Efficiency of the State, Governance and Red Tape Reduction

Why Efficiency of the State, Governance and Red Tape Reduction?

State inefficiency translates into substandard, low-quality public goods and services. As a result, resources that could be invested in production are diverted both due a high taxation and to the need for the private sector to take on responsibilities that belong to the state. Both impose costs on society.

The Brazilian State spends a lot on  cost  financing.  Increasing  the  efficiency  of the state entails allocating more funds for investment, systematically evaluating government projects and programs and implementing mechanisms to prevent and fight corruption.

For this purpose, it is necessary to reduce red tape, improve the capacity of the state to plan and implement its policies and investments and increase transparency in the public sector.


The Brazilian State improves its management efficiency and effectiveness and carries out a comprehensive red tape reduction program. Public policies are evaluated with greater transparency and management is professionalized based on the adoption of criteria to fill most public positions. Governance and the fight against corruption are improved on an ongoing basis. The capacity and agility to invest and to open and license businesses are significantly expanded.

How are we doing?

Brazil ranks last among 18 countries in the Efficiency of the State indicator in the report
Competitividade Brasil 2017-2018: comparação com países selecionados.



Where do we want to get to?

Main Goal: Improving the efficiency of public spending by increasing public investment

Macro objective: Increasing the share of investment in government spending from 3.9% to 5.0%






Improving the quality of public services translates into greater efficiency in resource allocation and in the management of policies

The Brazilian State has not been providing basic services to the population appropriately. Insufficient and low-quality public goods and services make economic activities more expensive and discourage investment.

The inadequacy of public services is mainly due to the poor quality of public management. It is possible to improve the quality of the services provided without increasing costs.

Evaluating public policies and improving the management of processes, results and human resources are key requirements for improving service delivery without putting pressure on public spending. Policies must  have goals and  metrics  defined  before  they  are  implemented  and  it is necessary to evaluate them periodically to check whether they are achieving their goals. This way, programs can be expanded with positive results and other programs that are not yielding the expected results can be discontinued.

Sustained economic growth, at a high level, requires structural adjustments in the public sector. Accurate  evaluations  of  the  costs  and benefits of programs and policies with the aim of ensuring more productive spending and balanced public accounts is even more essential in a scenario of increasing fiscal constraints.

The public management modernization agenda must be designed to promote a more  efficient  state,  one  that  acts  with  transparency  and in partnership with the private sector, so as to increase its capacity to produce benefits for society.



Increasing the efficiency of public spending

Logo-Meta.png OBJECTIVE

Improving Brazil’s score on efficiency in the management of public finances from 1.63 to 5.00

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  • Encouraging cost-benefit analysis of government actions with a high impact on competitiveness
  • Evaluating resource allocation in the federal budget and its impact on competitiveness
  • Modernization of public administration

Increasing transparency in the public sector

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Improving Brazil’s score on transparency of government policy from 1.95 to 4.50

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  • Improving the tender law
  • Implementing mandatory consultation mechanisms in the process of regulating laws
  • Regulation of lobbying


Advancing the competitiveness agenda depends critically on improving links between public policies

The management of the competitiveness agenda in Brazil is fragmented between several programs carried out by different agencies and bodies, making it difficult to align objectives and measure results and leading to repeated and even conflicting efforts. Ensuring effective links between public policies is a key measure for Brazilian industry to become a global, competitive and sustainable industry.

The model  currently  adopted  for  the  management  and  governance  of the state is not leading to the transformations required to improve competitiveness. It is necessary to improve institutional frameworks and focus on the competitiveness agenda.

The state needs appropriate mechanisms to coordinate and align medium- and long-term strategies and objectives on an ongoing basis. Clear priorities and responsibilities need to be set to make it possible for the agendas under the responsibility of different government agencies and bodies to be managed with a view to delivering results.

New links and cooperation arrangements should be established among governmental, entrepreneurial and political actors and these interactions should be regulated and coordinated in such a way as to make it possible for bottlenecks hindering competitiveness in the country to be eliminated.

The performance of regulatory agencies needs to be improved. It is necessary to evaluate impacts for companies and consumers before, during and after the implementation of regulatory decisions. Adopting technical criteria to fill public positions is one way of furthering this process. Disseminating best practices in regulatory quality,  such  as  public consultations, regulatory impact assessments, and public policy evaluation, is another way.



Increasing governance effectiveness

Logo-Meta.png OBJECTIVE

Improving Brazil’s score on effectiveness in implementing government decisions from 2.68 to 5.00

Ícone-Iniciativas.png INICIATIVES

  • Ensuring sound governance as part of the competitiveness agenda
  • Improving the federal regulatory system
  • Improving regulatory quality


Improved public safety should translate into better quality of life and into a more favorable environment for economic activity

High levels of crime and violence mean losses for both society and the economy of a country.

Poor public safety forces people to pay twice for their security, first in taxes and second in private security solutions. Funds that could have been allocated to production are diverted for purchasing safety equipment and hiring private security and insurance, reducing the productivity of the economy as a whole.

