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Country: Brazil
Brazil has a free market economy with a lot of natural resources. The
Brazilian economy has been predicted to become one of the five largest in
the world in the years to come. Its current GDP (PPP) per capita is
$10,200, putting Brazil in the 64th position according to World Bank
data. It has large and developed agricultural, mining, manufacturing and
service sectors, as well as a large labor pool.
Brazilian Exports:
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markets, and is one of a group of four emerging economies called the
BRIC countries. Below is a pie chart showing the percentage of different
goods and services exported in the year 2006:
Brazilian currency:
The currency in Brazil is called the Real (plural: Reais). However, the
name of the money was only taken on in 1994. This was because in the
past Brazil had lots of different currency due to fluctuations and changes
in the economy.
In the 1980s and early 1990s, Brazil saw very high inflation. For a time
the currency or money used in Brazil was called Cruzeiros (until 1986)
and then changed to Cruzado. A couple of years later a new currency
was introduced to Brazilians called the Cruzados Novos ("new cruzados").
In 1990, the Cruzados Novos were stopped and the Cruzeiros returned!
The story did not end there; in 1993, the Cruzeiros had three zeros
shaved off them and were turned into Cruzeiros Reais. Finally in 1994,
after the development of a new monetary plan, the new currency, the one
we know today was born called the Real.
Brazil pegged its currency, the real, to the U.S. dollar in 1994. But, after
the East Asian financial crisis, the Russian default in 1998 and the
series of unfavorable financial events that followed it, the Central Bank of
Brazil temporarily changed its monetary policy to a managed-float
scheme while undergoing a currency crisis, until definitively changing
the exchange regime to free-float in January 1999.
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THE BALANCE OF PAYMENT AND THE TREND: BRAZIL.
The following chart shows Brazil’s GDP (PPP) during 2007-2009. All
figures are in US dollar trillion.
The next chart shows Brazil’s GDP-real growth rate during 2007-2009.
All figures are in US dollar trillion.
The next charts show Brazil’s GDP-Per Capita and GDP- Sector
Composition. All figures are in US dollar.
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The next chart shows the Brazilian total workforces in percentages.
Brazil’s total workforce, according to 2009 estimates, was 95.21 million.
The rate of unemployment in 2009 was 7.4%, down from the 2008
estimates when the rate was 7.892%. The following chart shows Brazil’s
labor force composition by occupation. All figures are in percentages
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Below is a graph showing the balance of payments in US $ between the
years 1996 -2009:
Brazil
On the capital account side, there was a strong inflow. Indeed, FDI
reached USD2.5bn and the inflow from Brazilian direct investments were
USD 1.4bn. As a result, the net direct investment reached USD 3.9bn,
well above the one seen in May'08 of USD -0.1bn. Portfolio flows were
also positive, USD 3.0bn, reflecting mainly foreign investments in
equities (USD 2.5bn), topping the USD 1.7bn seen in May'08.
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Over the last 12-months, the current account deficit went down from
-1.4% to -1.5% of GDP. An interesting aspect is the fact that FDI
(accumulated in the last 12 months) rose from 2.9% to 3.1% of GDP.
The Brazilian FDI regime has remained liberal and has been reasonable
in its sum financial output for its economy. Brazil investment
opportunities have a minor number of reservations or limitations
FDI flow into Brazil was encouraged by the existence of a vast, dynamic
home market insulated by a host of trade barriers. Since the very
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beginning the Brazilian government prompted the market seeking
behavior of foreign investment. A protectionist trade policy was put in
place to guarantee the profitability of these investments.
Country Brazil
Year 2004 2005 2006
FDI inflow measured 18.1 15.1 14.8
in Billions of dollars
Source: UNCTAD
Brazil halted its 2 year long interest rate cutting program recently
amongst concern of inflation.Consumer spending rose 5.7 percent and
investment rose 14 percent, while industry rose 6.8 percent, services 4.8
percent and agriculture rose 0.2 percent. Excessive rate cuts have
contributed to this accelerated rate of consumer spending as Brazilians
borrow more.
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Since most forecasters are not foreseeing a rate increase, spending in
Brazil should at least continue on its current trend which will be
favorable for the nation’s economy.
One of the major concerns for investing in Brazil is currency risk, but so
far the Brazilian Real has been essentially firm. It’s currently situated at
1.869 per dollar, having appreciated 13.9 percent this year.
Corruption is widespread.
Crime is common.
Restrictive business labor laws are still in effect, which has given
rise to underground black markets.
Brazil has big plans for years ahead. In 2014, it will host the World Cup
and in 2016, it will host the Summer Olympics in Rio. The country
knows that the world will be watching, so they’re working hard to get
camera-ready.
Brazil can improve its DFI by adopting respective policies for attracting
more investment. They may depend on targeted financial concessions
like tax concessions, cash grants and specific subsidies. Moreover, they
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can focus on improving the infrastructure and skill parameter and create
a base for the demands and expectations of foreign investors.
REFERENCES:
http://www.economywatch.com/foreign-direct-investment/attract-more-
fdi.html
http://www.nationsencyclopedia.com/Americas/Brazil-BALANCE-OF-
PAYMENTS.html
http://www.etftrends.com/2010/04/brazil-etfs-robust-economy/
http://streetcapitalist.com/2007/09/24/economic-outlook-brazil/
http://www.allbusiness.com/educational-services/business-schools-
computer/981580-1.html
http://en.wikipedia.org/wiki/Economy_of_Brazil
http://www.economywatch.com/world_economy/brazil/
http://www.latin-focus.com/latinfocus/countries/brazil/brabop.htm
http://www.oxfordeconomics.com/Free/pdfs/BRAZDB111208.pdf
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