Brazil has a long history to share with over 110 years of development. Last January 1st, Brazil celebrated more than a century of development with its hosting of the World Cup in 2014 and the Olympic Games in 2016. Brazil has forgotten its remarkable past including its great leaders, incredible engineering projects, and long-term programs that today are meeting the needs of modern world society.
Brazil Developmental History and Climate Change
It is somewhat difficult to imagine that in 1905 the potential of ethanol energy had been just discovered[1]. By 1927, sugar industries were commercializing ethanol fuel motors in Brazil. The pace at which this technology arrived scared contemporary conventional technology. Subsequently, all these new ethanol projects developed by the private sector were retired due to the power of the oil industry.
President Getúlio Vargas was elected in 1930. Through his election came the end of the “Coffee & Milk Policy” which brought about an era of industrialization in Brazil. During his term in office, President Vargas opposed the private sector through the use of the state. He built-up a Brazilian based industry. For example, hydropower at the São Francisco Valley, the National Steel Company (CSN) and the Mining Company Vale do Rio Doce which is today one of world’s leading mining groups. What’s more, he is famous for the creation of Petrobras and the Brazilian Geographic and Statistics Bureau (IBGE, 1938), and the implementation of labor laws in 1939, including a minimum wage, labor rights, paid holidays, and a 48 work hours per week cap.
In 1955, the year that Vargas committed suicide[2], another charismatic leader emerged from Brazilian society, the so-called Juscelino Kubitschek, a man who promised and accomplished his marketing campaign epitomized by the famous sentence, “50 years of development in five.” He was responsible for building Brazil’s Capital Brasilia, a worldwide architecture model. He also brought in the German auto-industry company, Volkswagen. Wanting more, he pushed development to Brazil’s countryside, which is today the largest producer of crops and food in the world.
It was in 1961 that the next president, João Goulart, made a diplomatic mission to Communist China, and proposed land reform. In 1964, oligarchy and military power took over the country.
With the military in power, the country faced more than 20 years of development with an average growth rate higher than 6%. The military government organized a state taxation system, implemented a monetary correction mechanism, and developed a large plan through which state-owned industries collaborated with a centralized government.
The military government’s program: “Populate empty spaces”, brought development to isolated regions of the country. The states of Mato Grosso, Mato Grosso do Sul, and Amazonas are economically independent today because of such policies which were implemented back in the 1970s and 1980s. Among other policies, it installed industries in undeveloped regions of the country. The military also created organisms such as Embrapa (responsible for providing the highest productivity/ha in the world), Embraer (today’s world leader in the private jet market). Projects focused on exports, telecommunications and infrastructure such as Rio-Niteroi Bridge, Manaus Free Trade Zone, Três Marias Hydropower and Itaipú Barrage Hydroelectric dam.
When the 1976 oil crises hit, the military government implemented the energy efficiency program--the National Ethanol Program--and constructed two nuclear power plants in the southeast region of Brazil.
With social pressure for democracy, the oil crisis, and an inflation rate reaching over 100% a year; the military lost its legitimacy over Brazil’s society and returned the power to the people.
In 1988 the will of direct elections conquered, a new constitution was made. Sadly, this was accompanied by hyper inflation reaching over 1000% per year, and the failure of a policy that froze prices proposed by the government of José Sarney, the current president of the Senate.
The fight for political and economic stability
In 1990 Brazil opened-up its market to foreign goods and blocked citizens’ savings. It was under the government of Fernando Collor that the evidence that democracy in Brazil indeed took place. The impeachment of Collor[3], at that time, Brazil’s inflation reached 1157% a year, with a high of 2708% in 1994. In the second semester of the same year, the Stability Plan proposed by Fernando Henrique Cardoso (FHC), at that time as Minister of Finance, brought to Brazil the financial stability that was necessary to lead to today’s success.
Data Source: FGV (Fundação Getúlio Vargas)
FHC was elected as President, but the stability plan alone was not enough to keep the Brazilian Economy safe, it was necessary to implement economic reforms, introduce regulation to the economy, privatize state-owned companies, and open the market to foreign investments. FHC implemented the regulatory system in Brazil as divided by 5 main agencies:
(1) Anvisa, responsible for Food and Drug Safety
(2) Aneel, responsible the Electric Energy Sector
(3) Anatel, responsible for the communication sector
(4) ANP the agency responsible to regulating the Oil, Natural Gas and Biofuel Markets
(5) CADE is responsible to guide, monitor, prevent and investigate economic power abuses, being responsible for judge and repress such abuses.
