{"id":3540,"title":"Brazil &#8211; a Country of Buts","link":"https:\/\/bst-europe.eu\/de\/globalization\/brazil-a-country-of-buts\/","date":"5. August 2015","date_unix":1438770377,"date_modified_unix":1438770377,"date_iso":"2015-08-05T10:26:17+00:00","content":"<p>&nbsp;<\/p>\n<figure id=\"attachment_3724\" aria-describedby=\"caption-attachment-3724\" class=\"wp-caption alignnone\"><a href=\"https:\/\/bst-europe.eu\/wp-content\/uploads\/sites\/24\/2015\/08\/shutterstock_181638728_Premier.jpg\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\" ><img loading=\"lazy\" decoding=\"async\" class=\"size-full_grid_size wp-image-3724\" src=\"https:\/\/bst-europe.eu\/wp-content\/uploads\/sites\/24\/2015\/08\/shutterstock_181638728_Premier-780x439.jpg\" alt=\"dmitry_islentev \/ Shutterstock Images\" width=\"780\" height=\"439\" \/><\/a><figcaption id=\"caption-attachment-3724\" class=\"wp-caption-text\">dmitry_islentev \/ Shutterstock Images<\/figcaption><\/figure>\n<p>&nbsp;<\/p>\n<p>It\u2019s tough to visit Brazil without noticing the buts. Every objective statement seems to require a subsequent hedge. Yes, the country enjoyed heady growth through the first decade of the 20<sup>th<\/sup> century, <strong>but <\/strong>since 2011 its economy has averaged just 1.6 percent annual expansion.<\/p>\n<p style=\"text-align: justify\">Yes, conditional cash transfer programs have pulled millions from poverty <strong>but <\/strong>Brazil remains one of the globe&#8217;s most unequal countries in terms of income distribution.<\/p>\n<p style=\"text-align: justify\">Yes, President Dilma Rousseff has taken an aggressive stance against corruption, <strong>but<\/strong> a brewing scandal threatens to undermine her administration.<\/p>\n<p style=\"text-align: justify\">You get the idea, but let me explain.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">On June 30, 2015, Brazilian President Dilma Rousseff visited US President Barack Obama in Washington, DC, her first trip to the US capital since cancelling a 2013 meeting in the wake of the spy-gate scandal.<\/p>\n<p style=\"text-align: justify\">The trip marked an opportune moment for the leaders to reflect on the future of Brazilian \u2013 US relations; <a href=\"http:\/\/semancha.com\/2013\/09\/23\/behind-the-brazil-usa-beef\/\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\" >a partnership that has underwhelmed for some time now<\/a>.<\/p>\n<p style=\"text-align: justify\">But Brazil faces a trying moment, independent of its relations with the US. Back home, the country struggles with a sputtering economic environment that requires fiscal and monetary tightening.<\/p>\n<p style=\"text-align: justify\">Dilma is expected to push for fiscal adjustments through 2015, but her efforts will be complicated as her support in Congress wanes, and as ominous clouds from the Petrobras scandal loom over her presidency.<\/p>\n<p style=\"text-align: justify\">On the ground, observers note a tension in the atmosphere. <a href=\"http:\/\/semancha.com\/2014\/12\/08\/mo-money-mo-problems-brazils-monetary-dilema\/\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\" >Inflation is up, interest rates and debt are up,<\/a> job security is down, and it is in this environment that technocrats are asking President Rousseff to push fiscal austerity.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Is Brazil on the Rocks?<\/strong><\/p>\n<p style=\"text-align: justify\">These are all factors the Bertelsmann Foundation\u2019s INCRA (an <a href=\"https:\/\/www.ted.com\/talks\/annette_heuser_the_3_agencies_with_the_power_to_make_or_break_economies?language=en\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\" >international non-profit credit rating agency built by Bertelsmann Foundation<\/a>) committee <a href=\"http:\/\/www.bfna.org\/publication\/incra-brazil-rating-report-2015\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\" >considered when reviewing Brazil.<\/a><\/p>\n<p style=\"text-align: justify\">As a spoiler alert, the committee (in which I took part) is generally optimistic about Brazil\u2019s forward looking indicators, and that while overall, INCRA has downgraded Brazil to BBB+, Brazil\u2019s forward outlook remains relatively stable.<\/p>\n<p style=\"text-align: justify\">For example rule of law is considered strong in Brazil, a country with a democratic, constitutional government, an independent judiciary, and strong separation of power.