Brazil's economy is thriving, yet real development can be more complex than economic growth
There is more to Brazil than the Amazon Rainforest and favelas. Brazil is a country on the verge of change. In the past it has failed to live up to the hype of becoming a new superpower and it is not yet able to compete on the world stage. Yet the situation is changing. The Brazilian joke: ‘Brazil is a country of the future; and always will be…’ is perhaps wearing thin.
In this article we firstly take a look at the thriving economy and reasons for the recent growth. However real development is more complex than economic growth.
This article highlights the development challenges for Brazil and encourages thinking about what the future holds for Brazil and asks whether it really will become a superpower.
The themes in this article relate to:
Development and inequalities
Energy security and environmental impacts
Superpowers geographies- theory of emergence, implications of rise
Characteristics of emerging superpowers
Strong economic growth
Access to key resources, especially fossil fuels
Regional power and influence.
(Source: Dunn et al, 2009)
Brazil has all the characteristics of an emerging superpower yet it is China and India that dominate discussions of superpower geography.
Brazil is booming: the rise of economic growth
Will the party be crashed in Brazil?
While countries of the ‘rich North’ have been worrying about recessions and slow rates of economic growth, Brazil has been concerned with the exact opposite; how to manage, and sustain, the rapid economic growth. Brazil is the largest economy in South America and the first quarter of 2010 showed that Brazil’s economy grew by 9%, the fastest pace since 1996. This growth is expected to average at about 7% over the year and is expected to slow eventually. For now, the carnival party is in full swing and the current growth is being embraced by the government and Brazilian citizens. A feeling of prosperity is growing and Brazil is on the up (Independent, 09 July 2010).
Known as one of the BRICs (Brazil, Russia, India and China), a term coined to reflect the potential economic growth and development in these huge nations which sit between the ‘rich north’ and the ‘poor south’, Brazil has often been cited as a country which has failed to live up to the hype. However the current boom indicates fast-growing consumer markets, rapidly increasing commodity exports and foreign investment which has tripled in the last decade (Telegraph, 02 October 2010). GDP per capita is $10,200 (2008) which is nearly double China’s and millions are escaping poverty. For some this growth is surprising “I didn’t think I would see this in my lifetime. I’m 45 years old and experienced the military dictatorship, the hyper-inflation and all the other problems. The country has changed” Marcelo Moura, a partner in one of Brazil’s largest law firms. This shows just how rapid the growth has been (Inside Brazil, Guardian supplement).
October 2010 saw the election of Brazil’s first female president Dilma Rousseff. Brazil’s large democracy is viewed positively on the world stage. Rousseff follows President Lula da Silva (known as Lula) who was a very popular leader with an 80% approval rating; he is credited with combining sound economic policy and transformation of the welfare system. She aims to build on Lula’s success; under his leadership 28 million people have been lifted out of poverty and the number suffering from hunger has fallen by more than half to 10million, safely putting Brazil on target to meet its Millennium Development Goals (MDGs) (Guardian, 21 September 2010) . That is not to mention the booming economic growth Brazil is currently experiencing and securing, not only the 2014 World Cup, but the 2016 Olympic and Paralympic games, which promises billions of pounds in investment in infrastructure and tourism, as well as developments in global relations (Telegraph, 02 October 2010).
Economic policies have maintained growth and created 8 million jobs since 2003. The minimum wage has risen by 45% and so this improved standard of living means that a significant proportion of the 193.7 million Brazilians are spending money. Spending money on washing machines and microwaves, fashion and mobile phones. It is the increasing demand for products from the new middle classes which is driving the domestic markets. 32 million people have joined this group in the last decade and the lower middle classes can now afford to buy houses, thanks to government schemes offering cheap loans (Bloomberg BusinessWeek, 6 August 2009).
Brazil relies heavily on exporting commodities thanks to its large scale agricultural system and abundance of natural resources; it exports more meat than anywhere else. Trade links are strengthening; China shops in Brazil, in fact it provides 14% of Brazil’s income from exports. It is the iron ore reserves and the discovery of potentially the largest oil field in Latin America, as well as the level of technology invested in bio-fuels which makes trade with Brazil an attractive proposition for China and the USA in particular. With increasing pressure on global energy resources Brazil is well positioned to be a leader in the energy export market, further influencing its power on the world stage.
Despite the success of the last decade and the party atmosphere that Brazil currently experiences, there are challenges to development and concerns that Brazil’s bubble may burst.
For many the greatest challenge for Brazil is the gap between rich and poor, identified by the World Bank as one of the worst regional inequalities in the world. Champagne corks may be popping amongst the wealthy in Rio de Janiero but the skyscrapers merely provide a backdrop for the millions living beneath them in the favelas where squalor, unemployment and drug gangs are rife. 7.5% of the population live below the poverty line (Less than US$1 per day) and inequality remains a feature of Brazil’s social landscape (Inside Brazil, Guardian supplement).
