27 Jun 2013
Immersion in Brazil
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This week, a group of 11 faculty and 3 senior staff members, led by Professor Aldo Musacchio, is visiting Brazil as part of an immersion experience. The purpose of the trip is to understand Brazil as a country that has risen as a player on the global stage and to examine the innovative business opportunities that have emerged as 40 million people become members of the middle class. The group is traveling from the board rooms of Sao Paulo to the Ministry of Foreign Relations to the favelas of Rio de Janeiro. They will experience what happens in the likes of airplane factories, beverage distribution centers, and government ministries and will see the rapid transformation of Brazil's cities in preparation for the 2016 Olympic Games.

Follow the conversation on Twitter at #HBSbrazil.

(LtoR): Arthur Segel, Thales Teixeira, Shikhar Ghosh, Valerie Porciello, Aldo Musacchio, Imelda Dundas, Shawn Cole, John Macomber, Elon Kohlberg, Fritz Foley, Earl Sasser, Karthik Ramana, Victoria Ivashina, Angela Crispi, Susan Lyons
27 Jun 2013
By: John Macomber

Eleven Harvard Business School faculty and three senior staff are in Brazil for a long-scheduled “immersion.” We arrived in the midst of large street demonstrations that are the first in Brazil in 20 years. We have met with investors, entrepreneurs, bankers, and ministers and spoken as well with waiters and flight attendants. Everyone agrees this is a watershed that won’t be forgotten; no one knows what it means. For the most part nobody even knows who are the leaders or what they want. It’s a quickly evolving social media phenomenon.

Personally, I walked with 100,000 Brazilians on the main boulevard in Sao Paulo on Thursday night, the night of the largest protests nationwide. US CNN showed the same truck on fire over and over; I witnessed community, light-heartedness, earnestness about the issues, and national pride. Subsequently from Saturday through this evening we have seen protests in person, been diverted around road blocks, but had no other disruptions. It is a very auspicious time to be here.

Consensus seems to be that the protests are an understandable expression of an emerging middle class looking for better lives. It’s also remarkable to us -- having been in the capital Brasilia today -- how relatively light the security is and how the protesters are tolerated. It’s the voice of direct democracy, said the foreign minister.

John Macomber

Most of the people we meet say the structural fixes are around: a) better infrastructure; b) more transparency/ accountability/enforceability in government activities ( It can take a very long time, for example, to jail bad guys -- decades until they exhaust their appeals --or to seize collateral for bad loans; and c) simplification of the tax code and hiring/firing rules. These are all items that politicians could resolve, although hard to do in a multiparty system that gives a lot of voice to the populace.

The banking system seems super attentive and conservative – a result, Brazilians tell me, of “being terrified about hyper inflation and financial collapse in the past.” Banks also tend to have a lot of equity owned by the principals and coupled with investor preference for strong balance sheets, they seem well capitalized. They are built for volatility.

My colleagues and I have been impressed with the nation, with our alumni, and with the professional high- level public servants.

There are presidential elections in October 2014, and people are waiting to see if President Dilma Rousseff will opt to make some infrastructure investments to show action or if she will postpone that and instead implement additional direct support for the poor, adding to federal obligations but courting those votes.

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