Investment decisions are also affected by violence. According to CNI (2017b), one in every three industrial entrepreneurs considers that lack of security affects investment decisions in terms of company location. More efficient locations - close to the source of raw materials or to consumers - are disregarded for insecurity reasons, increasing production costs.

Another indirect impact of the lack of safety lies in the fact that it reduces labor productivity. Anxiety about one’s own safety and that of one’s family affects the learning and concentration of workers, in addition to generating delays and even absence from work.

Outside urban centers, insecurity problems such as weak surveillance of borders - routes for smuggling goods, weapons and drugs - and a high rate of cargo theft in highways are evident.

In order to address the problem of lack of security, Brazil needs to modernize and integrate national security systems, increase border control and fight cargo theft. Consumption of  drugs,  pirated  goods  and stolen goods also contribute to increased violence and should be discouraged.



Improving public safety

Logo-Meta.png OBJECTIVE

Improving Brazil’s score on crime costs for business from 2.68 to 4.00

Ícone-Iniciativas.png INICIATIVES

  • Encouraging the creation of a national public security plan
  • Encouraging the creation of a national security information system, with standardized data available to society
  • Promoting the fight against piracy and the sale of stolen goods


Improved health care services translate into better quality of life and higher labor productivity

The success of a country depends on the quality of its human capital, which in turn depends on ensuring its population access to a health care system in charge of promoting, preventing, protecting and recovering the health of citizens according to their needs.

The Brazilian health care system (both public and private) has not been doing this appropriately, resulting in early deaths and chronic illnesses. In the context of workers’ health, the effects on companies can be felt in the form of lower productivity, recurrent and prolonged absences from work and higher costs with employee replacement and related insurance.

The Brazilian health care system is expensive and  ineffective because it is not focused on prevention, elimination of risk factors and continuous control of chronic noncommunicable diseases, such as diabetes and high blood pressure, among others. When such diseases are not controlled at a low cost through primary care and drugs, patients with these diseases are treated for complications in the emergency wards of hospitals.

Private spending on health care accounts for 57% of all funds earmarked for the Brazilian care health system (WTO, 2018), about half of which refers to health insurance plans in the supplementary health care system. Collective health insurance plans account for 80% of the coverage of health insurance (National Health Agency - ANS, 2017) and coexist with above-inflation increases in their costs.

Increases in the costs of health insurance plans are due to three main factors: lack of moderation in their use by users; judicialization for accessing technologies without due confirmation of benefit for patients in relation to the costs of the care involved; and wastage of human and material resources in excessive patient examinations and procedures.

The management of workers’ recovery and return to work also needs to be improved, since the care provided to workers on sick leave has not  been promoting their effective recovery, causing them to relapse into sickness and to go on sick leave up to 10 times a year.



Improving the performance of the health care system

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Improving Brazil’s score on appropriateness of the health care infrastructure from 1.82 to 3.50

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  • Strengthening health promotion and prevention programs and services
  • Improving the regulation of the supplementary health care system
  • Improving the quality of the care provided and the management of the rehabilitation of workers on leave due to accidents and diseases


Excessive red tape reduces productivity in the economy

One of the reasons for the low productivity in the Brazilian economy is  the excessive red tape faced by companies, which diverts resources from productive activities to non-productive ones. Instead of concentrating their efforts on their own businesses, companies are forced to spend a large amount of time and resources to start a business, obtain the required licenses and authorizations, handle import and export procedures and pay taxes, i.e. to comply with the legal requirements for their operation.

Regulating economic activity is important to protect society and companies. However, when such regulations are accompanied by excessive red tape, they do more harm than good. Excessive red tape contributes to increasing the size and expenditures of the state and favors corruption and informality.



Reducing excessive bureaucratic procedures that affect the business environment

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Improving Brazil’s score on business losses caused by red tape from 0.67 to 2.00

Ícone-Iniciativas.png INICIATIVES

  • Simplifying and stream lining procedures for obtaining licenses and authorizations
  • Providing incentives to the self-regulation of productive sectors
  • Developing strategies and consolidating proposals to reduce red tape in matters related to taxes, the environment, labor relations, and foreign trade policies


Corruption and embezzlement of public funds promote inefficient allocation of capital, apart from resulting in increased insecurity for investors

There is a long-term negative relationship between a country’s development and the degree of corruption in its institutions.

Embezzlement of public funds and the practice of favoring interest groups over others  mean  that  projects  actually  implemented  may  not necessarily be the most efficient ones. Inefficient projects and policies generate low productivity. Corruption drives investors away by generating legal uncertainty and increasing Brazil’s risk premiums.

In addition, corruption undermines the belief in democracy and politics as a means of social change and enhances political instability.

Brazil is going through a key moment in its fight against corruption. It is essential to strengthen institutions and improve instruments designed  to prevent and fight corruption. Likewise, it is also important that companies improve their compliance mechanisms.



Strengthening and improving anti-corruption mechanisms

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Improving Brazil’s score on presence of corruption from 0.61 to 2.50

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  • Improving the Anti-Corruption Law
  • Supporting compliance in the private sector



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2018-2022 Strategy Map for Industry