of co-ops unless a ‘new generation’ co-op can be developed. The US has developed sophisticated co-ops in some instances e.g. Ocean Spray – dominates world cranberry industry, Sunsweet in prunes. Dutch have got their act together too.
·          Nestle and Cargill will have it all in Argentina – because these two multinationals are very good. In 7-8 years there will be no local agrifood companies left of any significance –– countervailing action is required – unless of course people are satisfied with this.
·          Brazil will also be down to two local agrifood majors within a few years.
·          New forms of collective action are required. 

What do you think? I am thinking about where the Bega Cooperative fits on the scale, having interviewed the Chairman a few months back, and being impressed that they’d cope with global pressures. I believe that the dairy market deregulation underway in Australia will expose weaknesses in organisational and governance systems – for both cooperatives and vertically-integrated corporates. For example, Bonlac is one of the latter, and is on the slippery slide as Professor Cook noted.