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tHE CItY's potEntIal Salvador was the first capital of Brazil, the main destination of the Portuguese colonizers and where they maintained colonial administra- tion for over two hundred years. After almost five hundred years, much has changed, but still Bahia's capital re- mains a gateway into Brazil. Salvador has a major port and the city is re- sponsible the fifth most number of flights (domestic and international) in the country, with more than 100,000 takeoffs and landings in 2013. Public investments to foster innovation deserve special attention here. The state of Bahia invested over R$ 600 million in 2012, making it the fourth state that most invest- ments in this area (1.92% of its bud- get). Only behind São Paulo, Santa Catarina and Paraná. The local com- panies are also more focused on in- novation, compared to the national average: it's the city in the North and Northeast region with the high- est absolute number of teachers and doctors working in companies and, proportionally, the 4th largest number in the country. In addition, 1 in 13 officials of private compa- nies is allocated in areas related to technology, the highest rate among the cities analyzed. Still, the population of Salvador has great prospects to undertake. More than 68% say they want to open their own business in coming years, the 4th highest rate among the an- alyzed capital, and Salvador has the highest proportion of profiled "My Way" entrepreneurs, the type of profile identified as most prone to open their own businesses. tHE CItY's CHallEngEs Salvador has some of the worst levels of education, especially quality education: the city has the worst grades in the IDEB, and less than one fifth of univer- sity students are enrolled in good undergraduate courses, according to ENADE. Regarding the Regulatory Environment, there are some de- lays in the system. The court's over packed rates are the highest among the analyzed capital and the average time to install electricity is a month — a procedure that takes two weeks, on average. Beyond the bureaucracy, entrepreneurs should also consider the rates: in Bahia the average effec- tive tax for companies registered in the Simples tax regime is 8.1%, the highest among the analyzed capital — mainly due to the adoption of the tax substitution for various products. SALVADOR 80