Welfare reform has been based on the Bolsa Familia programme, a scheme that gives the lowest income families a credit card with $70 a month on the condition that the children go to school. The Fome Zero (Zero Hunger) programme was also set up to reduce the number suffering from malnutrition. These schemes have been very successful and around 12 million households (50 million people) benefit from the system which cost $6 billion, 2% of government spending in 2008. Most of those living in poverty are from poor peripheral regions such as the North East rather than the core in the South East. Despite the expense it is the world’s biggest welfare system of its kind. The concern is whether or not this can be maintained; some see it as unsustainable and of great cost to Brazil (Guardian, 21 September 2010). While 36 million people live in poverty and suffer from malnutrition, can a country be considered ‘rich’ or a ‘superpower’?
For secure long term economic growth Brazil needs to diversify from exporting primary commodities to manufactured goods including new technologies. To achieve this it needs a well-educated workforce. Many consider the lack of investment in education as a real hindrance to long term development. “Education is the biggest need in Brazil and the biggest opportunity. If we speed up education programmes Brazil will be less reliant on welfare… a country is only effective when it assures job opportunities and a job is only assured through education.” Joao Doria Jr works with a group that promotes education opportunities in Brazil (Inside Brazil, and Independent 09 July 2010). Literacy rates have improved from 83.2% in 1995 to 88.6% in 2009, for many this is not improvement enough. Despite the population having good access to schools, the quality of the education system is considered sub-standard and as a result Brazil has a below average literacy rate compared to the rest of Latin America. Many companies are investing in training and education amid complaints about the quality of the national system (Inside Brazil, Guardian Supplement). Can Brazil maintain sustainable long term development without real investment and reform of the education system?
For business to thrive it needs modern and efficient infrastructure. When entering Sao Paulo’s international airport, you would be forgiven for thinking you had arrived in a third world country rather than one on the cusp of global superpowerdom. Only 10% of roads are paved and they are congested. Despite securing the World Cup bid for 2014, Sao Paulo will not host a match because FIFA regards the development plans as inadequate. Of course, developing infrastructure is relatively easy compared to the challenges posed by poverty, education and inequality but it needs to be effective to attract investment. Will hosting major sporting events provide the kick-start that is needed to improve infrastructure?
Global politics remain a challenge for Brazil. It has still not found its position on the world stage despite being the dominant force of Latin America, having trade links with the USA and China, as well as forming strong relations and trade ties with other Southern countries in Africa. President Lula campaigned heavily for Brazil to have a permanent seat on the UN Security Council, which he failed to achieve (Independent, 09 July 2010). Does a country have superpower status without dominance in global politics?
The last but by no means least great challenge for Brazil is its position as guardian of large swathes of Amazon rainforest. By 2005 the government reported that one fifth of the Amazon had been cleared for development. This global treasure represents a challenge for Brazil as it struggles with the conflict between economic development and environmental conservation. In recent years Brazil has implemented legislation to tackle deforestation and protect areas of forest such as the Jau National Park however there is increasing pressure to relax laws in order for economic development to progress. Some see environmental issues as a new opportunity for Brazil; they are amongst the leaders in bio-fuel technology.
Brazil has developed bio-fuel technology over the last 30 years and they are one of the biggest producers of bio-fuel from sugar cane which is more efficient at producing ethanol than corn, used in the USA. President Lula was advocate for bio-fuels stating that they are ‘an effective weapon in the fight against global warming’. This is largely because they produce 56% less greenhouse gas emissions than fossil fuels. Brazil is leading by example; this year it began requiring all fossil diesel to be sold with a minimum 5% bio-diesel mix and it was expected to produce 2.4 billion litres in 2010. There is some debate over ethical issues surrounding farming sugarcane on such a large scale but the development of ethanol as a fuel by Brazilian companies and the bio-fuel infrastructure have won global praise and recognition. Can Brazil be an environmental superpower or is that a contradiction in terms?
No one can deny that Brazil is in carnival spirit at the moment but behind the feathers are great challenges to be met. The country that is the ‘country of the future’ is nearly there, just not quite yet.
What is hindering superpower status?
Vast gap between rich and poor
Expensive welfare system
Poor education system
Lack of political clout
Conflict between the economy and environment
A Level students studying:
Use the article to discuss:
Does Brazil now deserve the title ‘superpower’? Present arguments for and against.
Evaluate the challenges to development for Brazil.
What should be the development priorities for the new President?
What is the relationship between energy security and economic development in Brazil?
[tip:] When considering Brazil as a superpower, consider the status of other ‘superpowers’ at different levels of development for example the USA and China.
When evaluating, include discussion of the strengths and weaknesses before reaching you conclusion.
If you are asked to evaluate ‘relative importance’ it means that you must consider each aspect in relation to each other and also at a range of scales. For example you might consider that social development should be the main priority for Brazil because it affects people at a local scale. Whereas economic development is important for Brazil to compete on a global stage.
This article is written by Vicki Hull a teacher of A-level Geography
Reference: Dunn et al, 2009. Geography, Edexcel A2. 2009. Philip Allan updates
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