Assignment

On

“International Business”

Submitted To: Submitted By:

Prof. Uddeepan Chatterjee Mohit Malviya

Abhishek Pratap Singh

Anup Vijayan
 SOCIAL AND CULTURAL ENVIRONMENT-BRAZIL

Social Stratification

CLASSES AND CASTES: “Brazil is no longer an underdeveloped country. It is an unjust

country," Brazilian President Fernando Henrique Cardoso proclaimed in 1994. Today Brazil,
although one of the ten largest economies in the world, has the most unequal distribution of
income of any nation except South Africa. Moreover, inequality has been growing. In the mid-
1990s, the poorest 20 percent of the population received only 3 percent of national income, while
the richest 10 percent received 47 percent. Or, put in another way, the wealthiest 20 percent earn
twenty-six times as much as the poorest 20 percent. It is estimated that some thirty-three million
Brazilians live in poverty, including twenty million workers and ten million pensioners who
receive the minimum wage of around $115 a month. In parts of Brazil, particularly the Northeast,
infant mortality, a sensitive indicator of social inequality, has actually been rising.

This "social question," as Brazilians call the divide between rich and poor, has characterized the
nation since colonial times. With industrialization and urbanization during the first decades of
the twentieth century, however, the growth of the Brazilian middle class has made this simple
division more complex. Today, depending on how it is defined, the middle class accounts for
one-fifth to one-third of the population, but the resources and lifestyle of its members vary
considerably. Some claim the Brazilian middle class admires elite values and aspires to elite
status and it is indeed true that middle-class families in Brazil are far more likely to employ
domestic servants and send their children to private school than their North American
Counterparts.

Thousands of saqueiros (sack carriers) working on the Serra Pelada gold mine, which is now
closed. Gold was one of the most important exports in the eighteenth century
In the late 1980s, moreover, it was members of the Brazilian middle class who, hurt by then
rampant inflation, began seeking their fortunes abroad as immigrants to North America, Europe,
and Japan. Still, a ray of hope emerged with the stabilization of the Brazilian currency and the
rapid decline of inflation in the mid-1990s. Estimates suggest that some nineteen million
Brazilians moved from the working poor to the lower middle class. For the first time these
people had money to spend on consumer goods; those who remained poor also benefitted from
stable prices and were better able to afford staples such as meat, chicken, eggs, and beans.

SYMBOLS OF SOCIAL STRATIFICATION: Brazilians are preoccupied with class

distinctions and are quick to size up the social distance that exists between themselves and others
they meet. Yardsticks of such distance are general appearance and the "correctness" of a person's
speech. The degree to which an individual's vocabulary and grammar is considered "educated" is
used as a measure of schooling and, hence, social class. And this, in turn, establishes patterns of
deference and authority between two individuals should they belong to different social strata.
When such patterns are ignored, the "elite" persons may harshly demand of their "lessers," "Do
you know whom you're talking to?"—a ritualized response when someone of higher status is not
accorded due deference by someone lower on the social scale.

SOCIAL WELFARE AND CHANGE PROGRAMS: Brazil has long had welfare and pension
systems but they do little for poorer workers and largely benefit state functionaries. Brazil also
has some of the most progressive social legislation of any developing country—such as paid
maternity leave—but as with other legislation, it is more often honored in the breach. One very
successful social program that received national attention is Viva a Criança (Long Live
Children), which was begun by the governor of the state of Ceará in the impoverished Northeast.
A campaign of preventive health education, the program cut infant mortality in Ceará by one-
third in only four years.

NON GOVERMENTAL ORGANIZATIONS AND OTHER ASSOCIATIONS: Arguably the

most visible nongovernmental organization (NGO) in Brazil today is the Movimento dos
Trabalhadores Rurais Sem Terra (MST), or Movement of Landless Rural Workers. Now with
some 500,000 members, it began organizing the occupation of large unproductive estates in the
mid-1980s after the federal government was slow to follow through on its promised program of
land reform. A convoy of vehicles invade an estate at night so that by dawn too many people will
have occupied the land for the police to be able to evict them. Such land occupations have
escalated since the mid-1990s, enhanced by the Brazilian media's sympathetic portrayal of the
MST as supporting a just cause. Partly in response to the MST, by the end of 1998 the federal
agrarian reform program had settled nearly 290,000 families on eighteen million acres (7.3
million hectares) of land, and Brazilian President Fernando Henrique Cardoso had promised an
acceleration of the process. Over the last decade or so many other Brazilian NGOs have been
established dealing with the problems of street children, rural poverty, hunger, ecological issues,
women's issues, and indigenous rights. Some have received international attention and foreign
support.

