Status: #casefiles
Tags: Politik Politische Theorie Internationale Politik IB Wirtschaft International Political
Economy
Brasilien BRICS
Brazil was hit hard by the Great Depression of the 1930s. As Western markets for its coffee and
other raw materials collapsed, Brazil’s policy makers learned that the country should not
excessively rely on the global economy. As a result, they adopted an ISI strategy. The
government regulated trade and used tariff barriers and other incentives to encourage local
Brazilian firms, sometimes in collaboration with foreign multinational enterprises, to produce
goods for the large Brazilian market. ISI produced some growth over the years but, by the
1980s, Brazil was afflicted with high inflation, large external debts and inefficient industry. By the
early 1990s, Brazil joined many other developing countries in shifting development strategy in a
more liberal direction, emphasizing freer trade and privatization of many state-owned firms.
As many developing countries have embraced the world economy since the 1990s, why single
out Brazil for special attention? The simple reason is that, like India and China, Brazil is no
ordinary emerging economy; it has the potential to be a great power, economically and
geopolitically. Brazil’s land mass is similar in size to the United States. Its population is about
210 million, or two-thirds that of the United States. Its GDP of roughly $2.1 trillion in 2016
placed it among the top ten countries in the world. Unlike many developing countries, Brazil
already possesses a sophisticated and diversified economy. It is a major agricultural producer
and exporter of coffee, soybeans, cotton, tropical fruits and biofuels such as ethanol. It is
emerging as a global player in oil and gas. Within the past decade, the state-owned firm
Petrobras has made huge new oil discoveries in Brazilian territorial waters, and industry experts
estimate that Brazil’s reserves have now tripled to about 40 billion barrels, among the top ten
globally and equivalent to the reserve positions of long-time OPEC members Nigeria and
Venezuela. With over 2,500 miles of coastline, further discoveries are likely. It is ironic that
Brazil spent decades developing its manufacturing sector, and now finds raw materials and food
to be just as much an engine of its current and future growth. Its large size and economic
diversity increase its chances of avoiding the resource curse and other problems that plague
developing economies.
Until recently, Brazil had shown signs of becoming stronger and more stable. Brazil returned to
democracy in 1985 after two decades of military rule. Its extensive multiparty system ensures
that governing coalitions have numerous participants. Yet, only two of the parties, the leftist
Worker’s Party and the center-left Social Democratic Party, have been able to produce viable
presidential candidates, and they alternated in power over the past twenty years. When in
power, each party managed to form governments capable of getting things done, even with
seemingly unwieldy coalitions.
Until recently, the Brazilian state had made attempts to become more competent in some of the
good governance tasks those in the developed world often take for granted – the collection of
taxes and implementation of government programs. Between 2003 and 2013 President Luiz
Inacio Lula da Silva of the Worker’s Party targeted resources to the large numbers of Brazilian
poor, emphasizing health care, education and housing. He maintained the pragmatic and
growth-oriented economic policies that enhanced Brazil’s ability to compete internationally.
Brazil continues to face major challenges. Its average annual growth rate has been slower than
China’s (hovering in the 2 percent range between 2008 and 2016), while the government’s
share of its economy is larger (20 percent versus 14 percent). Large gaps in income and wealth
across the population remain. Brazil’s emerging dependence on raw material and agricultural
exports make it vulnerable to global economic slowdowns. Its Amazon region has become
something of a ‘wild west’, with loggers, miners and farmers grabbing what they can at the
expense of the local and global (Brazil is a leading emitter of greenhouse gases) environment.
Brazilian business and political elites have been caught up in recent corruption scandals; the
very popular former President, mentioned above, known as Lula, was convicted and sentenced
to twelve years in prison for accepting gifts in exchange for contracts offered to construction
firms, and Lula’s successor, President Dilma Rousseff, was impeached in 2016 for mishandling
Brazil’s national finances. The 2018 election of national-populist politician, Jair Bolsonaro,
called by many the ‘Trump of the Tropics’, has put Brazil on a right-wing path away from liberal
democracy and progressive political reform. These developments have diminished Brazil’s role
and influence on the global stage. Nevertheless, Brazil remains a plausible candidate to join the
ranks of the major powers in the decades ahead.
