BRAZIL HAS THE POTENTIAL TO BE AN ECONOMIC BEHEMOTH. BUT A NUMBER OF FACTORS HAVE LEAD TO A DISMAL PRESENT. UNCOVER THOSE NOW,
Brazil is a country which I have always admired. Its pristine nature. Kind & humble people. Football style (who doesn't love samba!). But its lack of economic progress has been difficult to digest. It has all the ingredients to become an economic powerhouse. Young workforce. Strong industrial base. Transition to services( 70% of GDP).
BUT A NUMBER OF FACTORS HAVE PREVENTED ITS RISE:
1. POLITICAL INSTABILITY
All the presidents of Brazil since 2003 have been proven guilty for charges of corruption. Be it Lula, Dilma Rouseff or Michel Temer. Only the current far right & highly controversial President Jair Bolsonaro has not been proven corrupt. This has been damaging for public morale in this South American nation.
LULA & ROUSEFF: 2 CORRUPT PREZ (source the telegraph)
2. INDUSTRIAL CHOICES
If we look at the major exports of Brazil, we can notice that the goods are volatile i.e. their demand can change dramatically. These are also not exports which can bring huge volume (except automobiles). So this does not give a good steady growth to the GDP as the demand for these products can fluctuate easily. This is not good as GDP growth has also fluctuated.
GDP GROWTH GRAPHED (source Quora)
3. EASE OF BUSINESS. & CORRUPTION
Brazil ranks a lowly 124th in the ease of doing business rankings out of 180 countries.
This is not good as it leads to lower FDI and weaker foreign exchange reserve. To understand its economic implications in detail, click here. Corruption is an issue in every developing economy. However in Brazil, it is more rampant and takes place on a huge scale. Transparency International's 2016 Perception index ranks the country 79th place out of 176 countries. This is a huge blow as taxpayer's money fills private pockets rather than being utilised for public welfare.
A DETAILED ANALYSIS ON CORRUPTION (source researchgate)
I BELIEVE THESE ARE ISSUES WHICH BRAZIL CAN OVERCOME & MAXIMIZE ITS POTENTIAL BY:
Diversifying its industrial base to overcome fluctuation in economic growth. (eg. capital goods industry)
Enhancing ease of business like BRICS counterpart India to attract more foreign companies and exports.
Try to decentralize power of governance by giving more autonomy to civi bodies for faster development.
Reduce gang violence by means of better education and opportunity.
Enter into trade agreement with emerging economies and established economies alike as its present export structure is dominated by USA & CHINA.
EXPORT STRUCTURE (source timbre trade portal)
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TCHAU!
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