GENDER ROLES AND STATUSES

DIVISION OF LABOR BY GENDER: Gender roles in Brazil vary to some extent by social
class, race, and place of residence. White, middle-class and elite women living in large urban
centers generally have more occupational choices and greater behavioral flexibility than their
poorer, darker, rural sisters. Nevertheless, even when women are employed, men are seen as the
primary providers of the family, with women's monetary contributions viewed as supplementary.
Moreover, whether employed outside the home or not, women remain responsible for the proper
functioning of the domestic sphere, with or without the aid of domestic servants. Today almost
40 percent of Brazilian women have jobs outside the home, although they hold only 2 percent of
executive-level positions. And while the number of women in industry has more than tripled
since 1970, they are primarily employed in low-skill, low-paying jobs in textiles and electronics.
Poor women, especially those in the 20 percent of households with no permanently resident
male, take whatever work they can get. Afro-Brazilian women are particularly disadvantaged in
this regard; about 70 percent are employed in low-level agricultural, factory, and domestic
service jobs.

THE RELATIVE STATUS OF WOMEN AND MEN: The mostly male Portuguese colonizers
of Brazil brought with them the concept of machismo, which identifies men with authority and
strength and women with weakness and subservience. Still, machismo is tempered in Brazil. It
lacks the sharp-edged stress on heterosexuality and obsessive dread of homosexuality that
characterizes it in other Latin societies. Nevertheless, this world view, combined with the
patriarchy of the Catholic Church, laid the foundation for male dominance. As in most of Latin
America, Brazil has a double standard in sexual matters. Traditionally, at least, men were
expected to demonstrate their virility through premarital and extramarital sexual escapades,
while women were supposed to "save themselves" for their husbands and remain faithful after
marriage. So-called "crimes of passion" are linked to this dual sexual standard. In the past—and
occasionally even in modern times—men who killed their wives believing them to be unfaithful
often went unpunished. Women have been slow to receive legal equality in Brazil. They were
not given the vote until 1932 and, until the 1960s, women were the equivalent of children under
Brazilian law. They needed permission from their fathers or husbands to leave the country and
could not open bank accounts on their own. A women's rights movement emerged fairly late
compared to that in the United States and has just started influencing legislation and the political
process at the onset of the twenty-first century. While it has had some success, for example, in
setting up special police stations for abused women, abortion is still illegal, although widespread.
Moreover, the emphasis on youth and beauty as a measure of female worth remains unchanged
and it is no coincidence that Brazilian plastic surgeons enjoy international renown.
 SOCIALIZATION

CHILD REARING AND EDUCATION: Like so many aspects of Brazilian life, educational
opportunities are tied to social class. Brazil has never invested heavily in public education and
most middle-class and elite families send their children to private school. Education is also
linked to race and geography. A white person in the Southeast has an average of 6.6 years of
schooling, whereas a person of color living in the Northeast has spent an average of just 3.5
years in school. Despite the low level of funding, the last four decades of the twentieth century
witnessed a significant increase in the number of Brazilians attending school and a concomitant
rise in the literacy rate— in 2000 about 82 percent of Brazilians are literate. In 1960 almost half
the population had little or no schooling, a figure that fell to 22 percent by 1990. Notably, school
is one setting in which females are often more successful than males. In some regions of Brazil,
girls are more likely than boys to be in school and women tend to be more literate than men.

HIGHER EDUCATION: Two-thirds of all public monies spent on education in Brazil goes to
universities, the other third to public primary and secondary schools. While public universities in
Brazil—widely considered superior to their private counterparts—charge no tuition, they have
very competitive entrance exams which generally favor students who have attended costly
private schools with high academic standards. The value placed on higher education by certain
segments of Brazilian society may explain why it receives such a large share of revenue.
Economic success in Brazil is said to come more from who one knows than what one knows, and
where one is educated, influences who one knows. University education then, aside from training
students in a particular profession, also confers (or confirms) social status which, in turn,
provides the personal connections that can influence future success.

