brazilian growth bottlenecks and digital ecosystem
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Brazilian Digital Ecosystem
The Role of Technology to overcome Brazilian Economy Bottlenecks
Brazil – From sky-rocketing GDP growth…..
….. To the “Pibinho”
Brazil - missed chance of sustainable economic growth ?
2003 05 07 09 11 12 13
8
6
4
2
0
2 (-)
GDP% change on a year earlier
Brazilian structural bottlenecks and interaction with the digital ecosystem
INFRASTRUCTURE
EDUCATION
PRODUCTIVITY
TAX & SYSTEM
Brazil Growth Bottlenecks: Infrastructure
INFRASTRUCTURE
(Transport, Telecom, Energy)
EDUCATION
Disaggregated, isolated, private infrastructures(Brazil: 114th out of 148 countries)
Skilled labor shortage (high turnover and cost)(Brasil (190M): 37 mil engenheiros/ano. Coreia do Sul (48M: 92 mil) - Brazilian education still ranks 88th
TAX & ADMINISTRATION The Brazil cost: Tax burden and bureaucracy
INDUSTRIAL PRODUCTIVITY Industrial competitivity and productivity (Auto, Equipments…)
Productivity & Growth Bottlenecks Challenges
Brazil’s stock of infrastructure value to GDP is 4x less than in developed economies
Total Value of Infrastructure Stock% GDP
Brazil Growth Bottlenecks: Education
INFRASTRUCTURE (Transport, Telecom, Energy)
EDUCATION
Disaggregated, isolated, private infrastructures(Brazil: 114th out of 148 countries)
Skilled labor shortage (high churn and cost) – education quality (55th/65th)*
(Brasil (190M): 37 mil engenheiros/ano. Coreia do Sul (48M: 92 mil) - Brazilian education still ranks 88th
TAX & ADMINISTRATION The Brazil cost: Tax burden and bureaucracy
INDUSTRIAL PRODUCTIVITY Industrial competitivity and productivity (Auto, Equipments…)
Productivity & Growth Bottlenecks Challenges
* Program for International Student Assessment’s analysis of quality of basic education
Brazil Growth Bottlenecks: Competitiveness
INFRASTRUCTURE (Transport, Telecom, Energy)
EDUCATION
Disaggregated, isolated, private infrastructures(Brazil: 114th out of 148 countries)
Skilled labor shortage (high turnover and cost)(Brasil (190M): 37 mil engenheiros/ano. Coreia do Sul (48M: 92 mil) - Brazilian education still ranks 88th
TAX & ADMINISTRATION The Brazil cost: Tax burden and bureaucracy
INDUSTRIAL PRODUCTIVITY Industrial competitivity and productivity (Auto, Equipments…)
Productivity & Growth Bottlenecks Challenges
Productivity gains contribution to GDP is very low
Productivity contributed less to Growth in Brazil than in other rapidly developing economies
Breakdown of value-added growth, 2002-2012
China India South Korea Mexico Russia Chile Brazil
10.6 7.8 4.2 2.3 4.6 4.1 3.7CAGR
2002-2012 (%)
Source: Euromonitor, BCG analysis
Employment growth (%)
Productivity gains (%)
7
93
18
82
28
72
40
60
60
40
70
30
74
26
Brazil Growth Bottlenecks: Tax burden & bureaucracy
INFRASTRUCTURE (Transport, Telecom, Energy)
EDUCATION
Disaggregated, isolated, private infrastructures(Brazil: 114th out of 148 countries)
Skilled labor shortage (high turnover and cost)(Brasil (190M): 37 mil engenheiros/ano. Coreia do Sul (48M: 92 mil) - Brazilian education still ranks 88th
TAX & ADMINISTRATION The Brazil cost: Tax burden and bureaucracy
INDUSTRIAL PRODUCTIVITY Industrial competitivity and productivity (Auto, Equipments…)
Productivity & Growth Bottlenecks Challenges
