How to Fix Brazil’s Broken Economy

October 24, 2014

Joshua Kempf and Mark Kennedy – Foreign Policy, 10/23/2014

The last two decades made obvious a life’s-not-fair fact: Big countries can get away with bad economic policy. Size matters to investors, global corporations, and entrepreneurs because a winning payout is large and can justify the costs of bureaucracy, compliance, and corruption.

China, India, and Brazil attract big investor dollars not because they are business paradises — check out their World Bank’s “Doing Business” rankings. To understand how business leaders think, let’s imagine you built a company with 85 percent market share in more business friendly Estonia. Congrats, they’ll say, those size revenues are in a multinational’s second footnote once removed.

Which brings us to Brazil. Despite its numerical advantages, Brazil has stagnated, and is expected to have just 0.4 percent economic growth this year. What’s wrong? Many analysts have pointed out the obvious: Brazil needs to improve its education, healthcare, and infrastructure. Few economists would disagree, but these are deeply rooted problems with decades-long solutions. Brazilians go to the polls on Sunday to select a president. What reforms can be done during one term to unleash Brazil’s charmed bequest, its size? Here’s the policies we think should be on the agenda.

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Brazil and its backyard

October 24, 2014

The Economist (print edition),  10/25/2014

Like voters in most democracies, Brazilians pay little heed to foreign policy when choosing leaders. Yet the presidential election on October 26th matters not just to Brazil but to the region. Over the past two decades Latin America’s giant has overcome its introversion and wielded growing influence in its backyard. And on foreign policy, as on economics, there is a clear gap between President Dilma Rousseff of the centre-left Workers’ Party (PT), who wants a second term, and her rival, Aécio Neves, of the centre-right Party of Brazilian Social Democracy (PSDB).

Brazil’s greater assertiveness began under Fernando Henrique Cardoso of the PSDB in the 1990s and continued under the PT’s Luiz Inácio Lula da Silva, the president in 2003-10. Both gave importance to the Mercosur trade block (founded by Brazil, Argentina, Paraguay and Uruguay), to South America and to ties with Africa and Asia. Both had reservations about a 34-country Free-Trade Area of the Americas, a plan that Lula helped to kill.

But there were differences, too, partly because of Brazil’s changing circumstances. Lula put far more stress on “south-south” ties and on the BRICs grouping (linking Brazil to Russia, India, China and later South Africa). In Latin America he emphasised “political co-operation”. Relations with the United States were cordial but distant, especially after Lula tried brokering a nuclear deal with Iran which the White House opposed.

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Key elections to shape Latin America’s future

October 20, 2014

Buenos Aires Herald, 10/20/2014

Brazilians will go as one to the polls this Sunday to select the nation’s next leader, where they will be asked to choose between President Dilma Rousseff and challenger Aécio Neves — but that’s where the unity will end, say experts, with the country split in two.

Neves, of the opposition Brazilian Social Democracy Party (PSDB), currently has a two-percentage-point lead over Rousseff, from the ruling Workers’ Party (PT), but that falls within most polls’ margin of error, effectively putting the candidates neck-and-neck. Recent surveys however show that support may have peaked for Neves, the markets’ favourite, and his disapproval numbers are rising amid a barrage of attacks from the Rousseff campaign.

The number of Brazilians who say they would never vote for Neves rose four percentage points this week to 38 percent, according to a survey by the Datafolha polling firm, while Rousseff’s rejection rate came down one point to 42 percent, suggesting the incumbent is gaining momentum ahead of election day. But with most voters having already made up their mind, the two are now focusing their fight on the support of two key demographics — the millions of Brazilian who were lifted from poverty during 12 years of PT rule and undecided female voters.

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Brazil looks to buy Chinook helicopters from Boeing as tensions with U.S. thaw

October 17, 2014

Andrew O’Reilly – Fox News Latino, 10/17/2014

In a sign that the icy relations between Brazil and the United States in the wake of the National Security Agency spying scandal are beginning to thaw, the South American nation has expressed an interest in buying a handful of military helicopters from Boeing, the Chicago-based company said.