<\/p>\n<p>&nbsp;<\/p>\n<p><em><em><a href=\"https:\/\/www.youtube.com\/watch?v=CXl6du7pTtE\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\"  target=\"_blank\" rel=\"noopener noreferrer\">What\u2019s Wrong with Brazil\u2019s Economy? Check out our video: Five Steps to Kickstart Brazil <\/a><\/em><\/em><\/p>\n<div class=\"postContentEmbed\">\n<div class=\"embedContainer embedContainer--video\"><iframe loading=\"lazy\" title=\"Brazilian Economy:  5 Steps to Kickstart Economic Growth\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube-nocookie.com\/embed\/CXl6du7pTtE?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div>\n<p>&nbsp;<\/p>\n<p><strong><br \/>\nThe Thing about Brazil is that it is a Country of Buts.<\/strong><\/p>\n<p style=\"text-align: justify\">In terms of social cohesion, Brazil is still reaping the benefits of pulling tens of millions of families from poverty, via conditional cash transfer programs such as <em>Bolsa Familia<\/em>.<\/p>\n<p style=\"text-align: justify\"><strong>But<\/strong> it is still profoundly unequal with a very high gini coefficient, and extreme social and regional disparities.<\/p>\n<p style=\"text-align: justify\">Brazil has improved its framework of anti-corruption laws, <strong>but<\/strong> implementation and enforcement remains lacking.<\/p>\n<p style=\"text-align: justify\">Let\u2019s look a little closer at some of the fundamental fault lines:<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Fixing Education in Brazil \u2013 It\u2019s more than Money <\/strong><\/p>\n<p style=\"text-align: justify\">If Brazil wants to be a 21st-century leader, it must build a 21st-century workforce.<\/p>\n<p style=\"text-align: justify\">The country has made impressive progress in education. <strong>But<\/strong> notwithstanding major improvements implemented by Presidents Fernando Enrique Cardoso, Luiz In\u00e1cio Lula da Silva and Rousseff, <a href=\"http:\/\/semancha.com\/2015\/01\/20\/fixing-education-in-brazil-its-more-than-money\/\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\" >the quality of Brazilian education remains poor by international standards.<\/a><\/p>\n<p style=\"text-align: justify\">Primary and secondary institutions have struggled to prepare students either to enter the workforce or to move on to higher education. Two-thirds of Brazilian teens can do little more than basic mathematics, and 50 percent have marginal reading comprehension skills.<\/p>\n<p style=\"text-align: justify\">Given that these young people will ultimately inherit Brazil, this is a major cause for concern. Unfortunately, addressing the education gap will require more than simply throwing money at the problem.<\/p>\n<p style=\"text-align: justify\">Bras\u00edlia already invests a reasonable amount in education. <a href=\"http:\/\/www.tradingeconomics.com\/brazil\/public-spending-on-education-total-percent-of-gdp-wb-data.html\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\" >As of 2013, the country spent 5.6 percent of GDP on education<\/a>\u2014more than the OECD average. This figure is set to jump to a <a href=\"http:\/\/www.economist.com\/blogs\/americasview\/2012\/10\/education-spending-brazil\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\" >globally-unprecedented<\/a> 10 percent by 2020.<\/p>\n<p style=\"text-align: justify\">Funding never hurts. <strong>But <\/strong>Brazil\u2019s key to building a qualified workforce lies rather in improved efficiency\u2014an area where the INCRA committee found the country lacking.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Transparency and Accountability<\/strong><\/p>\n<p style=\"text-align: justify\">The issue of corruption in Brazil recalls the proverbial debate about the glass of water: Is it half full? Or half empty?<\/p>\n<p style=\"text-align: justify\">It is no secret that corruption has long had a pernicious hold on Brazilian politics, and it is one reason the party system has been so weak. For the right price, many politicians have been willing to jump ship to a different party.<\/p>\n<p style=\"text-align: justify\">President Rousseff has stated that addressing corruption is a priority, and to be fair she showed little hesitation in ousting ministers involved in corruption scandals.