Brazil cost

Brazil cost (Portuguese: Custo Brasil [ˈkustu bɾaˈziw]) refers to the increased operational costs associated with doing business in Brazil,^[1] making Brazilian goods and services more expensive compared to other countries.^[2] For this reason, it is identified as a set of factors that undermine the competitiveness and efficiency of the domestic industry.^[3] The “Brazil cost” drains more than 1.5 trillion reais from the economy each year.^[4][5]

There are several factors that contribute to the extra cost, including:

• High levels of public deficits;^[6]
• The economy divided into cartels;^[7]
• Inefficiency of public services;^[8]
• Maintenance of high real interest rates;^[9]
• Exaggerated net interest spread of financial institutions (among the highest in the world);^[10]
• Excessive bureaucracy for importing and exporting, creating difficulties for foreign trade;^[9]
• Low education levels and lack of qualified labour;^[11]
• Excessive layers of bureaucracy (red tape), e.g., starting a company in Brazil takes at least 120 days;^[12][13]
• High levels of corruption within the public sector;^[12]
• High tax burden;^[14]
• Expensive labour costs;^[15]
• High social security costs;^[16]
• Complex and inefficient fiscal legislation;^[9]
• Economic instability;^[12]
• High electricity cost;^[17][9]
• Legal uncertainty;^[18]
• High interest rates;^[19][9]
• High crime rate, which adds extra security costs;^[2]
• Underdeveloped infrastructure, including a deteriorated network for domestic shipping by rail, highway and coastal navigation*.^[1][9]

In 2007, transport costs consumed 13% of GDP, 5% more than in the United States.^[20] The high transport costs are exacerbated by the scattering of industry over Brazil's vast territory.^[21] In 2013, the poor condition of Brazil’s federal highways increased fuel costs by 1.4 billion reais.^[22] The lack of logistics infrastructure for grain transportation alone results in an estimated loss of US$4 billion per harvest.^[23]

A study shows that a domestically manufactured good is, on average, 34.2% more expensive than its imported counterpart from Brazil’s main trading partners, solely due to the deficiencies in the country’s business environment.^[24]

The World Bank ranked Brazil 123rd in its Doing Business Ranking, which classifies countries by “ease of doing business.” The ranking includes 190 countries (2017).^[25]

• Licence Raj
• Fakelaki