Brazilian Economy Term Paper

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Brazilian Economy

When giving scholarly consideration to the rise and fall of the Brazilian economy over the past fifty or so years, it is vitally important of course to examine the economy in the context of government, politics, and the international economic climate. The reason for the great interest taken in the Brazilian economy is because it is the largest economy in Latin America and among the ten biggest in the world. Locating the information for a quality analysis of Brazil's economic history is not problematic; there is a wealth of solid material, including the Joseph A. Page book, The Brazilians, and numerous scholarly articles.

Page's book is presented in great detail, beginning with a realistic "Introducing Brazil" chapter (4-6) in which Page grimly describes how a once optimistic nation now is crime-ridden, so poverty-stricken that "the social fabric is tearing to shreds," with a "yawning chasm" separating "haves" from "have-nots." Economically, Brazil suffers from high inflation rates and still is coming to grips with the "relatively recent shift" from a "primarily rural to a primarily urban society."

Political sophistication and economic prosperity in Brazil, Page continues, was "stunted by two decades of military dictatorship (1964-1985)" and has a long history of "corruption." Indeed, Brazil is a "leasing producer of human misery," Page writes, as a Brazilian baby dies every six seconds from "a diarrhea-related disease." Every thirty minutes one Brazilian contracts leprosy and another Brazilian contracts tuberculosis, Page asserts. The misery goes on and on in this chapter, so clearly, the psychology of positive thinking has had a rough time gaining a foothold in a nation with so many social and political ills. On top of that, despite the image that many Americans have of Brazil as a liberated society in terms of social and personal mores and values Page insists Brazilians have extremely repressive attitudes about sex.

Among the initial industries that pumped life into the Brazilian economy was sugar cane, but there were not enough Portuguese colonists, nor native Brazilians, to do the work, so slaves were brought over from Africa beginning in 1538 (61). They were brought in huge numbers; 3.5 million Africans were put into slavery in Brazil over a period of 300 years, Page writes. That number is "six times" the number of slaves shipped to the U.S. The treatment of the male slaves in Brazil appears to be very much like the way in which slaves were treated in the U.S. -- where cotton was the crop that drove the early American economy -- which was "appalling ... like beasts of burden." The women were "forced to slake the carnal appetites of their masters."

Corporal punishment "at times sunk to the level of blatant torture" (61). And still today, Page writes (60), " ... racism deeply permeates Brazil's social fabric"; and of every 10 Brazilians, four are black, but "out of every ten poor Brazilians, six are black." On page 86 the author points out that in terms of national priorities, "Brazil's elite have always put their own comfort and enrichment ahead of the native Brazilians' struggles to preserve their way of life."

Blacks from Africa were not the only peoples forced to change lifestyles in order to satisfy the economic strategies of the Portuguese. The native Indians were subjected to "involuntary servitude" (87) to work the sugar plantations, which had a "catastrophic impact on native Brazilians." The arrival of more Portuguese and other Europeans, and the slaves brought in, forced some tribes of native people inland, and "put them in conflict with other tribes." The native Indians helped European settlers (conquerors) in other ways: they provided "indispensable service in the opening of the interior of Brazil" (90) through "native guides, bearers, hunters and canoers." Without those natives to provide that help to Europeans, explorers "could never have penetrated the vast reaches of the Amazon basin ... [nor] have pushed into the hinterlands of central and southern Brazil."

Those same Indians who helped Europeans push into the rainforest and into central Brazil also helped build and maintain large cattle ranches and diamond and gold mines; those developments contributed significantly to the economy of Brazil at that time. Many of the Indians paid a heavy price, however; " ... The spread of diseases such as influenza and smallpox," brought and transmitted by Europeans and Africans, for which the Indians had no resistance, "took a frightful toll" (91).

Around 1840 a boom began in the tapping of rubber trees that "would convulse the Amazon basin" -- and cause calamity for the Indians -- "for five decades.

