Competitiveness and Business Development

Formalization of micro-entrepreneurs

Research leader:

Cesar Zucco

Description: There is a mass of informal micro-entrepreneurs in developing countries like Brazil. The issue of informality has negative consequences for the state – such as tax evasion – and for these entrepreneurs who, among other challenges, face hardships in obtaining funding and accessing social security and have restricted growth opportunities. However, few micro-entrepreneurs formalize their businesses, despite existing legal frameworks facilitating the process through easy and low-cost measures. The reasons for this situation are, among others, misinformation and behavioral limitations, such as lack of attention and forgetfulness. 

The proposed research will evaluate the efficiency of different approaches to foster the formalization of micro-entrepreneurs. A field experiment carried out in different countries thanks to an international partnership will assess the effects of individual consultations on formalization. In Brazil, the study will examine the effects of these consultations and other measures such as text messages, inclusion in WhatsApp groups, and the endorsement of different public figures. As a result, the study will identify actions that can be incorporated into public policies to encourage formalization. 

The research will be carried out in a coordinated way in the following countries: Brazil, Colombia, Congo, Nigeria, India, and Malawi. Coordination will be carried out by researchers from FGV EBAPE (Brazil); UCLA (Colombia); MIT and Harvard University (Congo); Giorgia Tech, Columbia University and EGAP (India); University of Illinois (Malawi), and American University (Nigeria). 

Understanding product use recommendations based on less important attributes

Research leader:

Fabio Caldierado

Description: Companies use their less important attributes for product promotion, hoping that individuals will choose them over their competitors.  

An example is the case of pharmaceutical companies when recommending their over-the-counter (OTC) drugs to the detriment of their competitors: Pfizer uses the argument that its pain relief pills (Advil) are absorbed more quickly and are more gentle on the stomach because they have a “liquid capsule.” At the same time, Johnson and Johnson advertises the competing drug by emphasizing that “Tylenol has fewer drug interactions.” 

This situation is not unique to OTC drugs. Companies often use less important attributes in advertising to distinguish their brands from other viable alternatives. Individuals who believe the advertised messages or those heavily concerned with the less important attributes communicated choose based on the recommendation. Others may react differently, particularly if they recognize that these products have multiple benefits and that companies may have an incentive only to communicate comparative information about features that outperform competing alternatives. Policy-makers can use a better understanding of this phenomenon to improve advertising regulation and consumer education programs. 

The consequences of these policies can directly benefit individuals, empowering them to make better choices. Thus, this study aims to understand the reaction of consumers to recommendations based on less important attributes and the incentive for companies to use these recommendations. The research proposal includes partnering with the University of Georgia (USA). 

Governance and collective decision-making process in mutual organizations

Research leader:

Joaquim Rubens Fontes Filho 

Description: This research aims to identify, classify, and analyze how collective decision processes are defined and carried out in non-hierarchical organizations and how governance is manifested in these conditions. The study expands the existing analyses on this topic in Brazil to an international context. The choice of Ecuador (Andean University) represents, first, a way of consolidating a partnership with the Andean University’s PhD in Administration Program (which is unique in the region), and second, an opportunity to extend the analysis developed in Brazil to another cultural context with a sophisticated associativism, although with urbanization not as advanced as in Brazil. In this sense, the partnership allows submitting the analytical model – fundamentally based on proposals put forward by Elinor Ostrom in many of her studies and on Elster (1989) and Bengtsson (1998 and 2001) to the influence of culture and local values of associativism.

According to Elinor Ostrom (1990; 2005), who was awarded the Nobel Prize in Economics in 2009, cooperative organizations play a fundamental role in the management of shared resources since they emanate from the organization of the main parties involved in a given issue in which the state is inefficient or absent, and the market has no interest or power to act. Despite minor considerations made by the academia regarding the dynamics of these organizations, their importance can be proven in numbers: Pastoral da Criança has a staff of 150,000 and provides services to more than 1.5 million individuals; the Association for Assistance to Disabled Children (AACD) collects BRL 40 million a year; and the Support Group for Adolescents and Children with Cancer (Graac) raises BRL 12 million a year (VEJA, 2001). This is just the philanthropic organizations. According to the Organization of Cooperatives of Brazil (OCB, 2009), the cooperative movement has more than 7,200 cooperatives, with 8.2 million members, 270,000 employees, and revenues of BRL 88.5 billion in 2009. it is based on voluntary participation mechanisms, and the allocation of political rights (voting) is evenly distributed among the participants. According to FASFIL (a survey examining the Brazilian nonprofit sector carried out by the Brazilian Institute of Corporate Governance - IBGC), condominiums in buildings, horizontal or vertical, residential, commercial or mixed, regulated by Law 4591/1964, and condominium associations totaled, in 2010 (last survey data), 153,441 units, representing a market estimated by the sector at BRL 10 billion a year. 


Economic and Social Development

Improvement of Brazilian public education, from Kindergarten to High School

Research leader: 

Kaizô Iwakami Beltrão 

Description: Other countries are far ahead of Brazil in terms of the quality of public education, as demonstrated by the results of the PISA (Programm for International Student Assessment) conducted by the OECD every three years. Despite the improvement, mainly in mathematics, the learning outcomes of Brazilian 15-year-olds are among the worst of the 72 countries assessed in 2015. 

In addition to being a right guaranteed by the Brazilian constitution, quality education is one of the main ways to reduce social inequalities in the country. The low quality of Brazilian education is a severe obstacle to the country’s inclusive economic growth. Thus, the research seeks to collaborate with international institutions to produce knowledge and create courses that support the Brazilian governments’ (federal, state, and local) to implement educational policies that equitably improve students’ learning. 

Innovation and technology

Machine Learning for evaluating public audits

Research leader: 

Ricardo Lopes Cardoso 

Description: Develop machine learning (ML) solutions (applications - Apps) to assess the quality of audits carried out by the Courts of Auditors on the fiscal management of Brazilian municipalities. In 2017, Brazil spent around BRL 6 billion on external control. However, the frequent corruption scandals involving public agents and the inadequate allocation of public resources raised doubts about the independence and quality of the control exercised by these courts. 

Therefore, the development of ML solutions (Apps) aims to support auditors, avoid manipulations, and ensure the process’s correctness based on truly reliable data. ML adds value when considering that government accounting and auditing are big data (a massive collection of financial reports, statements, and explanatory notes) generated by the more than 5,000 municipalities audited – not always accurately – by the courts of accounts. 

High contrast