The regulatory system in Brazil has been very active after the privatization of state owned enterprises. Companies such as Vale do Rio Doce, Embraer, CSN, and a set of electric enterprises were privatized. Reelected, FHC led a country facing many international crises that brought much instability: the Mexican Crisis in 1995, the Asian crisis 1997, the Russian Crisis in 1998, and the Terrorism Crisis in the USA in 2001. In spite of all this world instability, Brazil had a trade balance surplus in 2001, and became the largest exporter in a number of commodities.
2002 came with a big threat land in the country, the popularity of an extremist left wing party, and a spectre of instability surrounding Brazil’s economy. The market thought Lula could change a whole set of policies that had been implemented by FHC. The country’s risk index hit records higher than two thousand points, the real currency rate became weaker, foreign investment was reduced by ridiculous amounts, and the country’s stability was again at risk.
Brazilian society teemed for Lula’s victory. Many rumors have been surrounding his government, but his decision to appoint Henrique Meirelles as President of the Central Bank[4] should indicate to the world that big economic changes are not in his plans.
economic and political stability
In 2005, Russia signed the Kyoto Protocol. The environmental debate had come to the world scene, and Brazil played an important role in the UNFCC agreement with the Clean Development Mechanism, as a part of the Carbon Trading System. This decision has brought opportunities for emerging economies to participate in the fight against climate change.
Brazil is as an example for the whole world in terms of its renewable energy use. The implementation of ethanol in 25% of the gasoline consumed in Brazil, the option to use ethanol or gasoline in Brazilian flex-fuel cars[5], and the development of bio-diesel[6] as a substitute for convectional oil diesel are examples that may teach valuable lessons to the world. Indeed, it shows that Brazil was prepared to tackle climate change a century before any other major developed economy.
The bio-diesel policies have pushed the north and northeast region of Brazil to become the largest producer of bio-diesel through the use of different sources of crops, “dendê, Pião Manso, Mamona, and others” differing from conventional ones such as soy beans which have a lower oil productivity than those firstly mentioned.
Moreover, in 2007, Brazil discovered that it was surrounded by the 9th largest oil reserve in the world, the so called pre-salt region. Even though, the Brazilian government persists in the use of renewable energy as its major energy source.
In 2008, Brazil received the investment grade and Brazil will host the Football World Cup in 2014 and the Olympic Games in 2016. The government has announced investments above US$500 trillion.
Unfortunately, the latest crisis came and broke the uprising growth rate of Brazil. Only China, Brazil, and India resisted the big shock of a crisis that squeezes the world even at present. While banks were everywhere bankrupting, in Brazil, financial institutions were attaining record profits. A strong domestic market has sustained its economy through a combination of good macro-economic policy and a sophisticated regulatory system resulting in wealth generating market competition.
Brazil’s International Relations
Brazil is currently commanding a U.N. stabilization mission in Haiti. In Lula's term, the ministry of Foreign Relation has made cooperation with Portuguese speaking countries such as Angola, São Tomé and Principe, and Mozambique. More recently, Brazil has been responsible for the restoration of peace in East Timor.
Characterized by multilateral principals, Brazil’s policies focus on peaceful dispute settlement and non-interventionism in other country’s affairs. It has push for regional integration between Latin American countries through MERCOSUR. Further, it is negotiating a seat in the United Nations and recently increased ties with developing countries in Africa, Asia and Middle East.
In the Mercosur GDP, Brazil contributes for 68.4% of the group, being the largest economy with a GDP of U$1,980 Trillion, while the MercosuR GDP is U$2,895 Trillion. In Latin America, Brazil contributes with 54% of the GDP as can be observed in the table below.
Latin America countries
| País | Population | Territory | Billion USD | GDP per capita |
| Argentina | 40.403.943 | 2.766.889 | 212,595 | 16.08 |
| Belize | 314.275 | 22.966 | 2,307 | 7.8 |
| Bolivia | 9.627.269 | 1.098.581 | 11,221 | 2.931 |
| Brasil | 191.480.630 | 8.514.876 | 1,998,706 | 18.073 |
| Chile | 16.800.000 | 756,950 | 145,845 | 12.811 |
| Colômbia | 44.379.598 | 1,141,748 | 135,883 | 8.26 |
| Costa Rica | 4.327.000 | 51,100 | 21,466 | 11.862 |
| Cuba | 11.382.820 | 110,861 | 40 | 4.1 |
| El Salvador | 6.881.000 | 21,041 | 18654 | 5.6 |
| Equador | 13.363.593 | 272.045 | 41,402 | 4.835 |
| French Guine | 190.842 | 86,504 | -- | -- |
| Guatemala | 14.655.189 | 108,890 | 30,299 | 4.335 |
| Haiti | 7.500.000 | 27,750 | 4,473 | 1.84 |
| Honduras | 7.205.000 | 112.492 | 9,072 | 3.3 |
| México | 106.202.903 | 1,958,201 | 840,012 | 11.369 |
| Nicarágua | 5.487.000 | 130,000 | 5,301 | 3.1 |
| Panamá | 3.232.000 | 75,517 | 17,103 | 8.593 |
| Paraguai | 5.734.139 | 406,752 | 9,527 | 5.339 |
| Peru | 28.675.628 | 1.285.215 | 107 | 7.856 |
| Dominican Republic | 8.900.000 | 48.734 | 31,6 | 9.377 |
| Uruguai | 3.415.920 | 176.215 | 19,127 | 11.969 |
| Venezuela | 27.730.469 | 916.445 | 181,608 | 7.48 |
Souce: http://pt.wikipedia.org/wiki/America_latina, 2006.