ECONOMY OVERVIEW OF BRAZIL

Characterized by large and well-developed agricultural, mining, manufacturing, and service

sectors, Brazil's economy outweighs that of all other South American countries and Brazil is
expanding its presence in world markets. Since 2003, Brazil has steadily improved
macroeconomic stability, building up foreign reserves, reducing its debt profile by shifting its
debt burden toward real denominated and domestically held instruments, adhering to an inflation
target, and committing to fiscal responsibility. In 2008, Brazil became a net external creditor,
Brazil's external debt totaled less than its foreign reserve holdings, and two ratings agencies
awarded investment grade status to its debt. After record growth in 2007 and 2008, the onset of
the global financial crisis hit Braxil in September 2008. Brazil's currency and its stock market -
Bovespa - saw huge swings as foreign investors pulled out of Brazil. Brazil experienced two
quarters of recession, as global demand for Brazil's commodity-based exports dwindled and
external credit dried up. However, Brazil was one of the first emerging markets to begin a
recovery. Consumer and investor confidence revived and GDP growth returned to positive in the
second quarter, 2009. The Central Bank expects growth of 5% for 2010.
GDP (purchasing power parity):
$2.024 trillion (2009 est.)

$2.022 trillion (2008 est.)

$1.924 trillion (2007 est.) 

GDP (official exchange rate):

$1.482 trillion (2009 est.) 

GDP - real growth rate:

0.1% (2009 est.)

5.1% (2008 est.)

6.1% (2007 est.) 

GDP - per capita (PPP):

$10,200 (2009 est.)

$10,300 (2008 est.)

$9,900 (2007 est.) 

GDP - composition by sector:

agriculture:  6.5% 

Labor force:
95.21 million (2009 est.) 

Labor force - by occupation:

agriculture:  20% 

Unemployment rate:
7.4% (2009 est.)

7.892% (2008 est.) 

Population below poverty line:

26% (2005) 
Household income or consumption by percentage share:
lowest 10%: 1.1% 

Distribution of family income - Gini index:

56.7 (2005)

60.7 (1998) 

Investment (gross fixed):

17% of GDP (2009 est.) 

Public debt:
46.8% of GDP (2009 est.)

38.8% of GDP (2008 est.) 

Inflation rate (consumer prices):

4.2% (2009 est.)

5.9% (2008 est.) 

Central bank discount rate:

20.48% (31 December 2008)

17.85% (31 December 2007) 

Commercial bank prime lending rate:

47.25% (31 December 2008)

43.72% (31 December 2007) 

Stock of money:
$95.03 billion (31 December 2008)

$131.1 billion (31 December 2007) 

Stock of quasi money:
$724.5 billion (31 December 2008)

$792.8 billion (31 December 2007) 

Stock of domestic credit:

$1.249 trillion (31 December 2008)

$1.377 trillion (31 December 2007) 

Market value of publicly traded shares:

$589.4 billion (31 December 2008)

$1.37 trillion (31 December 2007)

$711.1 billion (31 December 2006) 

Agriculture - products:
coffee, soybeans, wheat, rice, corn, sugarcane, cocoa, citrus; beef

Industries:
textiles, shoes, chemicals, cement, lumber, iron ore, tin, steel, aircraft, motor vehicles and parts, other machinery

Industrial production growth rate:

-7% (2009 est.) 

Electricity - production:
438.8 billion kWh (2007 est.) 

Electricity - consumption:
404.3 billion kWh (2007 est.) 

Electricity - exports:
2.034 billion kWh (2007 est.) 

Electricity - imports:
42.06 billion kWh; note - supplied by Paraguay (2008 est.) 
Oil - production:
2.422 million bbl/day (2008 est.) 

Oil - consumption:
2.52 million bbl/day (2008 est.) 

Oil - exports:
570,100 bbl/day (2007 est.) 

Oil - imports:
632,900 bbl/day (2007 est.) 

Oil - proved reserves:

12.62 billion bbl (1 January 2009 est.) 

Natural gas - production:

12.62 billion cu m (2008 est.) 

Natural gas - consumption:

23.65 billion cu m (2008 est.) 

Natural gas - exports:

0 cu m (2008 est.) 

Natural gas - imports:

11.03 billion cu m (2008 est.) 

Natural gas - proved reserves:

365 billion cu m (1 January 2009 est.) 

Current account balance:

$-11.28 billion (2009 est.)

$-28.19 billion (2008 est.) 

Exports:
$158.9 billion (2009 est.)

$197.9 billion (2008 est.) 

Exports - commodities:
transport equipment, iron ore, soybeans, footwear, coffee, autos

Exports - partners:
US 14.4%, China 12.4%, Argentina 8.4%, Netherlands 5%, Germany 4.5% (2008)

Imports:
$136 billion (2009 est.)

$173.1 billion (2008 est.) 