<\/p>\n<p style=\"text-align: justify\">These moves reveal that corruption exists in the upper echelon of Brazilin governance. <strong>But<\/strong> they also demonstrate that the country is trying to do something about it. All told, corruption and bribery are still obstacles to doing business in Brazil.<\/p>\n<p style=\"text-align: justify\">The 2014 revelation of a wide-spread kickbacks scandal involving Petrobras contracting and subcontracting demonstrates how ingrained corruption remains in Brazil\u2019s biggest and most important companies.<\/p>\n<p style=\"text-align: justify\">Just how big the fall-out from the scandal will be remains to be seen. President Rousseff, who was formerly Energy Minister and sat on the Board of Directors at Petrobras, has close ties to the company and if evidence emerges that she was complicit in the corruption, it could still cost her the presidency.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Infrastructure \u2013 Building Brazil <\/strong><\/p>\n<p style=\"text-align: justify\">From unpaved streets in the northeast to the overburdened ports of Santos, Brazil\u2019s infrastructure deficit is ubiquitous and costly. Brazilian fields produce grain twice as fast as those elsewhere, but getting that grain to port can cost almost half its value. Meanwhile, vast mineral deposits remain buried deep within the earth (and vast numbers of people remain buried deep in S\u00e3o Paulo\u2019s traffic) for want of better infrastructure.<\/p>\n<p style=\"text-align: justify\">Not only does this deficit hamper growth in established sectors, it prevents the country from fully exploiting new ones. Many analysts believed the discovery of potentially tremendous deep-sea oil fields off the Brazilian coast in 2007 would be a transformative moment for the Brazilian economy.<\/p>\n<p style=\"text-align: justify\">But having the oil is one thing. Extracting it has proven quite another. Given the infrastructure deficit, Brazil has been unable to fully meet these challenges.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>The Biggest But of All<\/strong><\/p>\n<p style=\"text-align: justify\">Significant fault lines clearly exist in Brazil\u2019s development, <strong>but<\/strong> Latin America\u2019s BRIC retains its perennial potential. The dynamism and opportunity in the country remain unmatched in much of the developing world.<\/p>\n<p style=\"text-align: justify\">Moreover, Brazil has shown an ability to make it through tough times. Perhaps <em>because<\/em> it has had the practice, the country is rather adapt at crisis management. Brazil has shown an ability to overcome political turmoil, democratic transition, debt default, hyperinflation and the impeachment of its first democratically elected president.<\/p>\n<p style=\"text-align: justify\">That said, the INCRA committee did determine that Brazil has an \u201calarming tendency towards crisis.\u201d<\/p>\n<p style=\"text-align: justify\">While Brazil\u2019s crisis management capacity can be commended, it must work towards avoiding future crises to begin with.<\/p>\n<p>The country could also use an attacking mid-fielder. But that\u2019s another story.<\/p>\n<p><em><br \/>\nWant More? See our study <\/em><a href=\"http:\/\/www.bfna.org\/publication\/five-steps-to-kickstart-brazil\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\" ><em>Five Steps to Kickstart Brazil<\/em><\/a>:<\/p>\n<p style=\"text-align: justify\"><a href=\"http:\/\/www.bfna.org\/sites\/default\/files\/publications\/Five_Steps_To_Kickstart_Brazil%20%28Mar%202015%29.pdf\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\" ><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-3565\" src=\"https:\/\/bst-europe.eu\/wp-content\/uploads\/sites\/24\/2015\/08\/Brazil.png\" alt=\"Brazil\" width=\"216\" height=\"279\" srcset=\"https:\/\/bst-europe.eu\/wp-content\/uploads\/sites\/24\/2015\/08\/Brazil.png 624w, https:\/\/bst-europe.eu\/wp-content\/uploads\/sites\/24\/2015\/08\/Brazil-600x778.png 600w\" sizes=\"auto, (max-width: 216px) 100vw, 216px\" \/><\/a><\/p>\n","excerpt":"<p>It\u2019s tough to visit Brazil without noticing the buts. Every objective statement seems to require a subsequent hedge. So today we look a little closer at some of Brazil&#8217;s fundamental fault lines. <\/p>\n","thumbnail":null,"thumbnailsquare":null,"authors":[{"id":309,"name":"Samuel George","link":"https:\/\/bst-europe.eu\/de\/blogger\/samuel-george\/"}],"categories":[{"id":152,"name":"Globalization","link":"https:\/\/bst-europe.eu\/category\/globalization\/"}],"tags":[]}