Felipe Montoro Jens recently stated that government investments and public-private partnerships are the keys to a stronger Brazilian economy. Jens is a business leader and finance expert who has worked with both large and small Brazilian enterprises. Through his extensive dealings with Brazilian businesses, Jens understands the current challenges faced by investors and entrepreneurs. Public funds can be properly allocated to utilities and other infrastructure projects to improve the long-run trajectory of the economy.
Focus on Public Goods
Felipe Montoro Jens noted that many Brazilian cities are lagging behind other international cities in infrastructure spending. Over one-third of cities in the country have not completed a public-private partnership or concession program since 2015. To make matters worse, the private sector has been unable to address these failures due to regulations and licensure burdens. With limited development of public works, Brazil has fallen behind in international markets.
Jens understands that poor infrastructure means that it will be difficult to attract foreign capital investments from global institutions. Some populist leaders believe that less foreign intervention is a hallmark of a powerful and independent nation, but their logic is flawed. Without critical foreign capital, the health of an economy depends entirely on exports and imports. When imports exceed exports, the economy eventually must take on debt. With foreign capital, outside investments are used to cover the difference. Foreign capital flows allow a healthy economys’ imports to exceed exports. This situation increases material well-being and promotes job growth. Unfortunately, Brazilian cities are currently not attractive to foreign investors due to a lack of high-quality infrastructure.
Felipe Montoro Jens has realized that demand for public goods is growing due to increasing urban populations and economic activity. Brazil must use tax dollars and public-private partnerships to provide the infrastructure needs of an advanced economy. Jens believes that urban areas should start with basic services like sewage management, roads, and water treatment. Over the next decades, the cities can focus on services common in advanced economies across the world. With capital investments from Europe and Asia, Brazil can develop high-speed Internet, public transportation, and other necessities of an international city.
Jens also suggests that Brazil should focus its public investments on education and healthcare. Education is a vital service in an advanced economy. While Brazil has thrived with limited education programs in the past, economic conditions are changing. During most of the 20th century, Brazil depended on agricultural sectors to earn income. Agriculture requires some training, but large investments in education were unnecessary for economic growth. Brazil is now transitioning into an economy of robust service sector industries. Service sectors require technology, language, and technical skills that are generally acquired through training programs. To remain competitive in the 21st century, Brazil must increase its human capital with public education investments.
Healthcare offers similar long-term returns. The logic is obvious, but sick workers are less productive than their healthy counterparts. Furthermore, sick workers require time to recover. Healthcare expenditures can improve the overall health of workers to reduce burdens for employers.
What Is a Public Good?
Felipe Montoro Jens is a strong advocate of investing in works that are sustainable and contribute to the long-term health of the Brazilian economy. In general, these kinds of government services are known as public goods. In economics, a public good is any good or service that is both non-exclusive and non-rivalrous. The non-exclusive condition means that it is impossible to prevent people from using the service when it is offered. The non-rivalrous condition means that an individual’s consumption of the good does not diminish the supply of the good for other people.
Some of Jens’ suggestions are not pure public goods. In these cases, Jens suggests that public-private partnerships should be established to ensure that the services are effectively managed. Many Latin American countries failed to consider the effects of service mismanagement in the 1950s and 1960s. Instead of using public-private partnerships, municipalities created state-owned enterprises. These state-owned enterprises were notoriously inefficient because they relied on flawed price mechanisms. This failure led to high debt, malinvests, and rapid inflation in the 1980s. Felipe Montoro Jens believes Brazil can avoid this risk by focusing its investments on pure public goods and public-private partnerships.
Find more information on Felipe’s website here: www.felipemontorojens.com.br