The term “Brazil Cost” first appeared in 1995, following the introduction of the Brazilian real a year earlier to tame hyperinflation. After struggling with quadruple-digit inflation and five currency changes between 1986 and 1993, the country’s economy was finally beginning to stabilize.
The phrase was first used at a seminar organized by the National Confederation of Industry (CNI) to discuss Brazil’s economic obstacles. Participants debated the many structural, bureaucratic, and economic hurdles that hindered Brazil’s business environment.
The “Brazil Cost” is shorthand for the hoops that companies must jump through on a daily basis in Brazil. For decades, politicians, economists, and business owners have debated how to eliminate — or at least reduce — these costs.
According to Samuel Pessôa, an economist and professor at the think tank Fundação Getulio Vargas, several governments have tried to tackle the Brazil Cost, with varying degrees of success and commitment.
Improving the business environment was a key pillar of Fernando Henrique Cardoso’s agenda in the 1990s. It was also a priority in the early years of Luiz Inácio Lula da Silva (2003-2006), but fell by the wayside when Lula appointed a spendthrift finance minister in 2006 — who would remain in office until 2015, long after Lula had handed the presidential sash to his ally Dilma Rousseff.
A study commissioned by the Brazilian government found that the burden on businesses due to taxes, legal uncertainty, financing, problematic infrastructure, and other issues that make up the Brazil Cost would reach BRL 1.7 trillion (USD 340 billion) in 2023, equivalent to 19.5 percent of Brazil’s gross domestic...
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