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" Though wild rubber trees had flourished in northern Brazil for many years, the liquid taken from the trees wasn't useful on a grand scale internationally until Charles Goodyear (92) invented "vulcanization"; after that, "world-wide demand for rubber skyrocketed."

And "once again" Indians became "targets for a vicious form of de facto enslavement." Rubber tappers were needed, and workers who could "roam the rain forest" and tap rubber trees for their latex. It was Indians who did the work, and "found themselves trapped in debt peonage." When the Indians eventually put up resistance against the servitude they were put into, the "rubber barons" organized a "massacre of some forty thousand Indians" around 1912 (93). Eventually, seeds for rubber trees were spirited out of Brazil, planted in Asia, and thus Brazil no longer had a monopoly on rubber plants.

Among the articles available on Brazil's economy is a piece in the journal Historical Materialism (Saad-Dilho, 2003), which asserts that "the deteriorating performance of the Brazilian economy" over the past twenty or so years results from "a range of complex political-economic constraints." Whereas, between 1949 and 1980, the "annual GDP growth rates averaged 7.3% (3.8% per capita)," and that was among the best economic performances in the world, Saad-Dilho writes. Why the strong growth rate during that period of time?

A very poor, largely agricultural nation, that had specialized in coffee production and in exporting goods, "became a large, diversified and relatively wealthy industrial power" in the fifty years after the Great Depression, according to the article by Saad-Dilho. Brazil was exporting aircraft to the U.S., construction technology to the Middle East, and "durable consumer goods to China." The success Brazil had in those 50 years, however, could not be maintained. A faltering economic growth in the 1980s evolved into "prolonged stagnation"; and in the past 20-some years, the rate of economic growth has slowed down to 1.8% per year.

Indicators are not getting stronger for Brazil, and indeed, notwithstanding the enormous productive potential of this giant nation, "more than fifty million people currently live below the poverty line," Saad-Dilho continues. In the absence of a change in the political structure of Brazil, a better life for those fifty million Brazilians isn't likely to be realized.

Saad-Dilho writes that it is "unlikely that the Brazilian economy will perform well in the near future," under the stewardship of recently elected President Luiz Inacio Lula da Silva (in October, 2002). Several economic problems that Lula faces, according to some economists, are: "resource misallocation and lack of competition under import-substituting industrialization (ISI)" policies; "large fiscal deficits" and state-owned enterprise expansion during the military regime; "widespread corruption at different levels of government."

Other economists, according to the Saad-Dilho article, believe the sluggish Brazilian economy can be blamed on "under-consumption due to the concentration of income" among just a few in a "highly unequal society."

While he agrees that all the above-mentioned problems contribute to Brazil's woes, Saad-Dilho believes that two major flaws in the economic system -- that kicked in during the early 1980s -- need to be pointed out: one, the "inefficiency of the financial system" (Brazil has been "unwilling or unable to fulfill the funding requirements of a rapidly expanding manufacturing sector"); and two, "the Brazilian state was never strong ... [rather it was] institutionally disarticulated, and unable to impose a consistent set of long-term policy priorities." Also, the "oil shocks and the international debt crisis" made the balance of payments worse while social conflicts were growing more intense, "political instability" was becoming endemic, and the military ruling government failed to establish any worthwhile / long-range policies with reference to economics.

Another article, called "Brazil's New Capitalism" (de Onis, 2000), in Foreign Affairs, claims that Brazil's "robust growth came to a halt in 1980" when its economy was slammed by "extravagant bouts of inflation." Also, the nation had "a mountain of unpayable foreign debt," vast corruption, and a "chronic waste of capital." Brazil's ability to borrow money from other nations "dried up during the debt crisis of the 1980s," de Onis writes, and the nation has not sustained growth of any substance since then.

There have been bursts of economic sunshine piercing down through the heavy clouds, though, according to de Onis. In fact President Cardoso got re-elected in 1998 partly because he had put in place the "1994 Real Plan," which whittled down inflation somewhat and boosted.....

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