Introduction
Brazil with a population around 201,032,714, is the largest South America’s country. Brazil’s most important components of its GDP are service revenues, wide industry sector and its successful agriculture.
For More than two decades Brazil suffered badly from high inflation, economic decline, domestic and foreign debt. In 1993, country’s Inflation reached 30 percent a month and as a result the country wouldn’t sustain growth. After many unsuccessful plans to control the inflation, finally Real Plan of Fernando Henrique Cardoso, minister of finance, worked out and brought the inflation down to a single digit.
Today, Brazil with a GDP of $2.533 trillion is the 7th largest economy in the world and it is also considered as one of the most successful emerging countries. Despite all predictions, thanks to its huge domestic market and agriculture, the country maintained its growth in 2009 and 2010.
The purpose of this paper is to demonstrate how Brazil, a country with an extremely high rate of inflation and low growth, positioned itself as the 7th largest economy of the world and what are the challenges that the country is facing. First of all, the Real Plan of Fernando Henrique Cardoso and how it helped the country to stabilize its economy and drop down the inflation rate will be discussed. Secondly, how his successor’s policies, Luis Inácio Lula da Silva, improved country’s economy. At the end the challenges that Dilma Vana Rousseff, the current president, is facing will be discussed.
In early 1994, Fernando Henrique Cardoso was selected as minister of finance, his primary objective was to develop a new stabilization plan. The plan named Real Plan and it focused mainly on the causes of inflation in country. Th...
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Brazil is the largest country in South America and in Latin America, fifth largest in the world. It is one of the more diverse countries in the world, with different cultures and ethnicities. Brazil’s type of government is a Federal Republic. Brazil is on its way to growing out of its emerging market status and becoming one of the richest and most developed countries on earth. Brazil’s human, mineral, and agricultural resources are on par with those of the United States and Canada, and it has a few great opportunities to take advantage of in order to continue the growth it’s been experiencing over the past 20 years. Brazil, known for its natural resources, find in energy one of the country’s main ways of resources, being either oil and natural gas or biofuels and solar/wind power.
Globalisation has been crucial to the economic and social development of Brazil. In the late twentieth century Brazil face years of economic, political and social instability experiencing high inflation, high income inequality and rapidly growing poverty. However after a change of government in the 1990s and large structural changes in both the economic and social landscapes, the brazilian economy has been experiencing a growing middle class and reduced income gap. Since the start of the 21st century, brazil has benefitted from the move to a more global economy.
Tompkins, C., 2009. The paradoxical effect of the documentary in Walter Salles’s “Central do Brasil”. Studies in 20th & 21st Century Literature 33 no1 p9-27
The first reason why Brazil is a wealthy country on a national scale is because it has low national debt! (document B) Secondly, Brazil is a wealthy country because they have one-quarter of the world’s arable land which is great for growing crops! (document B) Lastly, Brazil is a wealthy country because Brazil was marked the eighth highest GDP in the world in 2013! The United States dollar equivalent in trillions in Brazil in 2013 was 2.5 trillion dollars! (document A) GDP stands for “Gross Domestic Product” and is an estimate of the total value of all the goods and services a country produces in a year! As a result, Brazil has many advantages that make it a wealthy country on a national
Veloso, Caetano, and Barbara Einzig. Tropical Truth: A Story of Music and Revolution in Brazil. Cambridge, MA: Da Capo, 2003. Print.
The first chapter focuses on Brazil’s founding and history up until present. When the Portuguese were blown off course to Asia onto the coasts of Brazil in 1500, the Portuguese knew they had found a land filled with opportunities. The main attraction was the abundance of brazilwood which could be used for manufacturing luxurious fabrics in Europe. Over the centuries, exploration led to the discovery of more resources such as sugar, coffee, and precious metals that had made it a sought after country for colonization. Even to this day, Brazil maintains the image of a land with limitless resources since the recent discovery of oil and gas reserves and other commodities.
