Thursday, June 20, 2013

Brazil’s unrest: should investors worry?

Prof. Alfedo Behrens / Financial Times

The scenes have been extraordinary. Not only the size of public demonstrations in Brazil’s major cities over the past week but also the violence with which they were met by supposedly elite police units have made for surprising and shocking viewing.
Are investors worried? And should they be?
The short answer to the first question is, apparently, No.

...“What is going on is the result of slow growth and that is unlikely to go away,” says Alfredo Behrens, a professor of management at FIA, a business school in São Paulo.

Monday, June 3, 2013

The City We Want

In about 27 years, the city of São Paulo may be a more humane city where most citizens will be able to live closer to their work, have well-paying jobs and live at fifteen minute walk distance from a small green area or a train station by public transportation. For this to become reality, consistent work for over three or four administrations is required to implement a long-term plan for changing the lives of paulistanos for the better.

For the past two years Profuturo coordinated a long-term strategic planning for the city, known as Plan SP2040. This study, sponsored by the Municipality of São Paulo, involved more than 250 experts from city hall, business firms, universities and, also, consulted over 25 thousand citizens. Its outlined a strategic vision, projects and action programs for the city that resulted in a document that presents both a popular view as a technical vision. The reader must be wondering: how would this dream scenario of São Paulo be?

The city we want will have more housing within its central region, which today is quite well served by public transportation and concentrates a large portion of the city’s employment opportunities. At the same time, the city will be more decentralized, concentrating itself around about 120 regional centers in city neighborhoods that offer transportation, education, housing, services and jobs. It is hoped that every citizen can live about fifteen minutes on foot from recreation areas and that the daily commute to work and study does not exceed thirty minutes on average.

Thus, almost 80% of normal daily activities can be carried out in these  120 "equivalent cities", allowing for a strong reduction in daily commutes and mitigating social impacts from pollution, stress and traffic accidents.

To accomplish its economic potential, São Paulo should embrace its vocation as an international business center. To excel among Latin American cities such as Rio de Janeiro, Buenos Aires, Mexico City and even Miami, we need not only to rehabilitate its infrastructure (transport and communication, especially) as well as train, attract and retain human talent of an international standard. To form talented citizens, universities and professional schools should interact more with the productive sector and encourage entrepreneurship. To attract them, São Paulo should be capable of providing support for their self-development along with that of the companies established here. Finally, to retain talent, the city should be receptive to different cultures and offer an attractive quality of life to skilled and creative people.

To continue to thrive, increasing its GDP without a significant population growth, Sao Paulo must attract economic sectors which generate high added value and innovation. Some of these strategic areas are: health and financial services, education, research and development, infrastructure and urban retrofit, transportation, communication, energy and environmental sustainability. At the same time, the trained manpower for these sectors has to be constantly improved to sustain a decent standard of competitiveness in a global city.

Attracting modern enterprises, training manpower and innovating are required for Sao Paulo to strengthen its role as a national center for logistics, trade and services, efficiently supporting productive activities throughout Brazil. According to our projection models, this trend will make our city reach in 2040 levels of per capita income and human development index (HDI) similar to those of the cities of Mediterranean Europe today.

During the next three decades São Paulo is expected to maintain growth rate around 15% lower the average growth of the Brazilian GDP, in line with the necessary reduction of regional inequalities and income distribution in our country. However, this growth will be sufficient for São Paulo to become the most important and prosperous city in the southern hemisphere, the center of financial services for global investment in South America and the headquarters of most major international companies in the region.

This is a possible scenario for thirty years in the future, ie, in just one generation. As methodological coordinator of SP-2040 plan, I have confidence in the prospect of implementing the proposals made, which were validated by a sample of 25 000 citizens. In addition to personal convictions, other studies support our belief in the desired future perspective. Recently, we have coordinated an analysis of São Paulo as part of an international study of 12 large cities in developing countries. The results showed that São Paulo inhabitants have a very critical view of the city, even on subjects in which objective data show that we are better off than other large cities in emerging countries.

This combination of critical vision and our historical capability to work for a better future can certainly lead us to our desired scenario of the City of São Paulo that we all want. To do so, we must work together, stay focused on future goals and not allow demagogic deviations from common goals of quality of life improvements and better opportunities for future generations.

Prof. James Wright

Executive, International & Americas MBA