Structural bottlenecks have shaped and impacted the digital ecosystem
INFRASTRUCTURE
EDUCATION
PRODUCTIVITY
TAX & SYSTEM
Digital landscape: France vs Brazil
FRANCE BRAZILGDP in million US$2,775 US$2,476
France and Brazil are the two first Latin economic powers
Brazil: High engagement but challenging affordability & environment
FRANCE BRAZIL26th 60th
• Digital readiness impaired by structural bottlenecks
• Business and Innovation environment is not supportive
• Accessibility is average and Affordability is still a challenge
• Engagement is high throughout individuals, businesses and governments
• Online spending are still lagging (e-commerce & online advertising)
Key takeaways about the readiness of the Brazilian digital ecosystem
Engagement
Affordability
AcessibilityEnvironment(Regulatory, Business & Innovation)
Worldwide Ranking:(World Economic Forum)
Brazil: an impaired digital environment
FRANCE BRAZIL
Regulatory, Business & Innovation Environment
World Economic Forum
Software Piracy rate
Laws related to ICT
Availability of latest technologies
Venture Capital Availability
Intensity of local competition
Quality of management schools
IP protection
Number of days – procedures to start a business
Total Tax rate (% profit)
Quality of education systemR&D Research
27th 107th
Skills
Business -Innovation
Regulatory
A V E R A G E T I M E T O S T A R T A B U S I N E S SI n d a y s
7 days
111 days
7 days
33 days
F r a n c eB r a z i l C h i n a
13 procedures 5 procedures
Digital environment
R & D I N V E S T M E N T S & J O B S
2 . 2 5 % G D P
1 . 1 6 % G D P
R&D technicians in France vsBrazil per 100 habs
3 x
TAX & ADMINISTRATION EDUCATION
FRANCE BRAZIL
World Economic Forum
Brazil: Average Accessibility
FRANCE BRAZIL
Accessibility
World Economic Forum
Acessibility of digital content
Mobile Network coverage
Mobile Internet Penetration
Secure Internet servers
Fixed broadband penetration
28th 62th
Digital Accessibility
FRANCE
BRAZIL
33 M
77 M
50%
38%
M O B I L E B R O A D B A N D P E N E T R A T I O N% p o p u l a t i o n
3 G C O V E R A G E% p o p u l a t i o n
90%98%
FRANCE
BRESIL
24 M
19 M
35%
10%
F I X E D B R A O D B A N D P E N E T R A T I O N% p o p u l a t i o n
INFRASTRUCTURE
€ 20 / month (1GB)
€ 10 / month (1GB)
FRANCE BRAZIL
World Economic Forum
Brazil: Still a challenging affordability
FRANCE BRAZIL
Affordability
World Economic Forum
Mobile cellular tariffs
Fixed Internet Broadband tariffs
Smartphone price
Mobile Internet broadband tariffs
Internet and telephony competition
86th 76thFRANCE BRAZIL
Brazil: High usage and technological uptake
FRANCE BRAZIL
Engagement: technological uptake
World Economic Forum
Cellphone penetration
Internet users (% population)
Time spent online
Social networks penetration
Business Usage of internet
Governement usage of internet
E-commerce penetration (e-consumers)
Online advertising penetration (% total retail)
22th 44th
Source: Brasscom, WOF, McKinsey, Valor, IBGE, Comscore, eMarketer
Digital engagement is high
I N T E R N E T U S E R S
54M 96M
83% pop
49% pop
90% 91%361 mins 535 mins
€ 390 € 285
A V E R A G E S M A R T P H O N E P R I C E
P E N E T R A T I O N F E A T U R E & S M A R T P H O N E S
125%
99%
38%
18%
P O S T P A I D P L A N S% m o b i l e p h o n e s
78%
21% € 38 ....
€ 20 ...
