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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For the government to overcome deficiencies efficiently in the sectors of industry, the private sector must have an active involvement in capital investment and creation of services. Brazil’s potential in a global market is set back by inefficiencies in infrastructure that turn away private investment.
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
Larry Rohter was a journalist in Brazil for 14 years and from his experiences he offers in this book some unique insights into Brazilian history, politics, culture and more. In 10 topical chapters Rohter’s easy-to-read book provides a look at Brazilian history and the extraordinary changes the country has undergone -- and is still undergoing. Rother covers many significant issues, but several stand out more than others. Namely: the country’s history, culture, politics, and finally its economy/natural wealth.
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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
Filh, Alfredo Saad. "Neoliberalism, Democracy, and Development Policy in Brazil." DEVELOPMENT AND SOCIETY June 2010: 1-28.
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 increasing currency stability, international companies have heavily invested in Brazil over the past decade. According to CIA World Factbook, Brazil had 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. 2.
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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.
Machado de Assis." Brazilian Literature (1922). Rpt. in Twentieth-Century Literary Criticism. Ed.
In the current economic times the development and growth of any economy has come to a near stop or at least to a drastic slow down. The face of the global economic environment has changed and many new countries are starting to change the way their country and the rest of the world does business. One such nation is Brazil, who has turned around their own economic troubles and is becoming one of the fastest growing economies in the world (World Factbook). Brazil has started developing its economy and using the opportunity to achieve a level of respect in the world.
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.
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