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What business must do to reignite Brazil’s productivity growth

Research reveals four business-led actions to drive productivity.

Overview

Brazil’s productivity growth has been stagnant since the boom of 2000 to 2008. Its business leaders have viewed this as a problem for government to solve, but they can no longer remain on the sidelines. Through extensive research on Brazil’s economy and the leading practices of its successful businesses, we identified four critical actions that companies can take to improve national productivity through change at the business level: pinpoint the productivity bottlenecks, extract more value from their assets, digitally boost their employees and plug the information gaps.


“Brazil is caught in a vicious circle of low investment and low productivity. Both government and business need to change their expectations and act in parallel to shift Brazil’s economy to a higher growth trajectory.”

NAERCIO MENEZES-FILHO

IFB professor and director of the Center for Public Policy, Insper

KEY INSIGHTS

Brazil’s economy has reached a turning point. Gross domestic product (GDP) growth has come to a halt. Industrial output has fallen, and investors and businesses are worried about the nation’s long-term economic stability and prospects. Our research highlights how Brazil has come to this point. The country’s recent economic growth has been built largely on adding more—more employees to the workforce, more investment in capital assets. What has been lacking is the growth that comes from greater efficiency—more output from the same or fewer inputs—that is, higher productivity.

Brazil’s businesses can no longer afford to wait for government to raise productivity on its own. Government action in critical areas like education and infrastructure require many years to bear fruit. In the meantime, low productivity growth is already affecting the ability of firms to cope with the heightened challenges they face at home and in global markets. To fight back against these growing pressures, Brazil’s business leaders must act now to improve their companies’ productivity.

Brazil’s stagnation a symptom of chronically weak productivity growth

RESEARCH FINDINGS

We found:

  • Falling productivity: Brazil’s productivity growth is now lower than it was 10 years ago. In total since 1990, Total Factor Productivity (TFP) growth has been negative—a result that falls well behind that of other leading emerging market. Inefficiencies in the economy have been destroying the productive capacity of labor and capital. Chronic underinvestment in capital accumulation by both the public and private sectors jeopardizes Brazil’s productivity growth.

  • Competitive pressures at home and abroad: Key industries in Brazil have been able to thrive on high revenues and thin profit margins thanks to rapidly expanding demand. But the demand drivers, including high employment and easy credit, have now run dry and the structural problems that existed during the boom years remain unaddressed. As a result, Brazil’s ability to compete abroad has been eroding.

  • Productivity is a business issue: Across industries in Brazil, infrastructure shortages, bureaucratic burdens and high taxation are realities for banks as much as they are for retailers and miners. The impact on each organization is also influenced by the industry context, as well as the industry’s structure, dynamics and specific challenges. We examine five of Brazil’s industries, the different pressures they face, and the common need for actions targeted at their productivity growth.

Chronic underinvestment is affecting Brazil’s productivity growth

Recommendations

The four actions that can be put into practice quickly, and often inexpensively, while promising to be transformative for the Brazilian economy as a whole:

  • Pinpoint the productivity bottlenecks: Establish formal metrics and identify the worst operational bottlenecks to assess their impact on the business. Drive decision-making capabilities with real-time intelligence.

  • Extract more value from existing assets: Define targets to improve capital utilization and prevent ineffective use of assets, including excess downtime. Introduce asset-enhancing technologies—such as sensor-driven computing, industrial analytics and intelligent machine applications.

  • Digitally boost employees: Use smart devices to help employees improve productivity, wherever they are. Apply digital sensing, monitoring and reporting technologies to bring improvements that raise workforce productivity. Develop effective knowledge management, communication and training platforms.

  • Plug the information gaps: Introduce process and governance structures to reliably deliver the right information to the right person, in the right format, at the right time. Establish an integrated data platform that crosses organizational silos and gives decision makers a shared view of company performance. Share real-time information to generate mutual benefit with external partners.

About The Research

The research involved economic analysis and growth decomposition in collaboration with Oxford Economics. In addition, we undertook a deep dive analysis of five key industries (banking, energy, consumer goods, retail and mining) and conducted case study research of several Brazilian companies.

Our conversations with eight key subject-matter experts included the views of professors and academic directors from Brazil, the United Kingdom and United States, as well as insights from Accenture managing directors across several industries and functions working in Brazil.

About the Institute for High Performance

The Accenture Institute for High Performance develops and publishes practical insights into critical management issues and global economic trends. Its worldwide team of researchers connects with Accenture’s business leaders to demonstrate how organizations become and remain high performers through original, rigorous research and analysis.

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Authors

 Armen Ovanessoff

Armen Ovanessoff
Thought Leadership Research Principal Director, Accenture Institute for High Performance

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 Athena Peppes

Athena Peppes
Thought Leadership Research Manager,
Accenture Institute for High Performance

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