2 GB DATA MOBILE PLAN
FRANCE BRAZIL
Digital spendings still shy
€ 45Mds
€ 8,6 Mds
8,7% of retail
3% of retail
31 M e-consumers
43 M e-consumers
E - C O M M E R C E
€ 2 , 7 B € 1 , 2 5 B
10%
27%
O N L I N E A D V E R T I S I N G
% t o t a l a d v e r t i s i n gr e v e n u e
A V E R A G E T R A N S A C T I O N C O S T F O R E - S E L L E R
( A c q u i r e r + F r a u d c o n t r o l )
40%60%
I N T E R N E T U S E R S T O E - C O N S U M E R S
% i n t e r n e t u s e r p o p u l a t i o n
A V E R A G E S H I P P I N G T I M E
A V E R A G E S H I P P I N G C O S T
Source: Brasscom, WOF, McKinsey, Valor, IBGE, Comscore, eMarketer
2.5% 6.5%
35% higher in Brazil
2x higher in Brazil
Role of the Digital landscape in unlocking Brazilian Growth
INFRASTRUCTURE
EDUCATION
PRODUCTIVITY
TAX & SYSTEM
Brazilian digital ecosystem still a low contributor to GDP growth
Internet – Digital Maturity and contribution to GDP
Technology to overcome Brazil Growth Bottlenecks
INFRASTRUCTURE
(Transport, Telecom, Energy)
EDUCATION
TAX & ADMINISTRATION
INDUSTRIAL PRODUCTIVITY
Productivity & Growth Bottlenecks
Technology can act everywhere throughout infrastructure supply-chains with high
efficiency / cost ratio and agility
E-learning platforms (distance education), Digital content production, job networks,
University / School efficiency
Public administration modernization and efficiency (E-gov, Electronic filling and
accounting system (SPED)
Technology solutions
From Price positioning to Value positioning, Lean processs & Automation
Technology to overcome Brazil Growth Bottlenecks
INFRASTRUCTURE
(Transport, Telecom, Energy)
EDUCATION
TAX & ADMINISTRATION
INDUSTRIAL PRODUCTIVITY
Productivity & Growth Bottlenecks
Technology can act everywhere throughout infrastructure supply-chains with high
efficiency / cost ratio and agility
E-learning platforms (distance education), Digital content production, job networks,
University / School efficiency
Public administration modernization and efficiency (E-gov, Electronic filling and
accounting system (SPED)
Technology solutions
From Price positioning to Value positioning, Lean processs & Automation
Technology to overcome Brazil Growth Bottlenecks
INFRASTRUCTURE
(Transport, Telecom, Energy)
EDUCATION
TAX & ADMINISTRATION
INDUSTRIAL PRODUCTIVITY
Productivity & Growth Bottlenecks
Technology can act everywhere throughout infrastructure supply-chains with high
efficiency / cost ratio and agility
E-learning platforms (distance education), Digital content production, job networks,
University / School efficiency
Public administration modernization and efficiency (E-gov, Electronic filling and
accounting system (SPED)
Technology solutions
From Price positioning to Value positioning, Lean processs & Automation
Technology to overcome Brazil Growth Bottlenecks
INFRASTRUCTURE
(Transport, Telecom, Energy)
EDUCATION
TAX & ADMINISTRATION
INDUSTRIAL PRODUCTIVITY
Productivity & Growth Bottlenecks
Technology can act everywhere throughout infrastructure supply-chains with high
efficiency / cost ratio and agility
E-learning platforms (distance education), Digital content production, job networks,
University / School efficiency
Public administration modernization and efficiency (E-gov, Electronic filling and
accounting system (SPED)
Technology solutions
From Price positioning to Value positioning, Lean processs & Automation
Brazilian “Tech forces” (Necessity drives innovation)
Financial Sector Agri-Tech Oil & Gaz - Mining
Aeronautical Mobile applications & Services Consumer Digital / Media
Brazilian “Tech forces”
Brazilian next tech forces ?
-
The ITC sector has constantly over-performed the GDP
0%
5000%
10000%
15000%
20000%
25000%
30000%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Brazilian GDP vs ICT sector (growth)
GDP ICT sector
3x
2.5x
2x
1.5x
1x
Source: Brasscom,, IBGE,
IT for Education & Health set to strongly over-perform their underlying sector
0
50
100
150
200
250
300
350
400
450
500
2011 2012 2013 2014 2015 2014 2016
IT for Health vs Heathcare sector (2011-2016)
Healthcare sector growth IT for Health growth
2011 2012 2013 2014 2015 2014 2016
IT for Education vs Education sector (2011-2016)
Education sector growth Education technology growth
% change on a year earlier % change on a year earlier
CAGR23%
CAGR24%
5x
4x
3x
2x
1x
Source: Brasscom,, IBGE,