The Economic Rise and Fall of Brazil

 Brazil is an absolutely massive country, spanning four time-zones while also having a population of more than 200 million. The country is also known for its vast inequality, partly due to the slavery that occurred hundreds of years ago. 

        However, the country has been experiencing lots of economic growth in the past couple of decades, seemingly incessantly until recently, when its economic growth halted. Based on this context and a recent inaugural lecture by Steen Christensen the 8th of september 2016, it’ll be uncovered “what the possible scenarios and likely prospects are for Brazil's development post-2015, and which implications this will have for the South-South cooperation and the global order”. 

Historically, Brazil has undergone several phases of industrial and economic growth as well as decline, of which the latest industrialisation spurt took place in the 60’s, which is relatively late compared to most european countries. Certain regions like the south and the south-east have always been ahead of the remainder of the regions of Brazil industrially, economically and in terms of living standards, as can be evidenced by how previously insignificant cities such as São Paulo suddenly became an order of magnitude larger. This period of growth did create incentive for well-off nations such as the US, Japan and Germany to invest in the country. When it comes to global trade partners and export markets, Brazil has always favoured developed the aforementioned nations. 

However, a new pattern has been emerging as of lately - China has had a profound impact on the Brazilian economy in the past couple of decades. This is due to the fact that China has gained recognition as one of the world’s leading economic forces, since it’s one of the major manufacturers of cheap consumer goods and electronics. Case in point, China has gone from accounting for 1 percent of all Brazil’s imports in the early 90’s to more than 70 percent today. Brazil on the other hand mainly exports commodities such as coffee, sugar and iron-ore Brazil has been notoriously incapable of managing its relations to China in a way that’s befitting for such a huge country, which has stained its reputation and weakened the country’s global position. All other South-American countries with the exception of Cuba have been embracing more liberal monetary and foreign politics, which in this day and age also means to be accommodating towards China, which Brazil hasn’t been in a satisfactory manner. 

Regardless of this careless approach to dealing with their foreign relations, Brazil has managed to stay clear of lots of economic turmoil, partially because of American monetary policies and secondly due to the so-called “China effect” in recent years. The China effect refers to China’s surge in demand, which has benefited lots of other economies. The reason why Brazil benefited from China is because the value of commodities rose during those years, which is what Brazil profits from in the first place. The commodity prices have since declined again since 2011, however. 

In summary, the general shift from socialist to liberal policies in South America throughout the years has caused a weakening of the international ties among the major countries of the world. According to Christensen, Brazil isn’t on the verge of bankruptcy, they’re merely facing minor setbacks with no lasting consequences to speak of. The currency has become much weaker recently, the political and economical turmoil won’t last. 

Written by Christian Fredlev Sand