Today, Brazil’s largest trading partner is China with a trade chain of US$39 billion in 2008, followed by United State US$32 Billion. China mainly imports commodity products from Brazil. On the other side, Brazil imports a larger variety of products from China; lately industrial equipment has been more observed on the list of goods imported from China. With the Brazilian currency over-valued, entrepreneurs have taken the opportunity to modernize their industries. Brazil’s trade relations may be observed in the table below.
| Brazil's Trade Balance with China - FOB US$ | ||||
| Year | Export | Import | Balance | Trade Chain |
| 1996 | 1.547.122.644 | 1.463.911.152 | 83.211.492 | 3.011.033.796 |
| 1997 | 1.553.704.664 | 1.576.473.065 | -22.768.401 | 3.130.177.729 |
| 1998 | 1.313.273.583 | 1.405.626.923 | -92.353.340 | 2.718.900.506 |
| 1999 | 1.118.472.837 | 1.147.473.472 | -29.000.635 | 2.265.946.309 |
| 2000 | 1.560.974.424 | 1.581.620.417 | -20.645.993 | 3.142.594.841 |
| 2001 | 2.372.009.983 | 1.678.781.050 | 693.228.933 | 4.050.791.033 |
| 2002 | 3.048.383.744 | 1.852.687.419 | 1.195.696.325 | 4.901.071.163 |
| 2003 | 5.228.174.063 | 2.404.708.314 | 2.823.465.749 | 7.632.882.377 |
| 2004 | 6.211.104.217 | 4.057.150.515 | 2.153.953.702 | 10.268.254.732 |
| 2005 | 7.724.851.084 | 5.748.780.760 | 1.976.070.324 | 13.473.631.844 |
| 2006 | 9.434.884.702 | 8.660.197.955 | 774.686.747 | 18.095.082.657 |
| 2007 | 12.085.133.631 | 13.229.050.717 | -1.143.917.086 | 25.314.184.348 |
| 2008 | 18.214.203.332 | 20.840.891.969 | -2.626.688.637 | 39.055.095.301 |
| 2009 | 20.508.630.925 | 14.942.447.323 | 5.566.183.602 | 35.451.078.248 |
Source: Alice – Ministry of Development, Industry and International Trade
Brazil’s Social Programs
The most remarkable achievement of Lula’s term is not found in economic performance, sustainable energy, solutions to climate change, or the pre-salt region; but in the social programs that have been implemented in the least developed regions of the country. With a combination of social programs, Lula has brought development to numerous regions that before had no opportunity, hope or health.
Lula expanded social programs that began in the Cardoso government such as:
· Bolsa-Família (Family Assistance) – F. Cardoso Government
· PETI Child labor Eradication Program - F. Cardoso Government
· Light for all - Lula’s Government
· Brazil Literate – Young and Adult Education – Lula’s Government
· ProUni – Universalize access to Undergrad education – Lula’s Government
· Solidarity Economics and Cooperatives – Lula’s Government
These major programs have provided a push in the farthest regions of the country. With a small amount of money, it has increased the consumption of families in local communities, mainly with consumer goods and allowing families to have better diets, keeping kids in school, and avoiding child labor. Of all programs implemented by the Federal Government, the most successful one has been the Solidarity Economics and Cooperatives program. It has increased by so much that the number of enterprises registered under this economic program has reached 15,000 in 2005 where 56% of them are located in the least developed region of the country, the northeast.