Imports - commodities:
machinery, electrical and transport equipment, chemical products, oil, automotive parts, electronics

Imports - partners:
US 14.9%, China 11.6%, Argentina 7.9%, Germany 7% (2008)

Reserves of foreign exchange and gold:

$238 billion (11 December 2009 est.)

$193.8 billion (31 December 2008 est.) 

Debt - external:
$216.1 billion (31 December 2009 est.)

$262.9 billion (31 December 2008 est.) 

Stock of direct foreign investment - at home:

$318.5 billion (31 December 2009 est.)

$294 billion (31 December 2008 est.) 

Stock of direct foreign investment - abroad:
$124.3 billion (31 December 2009 est.)

$127.5 billion (31 December 2008 est.) 

Exchange rates:
reals (BRL) per US dollar - 2.0322 (2009), 1.8644 (2008), 1.85 (2007), 2.1761 (2006), 2.4344 (2005)

Brazil: A country of Trade & Investment Opportunities

In these times of global financial turmoil and enormous challenges, finding new business
opportunities becomes crucial. Since the Irish economy is currently struggling to provide a
favourable environment for sustainable production and employment growth, it is critical to Irish
businessmen to focus their attention overseas, in particular towards fast-growing markets, such
as Brazil. The Brazilian economy is forecasted to grow approximately 5% in 2010. This
remarkable economic performance is based not only on a strong export performance, but,
primarily, on an increasing domestic demand. Over the last four years alone, Brazil’s middle
class has increased by 24%, removing roughly 20 million people from the poverty line,
according to Brazil’s Census Bureau. With a population of 192 million, the economy has already
achieved significant growth. Currently, Brazil’s economy ranks in ninth place, with a GDP (PPP)
of US$ 1,9 trillion in 2008, and accounts for more than half of South America’s output. In
addition, according to the latest World Bank report, Brazil is the second main destination for
foreign direct investment among the developing countries.

Due to strong macroeconomic indicators, the Brazilian economy has become more resilient to
external shocks. However, as a consequence of the reduction of commodities’ prices as well as
the fall of demand for manufactured and semi-manufactured goods, the Brazilian trade flow
reached US$ 202 billion in the first nine months of 2009. These figures reveal a contraction of
28.3% over the same period of 2008, reversing, thus, a growing trend that dates back to 2003. In
fact, Brazilian exports and imports had been performing strongly since 2003. In the period 2003-
2008, exports grew at a nominal average rate of almost 22%, while imports grew even faster, at a
nominal average rate of 26% in the same period. The recent drop in the Brazilian trade flow
shows that Brazil’s economy was affected to a certain extent by the international financial crisis.
It has not, however, cast shadow over the sound fundamentals of the economy and the big
opportunities the country offers to its partners. Despite Brazil’s economic success, it is fair to
say that the level of trade and investment between Brazil and Ireland does not match the potential
of both countries. In fact, while total trade reached US$ 202 billion between January and October
2009, bilateral trade was only US$ 670 million (US$ 265 million exports from Brazil and US$
404 million imports from Ireland). As export-led growth is the only sustainable route for Ireland,
the growing Brazilian demand and the valuation of the “Real” (Brazil’s national currency) will
certainly ensure high levels of imports in the coming years. On the other hand, Brazil is an
important and competitive world supplier of both manufactured and primary goods, as well as a
significant service provider. Therefore, more could enter the Irish market. There is plenty of
room, thus, for the increase of bilateral trade and mutual beneficial cooperation.
Despite the existence of many investment opportunities in Brazil, the share of Irish investments
in the total inflow of foreign capital is negligible. On a cumulative basis, it has not reached one
billion dollar. However, in 2008, Brazil attracted US$ 45 billion foreign direct investments and
the estimate for the current year is US$ 25 billion. The strong macroeconomic indicators were
one of the facts that led Brazil to win the right to host the 2014 World Cup and the 2016 Olympic
Games. These two major events will entail new business opportunities and investments for the
enhancements of its infra-structure in the transport system, hotel accommodation, food service
activities and other tourism-related services. Brazil offers a myriad of business opportunities for
Irish companies, and the Embassy of Brazil in Dublin will be most pleased to provide further
information and business contacts for those willing to tap into this dynamic, transparent and
predictable market.