Brazil is depending heavily on tourist money to pay for the country’s infrastructure as Vinicius Lummertz, Brazil’s national secretary of public policies, quotes, “We hope tourism in Brazil rises to a new level after the World Cup. With infrastructure improvements that increase the competitiveness of Brazil as a tourist destination, and the high exposure of the country abroad, I expect to see a significant increase in foreign tourists--but mainly more Brazilians traveling through Brazil.” The Bleacher Report reported that a prediction of 25 billion dollars would be spent by 600,000 foreign and three million Brazilian travelers as an estimation. There is no exact amount of tourist money yet but the reality is that Brazil would definitely not be saved from it because it is just impossible to pay off a 14 billion dollar payment just from tourist money. Another point that will take a while to cool down is Brazil’s pride.
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Brazil is both the largest and most populous country in South America. It is the 5th largest country worldwide in terms of both area (more than 8.5 Mio. km2 ) and habitants (appr. 190 million). The largest city is Sao Paulo which is simultaneously the country's capital; official language is Portuguese. According to the WorldBank classification for countries, Brazil - with a GDP of 1,5 bn. US $ in 2005 and a per capita GPD of appr. 8.500 US - can be considered as an upper middle income country and therefore classified as an industrializing country, aligned with the classification as one of the big emerging markets (BEM) next to Argentina and Mexico. Per capita income is constantly increasing as well as literacy rate (current illiteracy rate 8%). Due to its high population rate (large labour pool), its vast natural resources and its geographical position in the centre of South America, it bears enormous growth potential in the near future. Aligned with an increasing currency stability, international companies have heavily invested in Brazil during the past decade. According to CIA World Factbook, Brazil has the 11th largest PPP in 2004 worldwide and today has a well established middle income economy with wide variations in levels of development. Thus, today Brazil is South America's leading economic power and a regional leader.
Przeworski, A., 2004. Capitalism, Development and Democracy. Brazilian Journal of Political Economy, Vol. 24, No. 4 (96), Pp. 489-497
In 1822, Brazil became a nation independent from Portugal. By far the largest and most populous country in South America, Brazil has overcome more than half a century of military government to pursue industrial and agricultural growth and development. With an abundance of natural resources and a large labor pool, Brazil became Latin America's leading economic power by the 1970’s. Brazil is located in Eastern South America, bordering the Atlantic Ocean. It is slightly smaller than the U.S., with bordering countries Argentina, Bolivia, Columbia, French Guyana, Guyana, Paraguay, Peru, Suriname, Uruguay, and Venezuela.
Brazil is both the fifth largest country in the world based off of land size and population (World Factbook). Brazil has used this demographic as a strength in its efforts to find some sort of stability in a very unstable economic climate. Brazil is the largest national economy in Latin America the world's eighth largest economy at market exchange rates and the and 10 in purchasing power parity (PPP) or GDP, according to the International Monetary Fund and the World Bank (World Fact Book). There are many factors to the development of the Brazilian economy, each having an impact, but the development is not complete.
Following the end of the ISI policies, Brazil went through many plans to correct the economy and none seemed to work until the Real Plan made real changes to the country. The Real Plan was introduced in Brazil in 1994 under the presidency of Itamar Franco. After the lost decade in Latin America and the many economic issues that had not been fixed in the country, the Real Plan was introduced. One of the major issues of the nation was the inflation, which was believed to be caused by the inertial inflation phenomenon (Joffe-Walt). Inertial inflation is a situation in which all the prices in the economy are continuously adjusted in comparison to an index of prices by force.
However, more goes into controlling inflation than just the interest rate. A big factor in Brazil’s inflation rate is their infrastructure. When domestic production grows, Brazil faces transportation issues which causes the offer to stagnate. Once it stagnates the demand grows and puts an upward pressure on prices and therefore increasing inflation. In order for Brazil to control their inflation there needs to be a significant and constant development in infrastructure. Infrastructure plays big role because Brazil is one of the largest countries in the world in terms of area and population. A higher population leads to higher demand for certain goods and puts a lot of pressure on the inflation rates and contributes to why inflation historically