Brazilian Informal Economy Grows 9% and Brazil Doesn’t Know How to Deal with It

Brazil’s informal economy grew 9.1% between 1997 and 2003, according to the Brazilian Institute of Geography and Statistics’ (IBGE) Urban Informal Research (Ecinf 2003).

The IBGE’s research was carried out with the collaboration of the Brazilian Micro and Small Business Advisory Service (Sebrae) and released this month.


Professor Márcio Pochmann, of the State University of Campinas (Unicamp), judges that part of this growth occurred because incorrect policies were adopted, dealing with the problem as if it were homogeneous.


“In fact, the informal sector is a world of diversities. We have to identify specific policies for specific segments within the informal sector,” he affirmed.


According to the study, the chief difficulties identified by entrepreneurs in the informal sector are lack of clients (indicated by 48.6%), heavy competition (44.5%), and low profits (34.4%).


Other problems mentioned by the entrepreneurs were lack of credit (13.6%) and lack of personal capital (26.2%). Nevertheless, 16.1% of the entrepreneurs reported that they had experienced no difficulties.


“I believe that what we do in Brazil is to plant wheat in pots. Planting wheat in pots is inadequate to cope with Brazil’s hunger epidemic. Most of the time the pots we plant don’t correspond to the methods suitable for large-scale cultivation,” the professor pointed out.


ABr – www.radiobras.gov.br

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