TRADE AND COMMERCE IN BRAZIL

FDI in BRAZIL

Foreign direct investments have played an important role in Brazil's economic development. FDI
inflows into the country are mainly attracted by its big domestic market and the liberalized
economy thanks to fair government policies. Most investments in Brazil have been made with a
bias on the technological aspects of the economy. However, the service sector has attracted
foreign investments too. The Brazilian FDI regime has remained liberal and has been plausible in
its sum financial output for its economy. Brazil investment opportunities have a minor number of
horizontal reservations or limitations. Brazil investment opportunities flourish in the various
sectors of the economy; production as well as the service industries. With an economy estimated
at $1.3 trillion, foreign direct investments are crucial in financing the country's payment balance
due to investors taking out money from the capital markets and the slow recovery from the
global recession.

Brazil's stock of direct foreign investments stands at $318.5 billion, according to 2009 figures.
This shows a marked increase from the total FDI revenue from the previous year. Brazil's GDP
stands at BRR 1,359.71 billion. In the year 2008, as the close of that year, the country's GDP
stood at BRR 1,362.23 billion; a marked fall given the global recession. This represents a fall of
0.18%. Brazil's GDP for the year is expected to stand at BRR 1,434.44 billion, about five
percentage point increase from the year 2009. As at January 2010, the country's FDI totaled
US$2.41 billion. This was reflective of an annual growth rate of 63.9 per cent, the highest since
2000. Out of all these foreign investments at the beginning of this year, a majority of them were
in the service sector. FDI figures for the first month 2010 were also higher than those posted in
2006 in the same month. The retail sector took US$364 million, auto manufacture US$258
million, transport US$248million and the metallurgy sector US$232 million. In the year 2006,
Brazil's FDI peaked at US18.78 billion, the highest since 2001 with US$22.46 billion. This was
still higher than had been recorded in the year 2005 with US$15.19 billion. Even so, the
country's highest monthly FDI statistic was in 2007, June with the country getting $10.3 billion.
Brazil is the world's tenth largest economy and Latin America's largest. Its economy is expected
to top the five biggest in the world in the coming decades. Its GDP per capital stands at $10,200.
 EMERGING SECTORS

Education Industry

Brazil is regarded as one of the largest markets for investing in the education sector in the whole
of South American continent. There are more than 70 million students in Brazil. Out of the 70
million students, approximately 93% of them are enrolled in receiving basic education and only
7% of the student population enroll themselves for undergraduate and postgraduate level
education. As per the Higher Education census released by the Brazilian government in 2007,
the country had about 2.281 higher educational institutes and a majority of these institutes are
run by private players. This is mainly because the government of Brazil neither had the intention
to invest in the higher education sector nor did it have the essential resources required to build an
educational institute that provides top-class education.

In order to attract FOREIGN DIRECT INVESTMENT in the educational sector of Brazil the
government provides tax benefits to investors. The Brazilian government provides the same
protection to foreign capital investment as it gives to investments made by Brazilian locals. The
Brazil government has also formulated favorable FDI policies to attract investments.

Real Estate Industry

The Real Estate Industry is one of the leading industries in Brazil. In recent years, the industry
has grown significantly and it promises further growth. The Brazilian real estate industry offers
attractive investment opportunities for foreign investors. For any foreign investor looking for
investment opportunity in Brazil, the real estate industry of the country would fetch greater
returns. In fact, if the real estate sector in Brazil is compared to its counterpart in the United
States, you can see Brazil is a low risk investment opportunity. Moreover, real estate is less
volatile in comparison to other investments such as stocks and hence, you can achieve stability in
your investments by investing in Brazil’s real estate. Brazil has recorded a steady flow of foreign
investment in this sector and there is a speculation that this is likely to grow in future. The
foreign investment in Brazil’s real estate is mainly seen in construction of office buildings.
There are two primary opportunities for foreign investment in Brazilian real estate sector

1. An intermediate term investment

2. Active participation in  investment  for long operational cycle (20 years)  while earning
the revenue

Alternatively, Investor can remain alert and take an exit before the project ends which also
guarantees good returns.
The Foreign Institutional Investor (FII) in Brazil has a typical structure in the Brazilian market
that offers fiscal advantages in investment sharing in real estate sector.   Such advantages are not
found in other forms of securitization in Brazil.  The Brazilian Law8.668 (1993) defines all the
operations such as buying and selling of assets and profit sharing of FII as tax-free. The current
legislation clearly mentions that private investors are exempted from tax as long as they follow
the rules of distribution that says they cannot own more than 10% shares in FII. The FII
continues to make investment in shopping centers, office buildings and hotels in Brazil.
 
