minplanpac

Brazilian Regions for Foreign Investors

The Brazil Business

Updated

10 September 2012

An outlook of the economic profile of the five Brazilian regions, covering the viable segments and the impact Pre-Salt exploitation and the 2014 World Cup have over these states.

Background

Brazil has five official regions that are very different from each other, especially regarding economic development. However, the recent discoveries of petroleum and gas, and the investments for the 2014 World Cup has impulsed a significant investment in areas that 10 years ago were considered economically unviable, such as the Northeast and the North.

The recent discoveries of petroleum and natural gas in the Brazilian shores has led to a decentralization of workforce and foreign investments. São Paulo and Rio de Janeiro keep their strength and are still the most important economic hubs, but other cities have started to call attention too.

As the 2014 World Cup will be held in 12 different cities and every region will have at least one city hosting a match, Brazil has to invest heavily in infrastructure, especially regarding to accommodation and transportation.

Several projects are in progress everywhere. Hydroelectric dams, refineries, port facilities, roads and bridges have started to pop-up in many different areas of the country.

Such investments promote integration between the five Brazilian regions and speeds up the country's economic growth, besides the regional development.

Petrobrás has been a promise of economic development in Brazil. Pre-salt exploitation has attracted skilled manpower to the coast, especially IT professionals and engineers. The scenario is very promising and the National Organization of Petroleum Industry states that US$ 400 billion will be invested in offshore activities until 2020.

Also, BNDES has contributed with credit operations, most of them related to agricultural, chemical and petrochemical industries.

North Region

Host of Zona Franca de Manaus, the North region of Brazil used to be left aside when it comes to economic development, but the construction of hydroelectric dams and the preparation of Manaus to host the 2014 World Cup demands a growth of the local economy, especially in the services segment.

Here is a list of the most promising cities in the North region and its featured segments:

Manaus/ Amazonas: electronics and motorcycle manufacturers;
Belém/Pará: tourism. With the inauguration of Hangar Convention Center, in 2007, the city has been the host to many events;
Porto Velho/ Rondônia: building sector, especially related to the construction of two hydroelectric dams on Madeira river. Housing sector is growing as well;
Palmas/ Tocantins: aiming to transform Tocantins into an important distribution center, tax incentive and the construction of a North-South railway has attracted companies to this state. Mining is the most promising sector.

Northeast Region

The Northeast of Brazil has been historically known for its social inequality. While the coast hosts important universities and cities (most of them sustained by the tourism industry), the areas located on the west face a level of poverty that could be compared to the poorest of the African countries.

However, with the launch of different social welfare programs, in 2008 eight million northeasterns left poverty. This social rise resulted on a housing boom in cities like Salvador. Also, investments in the public sector of Bahia must be of BRL 2,4 billion. Among the projects, is the construction of west-east railway, a freeway and other projects related to the 2014 World Cup.

As most Northeastern states are on the coast, many of them benefit from investments from the petroleum and natural gas industry. The port industrial complex of Suape, a Fiat factory and the Petrochemical Company of Pernambuco are the most important segments in the Recife area.

Fortaleza (Ceará) has guaranteed the leadership of the footwear sector and following the example of Salvador, São Luís (Maranhão) and Porto Velho, is experiencing an evolution in the building sector.

Natal (Rio Grande do Norte), is experiencing a significant growth in the commerce, services and construction sectors. The state government has invested in urban mobility projects, in the construction of the airport and the Wind Power Technological center.

In the future, the most promising sectors in Natal will be:

Petroleum industry;
Private teaching (due to the expansion of higher education institutions);
Medical and pharmaceutical sectors.

Central-West Region

Brazilian central-west is notorious for its agribusiness potential. Multinationals such as Monsanto are established in the region.

In Goiás, the main activities are related to the sugarcane industry, mineral extraction and the pharmaceutical sector. The state is working to become the main generic drugs center in the country and is already the main producer of nickel, copper and asbestos.

Três Lagoas, in Mato Grosso do Sul, is becoming a major producer of paper and cellulose. The state is also a main player in the sugarcane industry due to the high demand of flex cars.

Brasilia is the national capital and has the higher income per capta in the country. Such characteristic empowers the building sector and Brasilia has the most expensive square meter in Brazil. Also, the city hosts ministries, autarchies and the headquarters of public banks.

Brasília is also focused on the development of a project similar to Baixada Digital, named Parque Tecnológico Cidade Digital.

Southeast Region

The wealthiest region in the country, the southeast is responsible for 58% of the country's GDP and concentrates a highly skilled manpower, as it hosts the most important universities in the country.

Public and private investments in the area are related to the building sector, services, petroleum, pre-salt, steel industry and ethanol.

São Paulo is the wealthiest state in the country and is responsible for 33,9% of the country's GDP. Its industrial production surpasses the one of Rio de Janeiro, Minas Gerais and Rio Grande do Sul together.

Besides being a financial center, São Paulo has the most qualified workforce in the country as it hosts some of the most important Latin American universities, such as Universidade de São Paulo and Universidade Estadual de Campinas.

Rio de Janeiro is the second most important Brazilian economy and is very strong in many economic sectors, from Tourism to IT. The telecommunications industry is also strong as the headquarters of five of the main telephone operators in Brazil (TIM, Oi, Telemar, Embratel and Intelig) are located in the city.

In terms of research, Rio de Janeiro is also the home to Oswaldo Cruz Institute, the major Latin American laboratory and one of the most important in the world. It also hosts Companhia Siderúgica Nacional (CSN), the second major steel company in Brazil.

Minas Gerais has the second largest industrial park and the main activities are the mining, metallurgy and automobile industries. Minas is also important for the agribusiness as it is one of the main producers of meat, milk and coffee.

The state is also one of the most important in the industry of electronics and telecommunications. One example is the city of Santa Rita do Sapucaí, known as the Brazilian Silicon Valley.

Espírito Santo is strongly focused on port activities, marble and granite exploitation and in the production of cellulose. It is also a main player in the exploitation of petroleum and natural gas. Its economy is currently facing a growth due to the discovery of huge natural gas and petroleum fields.

Tourism, mining, steel industry and agriculture are also important for the local economy.

South Region

The most European of the Brazilian regions, the south is famous for its elevated levels of education and quality of life.

For many years in a row, Curitiba has been the best city to live in Brazil. Its elevated quality of life attracted skilled professionals from other areas and many companies decided to establish in the city. The presence of Renault and Volkswagen , as well as other medium-sized companies has granted the city the lowest unemployment level in the country.

In Florianópolis/Santa Catarina, software and services segments are the most successful. In 2010, Florianópolis invoiced BRL 602 million. IT solutions are also strong in the state.

The local government in Rio Grande do Sul has invested in the development of the technology industry in Porto Alegre and area. Investors from São Paulo have been considering a partnership with the local government in Porto Alegre aiming the construction of an industrial park in the south side of the city.

Besides technology, tourism, health and services sector, and the building industry are also main players at the local economy.