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4.3 Managing business risks in Brazil > Closing remarks - Pg. 188

188 emerging Markets of road and rail networks and port and airport capacity. Indeed, the infrastructure sector has experienced a different trend when compared to extractive industries such as oil or mining. Whereas in the latter case the government has sought to increase the state's control, both the Lula and Rousseff administrations have generally welcomed foreign investment in the infrastructure sector. This benevolence is largely due to pragmatism: a failure to deliver adequate reforms and to ensure smooth sporting events in 2014 and 2016 would be a political catastrophe for the government, with the potential to precipitate the return of the opposition to power. Recent decisions to privatize three of the country's main airports and to increase the cap for foreign capital in local airlines are reflective of this trend. Despite this investor-friendliness, delays in establishing the mechanisms to support public­private partnerships have been an obstacle, while government's relaxation of procurement procedures and laws to accelerate works is a recipe for substantial cost overruns and greater corruption risk. Companies planning to invest in this sector need to adopt appropriate and prudent measures as outlined above. A further latent risk for foreign investors lies in the fact that Brazilian construction conglomerates are among the most powerful businesses in the country, with strong links to national and state governments. In the past, these companies have been less than thrilled at the prospect of exposing their market share to competition from abroad, and have adopted defensive tactics to avoid the entry of new players. Foreign companies aiming to take advantage of the huge potential in the sector need to be