The Asian Perspective on Brazil

"Brazil will gain a place as a significant player in the multi-polar international system taking shape since the end of the Cold War simply on the basis of its economic size and material capabilities. However, its potential to influence international outcomes is likelyto be determined more by the capacity of the country’s elites to identify and harness qualitative assets associated with its stable and democratic governance than by any hardpower assets."

This introduction belongs to an article published in Asian Perspective in 2007. What is interesting is that this is a view of Brazil from the position of other emerging economies and not Europe or the US. The article highlights all the material advantages Brazil has - but these have been mentioned elsewhere.

What is more interesting is that Brazil is placed as a "soft power", i.e. it may shape politics due to its close ties to the western world, it's sheer size and it's focus for decades on economic integration - in the region and globally. Rather than going for global domination, Brazil has sought to find it's place as a partner.

The early participation in peace-keeping missions (such as Haiti), it's hosting of the Earth Summit in Rio in 1992 and it's vast (currently) non-quantifiable ressources of Oxygen and Water give it additional clout, especially if it continues to play by these rules.

The article finishes with what has to be done and it highlights the weaknesses in (too) big government and inefficiency, inequality, lack of education, high taxation and poor rate of investment. However, if overcome, Brazil would be set to become a true BRIC.

Yes, Brazil still has enormous opportunities and recently I had a long discussion with my wife and we came to the (very German) conclusion that the only impediment that Brazil was not "there" yet (or close to there) was that the country was tripping over it's own feet and that it had not yet defined what "there" was. The potential exists and opportunities are huge and Brazil has advanced greatly over the past decades - but the elemental challenges still have not been reliably adressed: Education, Inequality, Taxation, Infrastructure and Bureaucracy.

The Shame of Being the World’s 7th Largest Economy 2011,

Worth a read: (Article from Brazzil Magazine, written by Professor Cristovam Buarque Monday [I would vote for him!], 18 April 2011)

In the 19th century, Victor Hugo refused to shake hands with Pedro II, the emperor of Brazil, because he was the ruler of a country living comfortably with slavery. Today, Victor Hugo would not shake the hand of a Brazilian to congratulate him for achieving seventh position among the international economic powers while living so comfortably with the surrounding social tragedy.

Continue here at ExpatBrazil

BRIC(S) - Why South Africa?

I don't get it. Brazil, Russia, India and China all make sense from any perspective (and were coined in the original Goldman Sachs acronym). But South Africa? South Africa is not in the top GDP nations now and will not be in 2050. South Africa has no important industry to mention, no significant impact on geopolitics and does not fit in any major KPI. Even Jim O'Neill, who "invented" the BRIC doesn't see why this makes sense.

Therefore I see only two reasons why South Africa is now in the club, and not Mexico, Turkey or Indonesia (in my humble opinion far more suitable for the group).

1. The BRIC(S) need a foothold in Africa... or China wants to ensure that it's major target for foreign direct investments is covered by a strategic partner. (That is what O'Neill also believes) But if we are talking geopolitics Indonesia, Mexico and Turkey make at least as much sense.

2. BRICS sounds much better than BRICI, BRICT or BRIMC.

But I will not get sidetracked any further... back to Brazil.

Brazil, to be or not to be.

What I like about the Pearson Publishers, is that they actually manage to have clear, critical and sometimes even contradicting opinions if you look at their two flagship publications, the FT and The Economist.

If we look at a recent The Economist article first, called "Four Reasons to Believe in Brazil", from July, the outlook is outright positive. The highlights are commodities and the global commodity hunger, the second oil (actually also a commodity, but the focus here is on self-subsistency and strategic importance in an increasingly energy-hungry world), demography (i.e. a major amount of people joining the work force and slower birth rates kicking in meaning infrastructure is set for the kids there and more people there to pay for it), and urbanisation, where wages usually are higher and access to education, infrastructure, etc. are much better.

Mr. Wolf from the FT takes on a much more pessimistic view in his June article "Why Brazil must try harder". Commodities also plays a significant role here, but with a highlight that while exports in Brazil have increased, the share of manufactured goods still remains low. This is similar to what I recently heard from a presentation of the Trade Ministry at the São Paulo Chamber of Business. The share of commodities in exports has actually increased. All of this still leaves Brazil at a lower development level, as industry development is not significantly challenged if all you have to do is dig out the stuff and ship it to China.

Most interesting, however, is Mr. Wolf's comparison of Brazil to two other BRICs, China and India. Brazil has lower ratios of trade, savings, exchange-rate ratios and population, and lower growth, meaning that while Brazil may have gained in the world, it has fallen behind China and India in world power over the past decades.

I believe it is exagerated to say, that this means that Brazil will not be of any significance in the future, but Mr. Wolf does have a point - especially if we consider the massive infrastructure needs the country has and the low level of savings, there is something Brazil must do, to catch up.

Brazil takes off

WHEN, back in 2001, economists at Goldman Sachs bracketed Brazil with Russia, India and China as the economies that would come to dominate the world, there was much sniping about the B in the BRIC acronym. Brazil?

Read more of this excellent and very balanced special, here.