The Brazilian real estate market is likely to give you more than 10% annual return on your
investments in real estate sector even after considering greatest market fluctuations and critical
market conditions. If you decide to sell your shares in FII in the secondary market, you can
expect annual return rate of 19.67% for an investment cycle of 37 months. Hence, Foreign
investors are likely to make profit even if they decide to take an exit from the FII investment in
shorter period of time.

Retail Market Industry

Brazil has emerged as one of the leading markets in the world. There is huge growth of sales in
the retail sector.  It is expected to grow continuously over next few years because of a constantly
declining inflation rate which allows continuous expansion of credit conditions ease; i.e.,
substantial demand for durable goods and real incomes and growing demand for non-durable
consumer goods.

The Northeastern Brazilian region has started attracting retailers. Grocery and non-grocery
retailers are attracted by segments which are untapped. Heavyweight players in the market have
plans to open new outlets and distribution centers in the region. Along with increasing
preferences for the latest fashion apparels, there is high spending on clothing imports and apparel
items. Brazil is ahead of China and India in clothing imports/exports and apparel consumption,
and is considered as an emerging market for investment in retail apparels. There is huge potential
for success of retail apparel in Brazil. Brazilian standards of retail markets are mixed predictably,
accounting from fashion specialty retailers in urban areas to niche boutique retailers and from
discounters, hypermarkets and large department stores through street traders. The retail sector in
Brazil is as innovative as compared to any retail sector in the developed world. The retail market
is increasingly growing internationally because the global chains do wake up to opportunities in
a country which emerges from economic challenges in the long run. The retail supply channel in
Brazil combines a mix of creative supply chain retail and financiers such as banks who operate
retail chains directly. Even large retailers offer their own credit facilities. Credit, consumerism
and scales are the day’s order for the Brazilian retail market.
 
There is a huge shift towards non-food products including textiles, gasoline stations, electronics
and drug stores that is accounting for 24% of sales. Super markets have largely inclined towards
non-food products. A huge boom in credit availability and a growing middle class are breaking
the shackles of retail growth. There are huge opportunities for foreigners to invest in the
Brazilian retail market and reap huge profits.
Health Industry

The health care industry in Brazil is one of the industries that is growing at an unprecedented rate
and promises great investment opportunities. The Brazilian government is making sustainable
efforts to revamp the prevailing healthcare system in the country, with a view to achieve greater
efficiency. Brazil government’s ambitious plans to expand the health care industry provide
ample investment opportunities for foreign investors.  Investment opportunity lies in supplying
medical equipment and IT products. Foreign investors can invest in providing patient monitoring
services. To attract foreign investment in the country the Brazilian government has taken the
initiative and has taken measures to introduce reformatory plans to restructure the healthcare
delivery system. The government of Brazil has decentralized the health care sector in every
Brazilian state and given them the autonomy.

Pharmaceutical industry
The Pharmaceutical industry, which is a part of the Health Industry, holds great potential for
investment in Brazil. The country is being tipped as being one of the top seven countries in the
world that has tremendous potential for growth in the pharmaceutical sector and is regarded as
being the emerging market for investment. In terms of the revenue generated, the Brazilian
Pharmaceutical industry is the 10th largest market in the world and is the second largest market in
South America. The pharmaceutical industry is huge, and is responsible for providing
employment for about 47,000 people in Brazil.

The Brazilian Pharmaceutical industry is one of the main industries that are the central point of
the Brazilian government’s industrial policy. The government of Brazil, with a view to give a
boost to the industry, has formulated a special financing program. The government aims to
increase the local production of medicines, facilitate development of Research and Development
centers and encourage mergers and alliances with foreign investors. The main motto of the
Brazil government is to bring down the negative balance of trade of pharmaceuticals, improve
the standards of drug quality in the country and enhance production of medicines. The
government of Brazil has very ambitious plans of creating an environment in the country to
attract investment of about $5 billion dollars. Thus, there is great opportunity for investors to
invest in the sector and gain valuable returns on their investments.

In the past, the pharmaceutical manufacturing companies in Brazil lacked proper production
technique. Also, the government imposed heavy taxes on medicines. As a result, not many local
investors were keen to invest in the sector. However, the situation today has changed drastically.
The government now has reduced the prices of drugs and this has created a dynamic investment
environment in the country. The Brazilian government today actively encourages new investors
in the sector by providing them the option of preferential purchase in public tenders. The
government also offers special financial investment conditions, which are beneficial for the
investors. Thus, with the backing of the government, the investors can gain tremendous
advantage from investing in the health industry of Brazil.