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Brazil Basics

In order to understand Brazilian issues in-depth, it is useful to begin with a brief overview of the economic, political, demographic and geographical components of the country.

Economics

Brazil has a large and well-developed economy.  Its strong growth and high interest rates have made it a prime spot for foreign investment, however currently it is worried that the real (Brazilian currency) is overvalued.

Brazil’s poverty rate is 6.7%, ranking 65th in the world but only 4th in Latin America (Cuba, Guatemala and Mexico have lower poverty rates).

Brazil has a labor force of 103,600,000, the largest in Latin America and 6th largest in the world.

Labor force by occupation: Agriculture 20%, Industry 14%, Services 66% (2003 estimate).

GDP by sector: Agriculture 5.8%, Industry 26.8%, Services 67.4% (2010 estimate)

Top agricultural products include: coffee, soybeans, wheat , rice, corn, sugarcane, cocoa, citrus and beef.

Top industrial products manufactured in Brazil include: textiles, shoes, chemicals, cement, lumber, iron ore, tin, steel, aircraft, motor vehicles and parts, and other machinery and equipment.

Brazil is the 9th largest producer of oil in the world (only 27th in terms of oil exports), producing more than Venezuela but not as much as Mexico.  However, Venezuela and Mexico export a much larger quantity of oil: 2,182,000 and 1,225,000, respectively, compared to Brazil’s 570,100 barrels per day (CIA World Fact Book).

IMF

It is important to note that Brazil has been one of the countries in Latin America which has severed ties with the International Monetary Fund.  In 2005 Lula de Silva chose not to renew Brazil’s contract with the IMF but rather to “go it alone” in order to fund infrastructure improvements, the funding for which would exceed IMF budget constraints.[1]

Other countries to reject the IMF include Argentina (Kirchner 2005)[2], Ecuador (Correa 2007)[3], and Venezuela (Chavez 2007)[4].

The IMF has a bad reputation in Latin America due to the macroeconomic conditions they attach to loan money to indebted countries.  These stringent free market policies, a type of economic shock therapy, are often criticized for promoting efficiency rather than equity[5],[6].

Development Indicators

Global Competitiveness Index (GCI)

In the Global Competitiveness Index put together by the World Economic Forum, Brazil ranks 58th in the world and 8th in the Americas ranking above its neighbors Paraguay, Uruguay and Bolivia, among others, but below countries such as Chile, Puerto Rico and Costa Rica.  The GCI is based on factors such as public institutions, property rights, ethics and corruption and diversion of public funds.

A list of the Americas ranking is below.  For more information go to: http://gcr.weforum.org/gcr2010/

Human Development Indicator (HDI)

In the Human Development Index, put together by the UNDP, Brazil ranks 73rd overall.  The HDI “measures the average achievements in a country in three basic dimensions of human development: a long and healthy life, access to knowledge and a decent standard of living.” [7]

BRAZIL: Country profile of human development indicators

As seen in the above graph, Brazil falls only slightly below the average for Latin America in HDI trends (in 2010, HDI for Brazil was 0.699; for Latin America and the Caribbean it was 0.706).  Note: annual data for Brazil starts in 2005.

GDP Growth

Below is a graph which illustrates Brazil’s annual percentage gross domestic product growth rate over the past 50 years in comparison with the Latin America as a whole and the world.  Brazil’s GDP growth seems very consistent with the overall Latin American GDP growth rate, and is much less volatile than other countries ranking highly on the CGI Index such as Chile, for example.

Brazil and Chile GDP Growth Rates (% annual)

Politics

The political system of Brazil is categorized as a federal republic.  The current president is Dilma Rousseff; the vice-president is Michael Temer.  President and vice-president are elected on the same ticket and serve a single four-year term.  Brazil is divided into 26 states and a federal district, each with its own governor.  The National Congress consists of the Federal Senate (81 seats – 3 members from each state to serve 8 year terms) and the Chamber of Deputies (513 seat- members elected by proportional representation to serve 4 year terms)[8].

Relating to current events, the president of Brasil, Dilma Rouseff, has seen the resignation of five ministers since her term began in January, four of which were over corruption allegations.  Tourism Minister Pedro Novais, was the most recent minister to resign on Wednesday, September 14th over misuse of public funds.  Other ministers to resign have been Rousseff’s chief minister, and the ministers of agriculture, transport and defense.

For more information, see the following link: http://www.bbc.co.uk/news/world-latin-america-14925248

At the conference “The Politics of Transformation of Brazil” hosted by the Bildner Center for Western Hemispheric Studies last Wednesday, John French suggested that these resignations are not an indication of an especially corrupt government.  He argues that such corruption scandals were present in other administrations such as former president Lula’s, however it was more often treated with passive acceptance as opposed to Dilma’s “house-cleaning” approach.  Joe Leahy on the Financial Times blog concurs, and further explains that the recent scandals have not been indications of regime weakness or instability but rather have reinforced her public image as someone who is tough on corruption.  He writes, “Indeed, the continual flushing out of corrupt ministers will probably only help her popularity, with signs that the public is taking more of an interest than in the past in corruption scandals in Brasília.”

The full article is available here: http://blogs.ft.com/beyond-brics/2011/09/15/dilma-can-afford-to-lose-a-few-ministers/#axzz1Y1VOheDI

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