After The Crisis: How Brazil Can Create Growth

It is a strange time to be talking about growth in the Brazilian economy; Brazil is in the middle of its largest recession in decades. Falling commodity prices have taken their toll, and Brazil continues to rely on exports of agricultural and mining outputs. However, the most important facets of the Brazilian economy are changing, and Brazil’s future relies on a series of sectors that get less attention than the traditional mining and agriculture sectors. In particular, Brazil’s future involves its growing creative sector.

The term “creative economy,” popularized by John Howkins in 2001, is all about branding. A country’s creative sector translates the ideas and passions of the people into profitable, marketable goods and services such as media, technology, advertising and art. Idea-based companies in the U.S. can access capital through venture capitalists and deep capital markets. Brazilian financial service providers, however, often struggle to value and encourage these industries due to the current recession and the archaic intellectual property laws that hold back the creative sector.

 Brazil’s creative sector is an asset worth protecting; 5.5% of Brazilians work in related fields, accounting for 320,000 companies and millions of new jobs. For comparison, the agriculture sector employs 15% of Brazilians, but is rapidly shrinking. Agriculture accounts for 5.6% of Brazil’s GDP, while creative industries generate 2.6% – exhibiting a nearly 70% increase in the last decade. The growing creative sector in the Americas accounts for 14% of all exported goods and services in this sector – $87 billion out of a total of $640 billion worldwide – and in Brazil, creative exports contribute to the Brazilian “brand.”

The crown jewel of Brazil’s growing creative economy is the fashion industry. While some Brazilian brands are household names – Nine WestHavaianas and others – less well-known designers, models and icons are gaining momentum. When the Brazilian economy was stronger, the fashion industry mirrored the explosive growth of the middle class, the thriving textile industry and the creative passion of the country. Even in the current recession, the Brazilian market is an important target for international designer brands, and Sao Paolo’s fashion week is known as an international gateway into Brazil’s latest trends. The city remains an oasis of trendy, wealthy shoppers, and international brands clamber to display their work on Sao Paolo’s runways and shopfronts.
Music, film and online media are growth sectors in Brazil. Recorded music represents a $246 million industry, and both digital and physical sales continue to rise, despite the uncertain economy. While piracy remains commonplace, with between 48 and 65 of the Brazilian music industry dominated by piracy, intellectual property laws are changing to reflect the increasingly digital industry’s needs. But the current legal protections hold back progress in the creative sector and stifles deeper partnerships with countries such as the United States whose creative entrepreneurs need more assurance against piracy and stronger intellectual property protection.
Museu Nacional
The Museu Nacional in Brasilia. Image courtesy of Flickr user Diogo Moraes under a Creative Commons Attribution 2.0 Generic License.
Other facets of Brazil’s creative sector are gaining traction as well, with international implications for the Brazilian “brand.” Architecture has long been a high art form in Brazil; the city of Brasilia is just one iconic example. Advertising and marketing also represents a large opportunity in Brazil’s economy, with $3.4 billion spent on digital advertisements in 2015 alone.

The Brazilian government takes the creative sector seriously, and has taken several steps to support the growing creative economy. Apex-Brasil, the Trade and Investment Promotion Agency, has partnered with several design institutes in order to help promote exports of cultural products. One important study, A Cadeia da Indústria Criativa no Brasil – “The Chain of Creative Industry in Brazil,” was originally published five years ago to map the growth and potential of the creative sector. Partially in response to the study, in May 2012, President Dilma Rousseff created the Secretaria da Economia Criativa – “Creative Economy Secretariat” – to support creative sector growth. However, given the challenges around intellectual property protection, there is still more work to be done.

With more than 11 million Brazilians employed in the creative sector, policymakers, strategists and investors must draw parallels between the creative sector and the agricultural or mining sectors. Innovators in the creative sector in Brazil – not U.S. companies –are going to change Brazil’s political dynamics, ultimately changing the laws around intellectual property and the trajectory of Brazil’s economy.

Article Published in on April 4, 2016.

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