Average Month Income of EES[7] Goods
| Products Distributed in Activity | Monthly Income R$* | % Monthly Value | |
| Agrobusiness Activity, Extractives e Fishing | 227.185.791,54 | 46,2% | |
| Food and Beverages[8] | 98.227.398,19 | 20,0% | |
| Financial and Credit Services | 82.055.700,75 | 16,7% | |
| Industrial Production (all kinds) | 29.404.555,00 | 6,0% | |
| Service (all kinds) | 20.319.691,22 | 4,1% | |
| Artifacts Craft[9] | 13.624.943,08 | 2,8% | |
| Textiles and Clothing Production | 9.307.757,59 | 1,9% | |
| Collection Services and Recycling Materials | 4.430.797,12 | 0,9% | |
| Mineral Production | 1.977.436,33 | 0,4% | |
| Herbal Medicines, Cleaning and Hygiene | 935.211,00 | 0,2% | |
| Production and Other Services | 3.981.755,18 | 0,8% | |
| TOTAL | 491.451.037,00 | 100,0% | |
| * out of all EES, 31% Did not declare the total production income value Source: Atlas da Economia Solidária, 2005 – SENAES/MTE | |||
The main characteristics of the Solidarity Economics program are cooperation, self-management, economic feasibility and solidarity. These enterprises have reached more than 90% of the municipalities of Brazil. 50% of these enterprises are located exclusively in rural areas[10], where 44% of their activity is related to agriculture, extractives and fishing, and has proven successful in the majority of cases[11].
Conclusion
The main concern of Brazilian society has been economic and political stability. As can be observed, the country has for years been growing without a certain level of political and economic stability. Indeed, Brazil had two dictatorships in the 20th century while having to deal with serious inflation.
After the stability plan of the FHC Government, Brazil has faced a series of tests such as the Mexican crisis of 1995, the Asian Crisis of 1997, the Russian Crisis of 1998, and the Terrorism Crisis in the USA of 2001. Further, the government transition between FHC and Lula presented an additional challenge. Since these crises have passed, international confidence in the Brazilian economy has grown tremendously.
Brazil’s investment grade given by major rating companies, the profitability of its financial markets, and its windshield against the latest financial crisis has proven that Brazil is the major economy in Latin America. It is a safe place for foreign investment, and a forth coming superpower into the world’s geopolitics, together with United States, China, and India.
The year 2010 is coming and Brazil is once more commemorating its recent successes, the World Cup in 2014 and the Olympic Games in 2016. The government has announced investments of over U$500 billion in infra-structure.
Brazil’s renewable energy policies serve as a model to countries around the world. Its social programs show that Brazil has independently developed a model to meets its own needs and stand on its own.
In terms of international relations, the variety of countries that Brazil has established relations with and size of the trade between Brazil and China, are signs that the old path of dependence on major developed countries has been overcome, truly affording Brazil its own international sovereignty.
references
Minitery of Minning and Energy – Plano Nacional de Energia 2030, 2008 – http://www.mme.gov.br
Ministry of Work and employment – Secretariat of Solidarity Economics, Atlas da Economia Solidária no Brasil, 2009. www.mte.go.br/ecosolidaria
ALMEIDA, Paulo R. - Breve visão histórica sobre o planejamento no Brasil, 2005 - www.pralmeida.org/05DocsPRA/1369PlanejBr1946-2005.pdf
OLIVEIRA, André de O. – A globalização e os 30 anos de indexação no Brasil, 1st edition, 2000. Editora JAC Editora e Gráfica LTDA.
Ministry of International Trade, Industry and Development – http://www.desenvolvimento.gov.br
Online Resources:
http://www.wikipedia.com/
http://pt.wikipedia.org/wiki/America_latina
http://en.wikipedia.org/wiki/Juscelino_Kubitschek
http://en.wikipedia.org/wiki/Getúlio_Vargas
http://alice.desenvolvimento.gov.br
[1] According with the web-site http://www.biodieselbr.com/
[2] Getúlio Vargas suicide is still a mystery for Brazilians, in his letter wrote by himself before he commits suicide says "Nothing remains except my blood. I gave you my life, now I give you my death. I choose this way to defend you, for my soul will be with you, my name shall be a flag for your struggle.(...) Serenely, I take my first step on the road to eternity and I leave life to enter History."
[3] To understand the Collor Impeachment please visit http://en.wikipedia.org/wiki/Fernando_Collor_de_Mello
[4] Henrique Meirelles had a successful professional career in the Famous Bank Boston
[5] These two policies were implemented in 2000.
[6] This policy was created in 2006
[7] EES – Solidarity Economic Enterprise, in Portuguese “Empresa de Economia Solidária”
[8] Includes Production and Service
[9] Includes Production and Service
[10] The enterprises are distributed by where they are acting, some of them are in the Rural and Urban Areas, some other exclusive in Rural areas and others only in Urban zones.
[11] To better understand the reality of Solidarity Economics check SENAES/MTE, Atlas da Economia Solidária no Brazil, 2005. Brasilia, 2005.
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