The most competitive states in Brazil, according to CLP

RIO DE JANEIRO, BRAZIL – The Center-South states are the most capable of prioritizing public policies aimed at society’s well-being, according to the State Competitiveness Ranking study released by the Center for Public Leadership (CLP) on Thursday, September 30.

São Paulo, Santa Catarina and the Federal District are the three best placed in the study. According to CLP analyst Lucas Cepeda, the best-placed states share the fact that they are able to grow by prioritizing specific agendas. But they also benefit from historical issues, such as better infrastructure.

The three states ranked highest overall also hold the top positions in the sectorial rankings prepared by CLP. São Paulo is the best qualified state in education and infrastructure; Santa Catarina is the leader in public safety and social sustainability; and the Federal District is the best placed in human capital.

The concentration of top positions in the Center-South contrasts strongly with the North, where the worst positions are found. The bottom four in the general competitiveness ranking are in the region: Roraima, Acre, Pará and Amapá.

Challenges are substantial. According to Cepeda, to progress in the coming years, to be leaders and have a more relevant role, the states need to improve their fiscal conditions. One of the ways to do this is to invest in administrative reform in order to provide quality public policies to society, he says.

Another point of attention is the ESG (environmental, social and governmental) criteria. Cepeda points out that they are becoming the basis of the new global protectionism.

“In order not to be excluded from international investment flows, more attention needs to be given to this. If a place doesn’t meet these criteria, it is unlikely to attract investments,” he says. São Paulo is at the top of this ranking, followed by the Federal District and Santa Catarina.

REGIONAL CHALLENGES

Although the states in the region have managed to evolve with GDP growth in recent years, public safety is a pressing challenge in the Northeast. The three largest states in the region – Bahia, Pernambuco and Ceará – all face challenges in the area. They are only better placed in this criterion than Roraima and Rio de Janeiro in the CLP ranking.

The main challenge in the North is related to infrastructure, Cepeda says. “It has made progress, but it needs to evolve more so the population is not excluded.” Three states in the region rank last in this pillar: Pará, Acre, and Amazonas. Geography is among the factors behind this.

Despite being the highlight in terms of competitiveness, advances are also required in the South and Southeast. One of the crucial issues related to the future of public policies is fiscal solidity. If, on the one hand, these regions have the national leader in this criterion, Espírito Santo, they also have 3 of the worst 4: Rio de Janeiro, Rio Grande do Sul and Minas Gerais.

Even São Paulo, the champion of competitiveness among states, is not in a good position in terms of fiscal solidity: in this specific pillar, it is only ranked 18th among the 27 states.

The Midwest region has been establishing itself among the 10 most competitive federal states. According to Cepeda, considering all of the CLP study’s 86 pillars and sub-pillars, the region’s states rank first in 19 of them.

The highlight of the Midwest is the environmental issue, according to the analyst: Goiás is among the states that register the least water loss and Mato Grosso has the highest score in transparency of actions to fight deforestation.

RIO D JANEIRO LOSES COMPETITIVENESS DUE TO FISCAL ISSUE

Of the Center-South states, only Rio de Janeiro is not among the top 10 in the general competitiveness ranking. Rio de Janeiro has dropped 9 positions since 2015, when it was the 8th most competitive state.

This poor performance can be attributed to the fiscal issue, Cepeda says. The state is last in this criterion, which has Espírito Santo, Mato Grosso and Pará in the top 3 positions of the study.

The CLP analyst points out that fiscal solidity is crucial in implementing public policies. “Despite higher oil royalties, tax collection is not enough to meet social demands,” he says. The main problem lies in public safety. In this pillar, the state has the second worst ranking, ahead only of Roraima.

FOCUS HELPS ALAGOAS IMPROVE ITS POSITION

Despite not being ranked in the top 10, one of the states that has most stood out in recent years is Alagoas. It was ranked last in 2015 and is now the 13th most competitive state in the country, 6 years later.

Cepeda says that the improvement in the ranking is due to the establishment of focused sectorial policies. He says that at first the state attacked the problem of maternal mortality, then aspects related to the Basic Education Development Index (IDEB), and finally the Human Development Index (HDI). This was reflected in a marked improvement in human capital, in which the state rose from 3rd worst in the country in 2015 to 5th best in 2021.

Other areas in which the northeastern state performed better were education (rising from 27th in 2015 to 17th in 2021), infrastructure (21st to 10th), and fiscal solidity ( 24th to 5th).

The top-performing states in the CLP top 10 competitiveness pillars and in the sustainable development goals and ESG pillars:

ENVIRONMENTAL SUSTAINABILITY
1st Paraná
2nd São Paulo
3rd Federal District

HUMAN CAPITAL
1st Federal District
2nd Rio de Janeiro
3rd Amazonas

EDUCATION
1st São Paulo
2nd Santa Catarina
3rd Minas Gerais

PUBLIC ADMINISTRATION EFFICIENCY
1st Espírito Santo
2nd Santa Catarina
3rd São Paulo

INFRASTRUCTURE
1st São Paulo
2nd Federal District
3rd Santa Catarina

INNOVATION
1 Rio Grande do Sul
2nd São Paulo
3rd Santa Catarina

MARKET POTENTIAL
1st Amazonas
2nd Roraima
3rd Mato Grosso

FISCAL SOLIDITY
1st Espirito Santo
2nd Mato Grosso
3rd Pará

PUBLIC SAFETY
1st Santa Catarina
2nd São Paulo
3rd Federal District

SOCIAL SUSTAINABILITY
1st Santa Catarina
2nd Federal District
3rd São Paulo

SUSTAINABLE DEVELOPMENT GOALS
1st São Paulo
2nd Santa Catarina
3rd Paraná

ESG
1st São Paulo
2nd Federal District
3rd Santa Catarina