Brazil
is becoming an
economic and political
superpower
By
Jonathan
Power
TFF Associate
since 1991
Comments to JonatPower@aol.com
January 27, 2006
SAO PAOLO - It was Charles de
Gaulle who once said, "Brazil has a great future. But it
always will have." Yet times are changing in Brazil and
it is no longer inconceivable that Brazil will emerge in
the next few decades alongside India and China as one of
the world's economic superpowers. As Dilma Roussef, chief
of staff to President Luis Ignácio da Silva,
"Lula", put it to me with only a touch of hyperbole,
"It's more difficult to make this economy not grow than
to make it grow."
Can Brazil move itself from Third
World to First World? Can Brazil, the world's most
successful country in terms of growth in the twentieth
century, repeat this achievement in the twenty-first?
Many, viewing the dismal inflation-consumed performance
of the 1980s and early 1990s, with a currency adding
zeros faster than the printing presses could turn,
believed Brazil could never make it, especially with a
former sociology professor, Fernando Henrique Cardoso,
becoming president followed by a leftist populist, the
present president, Lula. But indeed it is
happening.
Cardoso practised fiscal prudence,
stabilised the currency, and initiated the first real
reforms of Brazil's bloated bureaucracy and feudal
inefficiencies. Lula, to everyone's surprise- a mere six
month's before his election he was calling for Brazil to
renege on its debts- continued the process.
Brazil under Lula has recently
repaid its debts to the International Monetary Fund and
the Paris Club well ahead of schedule. It is running a
fast growing surplus on its trade account, its exports
are booming, growing at a faster rate than China's - in a
range of products from soya to aircraft from mining to
computers. Its economy is growing steadily at around 3 to
3.5%.
This is happening in a country that
is the world's fifth largest both in population and size.
It is highly industrialized country with over 80% of its
people urbanized. The city of São Paulo's economy
is larger than the whole of Argentina's.
Moreover, Brazil is home to the
world's largest tropical forest and Brazil has the
world's largest reservoirs of freshwater and ample hyrdo
electric power. It is self-sufficient in oil and gas.
Brazil has a head start on India
and China. It has been developing in its sometime madcap
way for over 100 years. Between 1960 and 1980 Brazil
doubled its per capita income, an achievement that was
only surpassed by the later growth spurts of the East
Asian countries. Its income per head is almost $8000 (in
purchasing power parity). This compares with China's
$4,500 and India's $3000. If this doesn't give Brazil's
economy with its 170 million people almost quite the
clout as India's and China's with their billion people
each, it certainly gives it a base to stand eye to eye
with them in say 50 years' time, when their growth rates
will inevitably have long slowed and Brazil's should have
cruised for two generations at a comfortable 5%. At the
very least Brazil will outgrow Canada, pace Russia and
leave Mexico way behind.
Ms Roussef says if Lula wins
re-election in October, tax rates will come down,
interest rates will continue to fall and there will be a
public/private push to invest in a substantial increase
in Brazil's energy, steel and paper sectors. There will
be increased financing for construction and housing and
inflation will stay under control.
She readily accepts what the World
Bank has said of Brazil - "there is increasing evidence
that inequality adversely affects growth, undermines,
social cohesion and increases crime." So Lula will
continue to expand his income transfer programme and will
focus his energy on reforming the country's moribund and
inefficient education system.
His principal rival for the
presidency, José Serra, the mayor of São
Paulo, will trump all this, or so he says, partly because
he, as a well known fiscal conservative throughout his
long political career, will have more credibility with
the financial markets and thus can afford to
significantly increase the growth rate and partly, less
beholden to the indulgence of the U.S. than Lula has been
forced to be as a one time Marxist-consorting leftist, he
can up the ante on trade negotiations, confronting
Washington to open up its protected markets.
Brazil has a good chance of
emerging as the world's first economic superpower without
nuclear weapons - on which there is a consensus in all
political corners. It hasn't been to war for 135 years.
It is the most tolerant of countries, one that never had
Jim Crow laws and which abolished capital punishment in
1885. If Brazil succeeds it can only make the world a
better place.
Copyright © 2006 By
JONATHAN POWER
I can be reached by
phone +44 7785 351172 and e-mail: JonatPower@aol.com
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