The Brazilian Army is looking to purchase several CH-47 Chinook helicopters from Boeing in a deal that would add to an already growing list of potential weapons deals between the U.S. and Brazil. Boeing executives said that they were “pretty positive” about the deal and that the company views Brazil as an important partner for both commercial and defense projects.

“We have had some early discussions about the Chinook with the Brazilian Army,” Boeing spokesman Scott Day told Reuters, adding that the proposed deal was not a very big one. “We still view Brazil as a very important country for Boeing.”

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Gwynne Dyer: The truth about Bolivia’s and Brazil’s economic miracles

October 15, 2014

Gwynne Dyer – The Georgia Straight, 10/14/2014

TO NOBODY’S GREAT surprise, Bolivia’s president, Evo Morales, has won a third five-year term by a landslide majority. It’s no surprise because Bolivia’s gross domestic product (GDP) has tripled since he took office in 2006. The number of people living in poverty has fallen by a quarter, even the poorest now have the right to a pension, and illiteracy has fallen to zero. Of course he won.

What has happened in Bolivia seems as miraculous as what happened in Brazil, where another left-wing president, Luiz Inacio “Lula” da Silva, took office in 2003. The economy started growing at five percent a year, unemployment fell steeply, and some 40 million Brazilians, almost a quarter of the population, were lifted out of poverty. Lula’s former chief of staff and successor as president, Dilma Rousseff, is also likely to win another term in office.

Is there some secret they share? Many other South American economies have been growing fast too, but without the dramatic change in the distribution of income that has happened in Brazil and Bolivia. Even the late Hugo Chavez’s “Bolivarian revolution” in Venezuela, for all its anti-imperialist rhetoric and despite the country’s great oil wealth, has not delivered a comparable transformation in the lives of the poor.

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Wall Street, Washington, and Brazil

October 8, 2014

Julia E. Sweig – The World Post, 10/8/2014

Wall Street made its preferences known well before the first round: the markets wanted change. Anything but Dilma, and if that meant Marina Silva, then by god she would be molded into the right market-friendly container! Washington had a slightly more sanguine view of the Marina surge, but most close Brazil-watchers likewise seized on Marina as the Obama-esque “change agent” who, embodying the demands of the 2013 protests, might propel Brazil to the next phase of political reform.

Moreover, Marina’s sudden openness to agribusiness and trade deals, her gripping personal narrative, and her environmentalism suggested an opening for the Obama administration to re-kindle the near dormant embers of the bilateral relationship.

Surprise! Time to re-calibrate expectations and ask some questions. With Aécio Neves pulling in a respectable 34 percent of the vote, in an outlier scenario that he can draw enough for Marina’s votes to prevail over Dilma, what would a PSDB government signal to Wall Street and Washington?

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Big Events, Big Risks: Lessons From Brazil’s World Cup

October 2, 2014

Jacqueline Day – Forbes, 09/29/2014

For a month this past summer, billions of fans around the world stayed glued to televisions broadcasting the FIFA World Cup from Brazil. Millions more descended on Brazil to watch the games in person. They came despite the various warnings about Brazil’s readiness to host and fears of widespread, violent protests. Yet, as it should be, the tournament will mostly be remembered for the drama that played out on the pitch: from the Brazilian team’s epic collapse against Germany and the controversy that erupted when Uruguay’s Luis Suarez (some would say allegedly) bit an Italian opponent, to the emergence of Colombian star James Rodriguez.

That the tournament will be remembered first and foremost for the soccer was no small feat and, frankly, a massive surprise. Thousands of corporate VIPs, celebrities and world leaders descending upon a country known for its security, logistics and infrastructure challenges was worrisome enough. Such a backdrop, combined with the disruptive social unrest that flared unexpectedly in 2013, could have easily shifted the storyline away from the sporting competition itself. That it did not is a testament to the hard work and careful preparation of the legions of public and private sector workers, as well as to the Brazilian people’s devotion to “the beautiful game.”

The Brazilian security forces deserve plenty of credit. They took active measures to address lessons learned from the 2013 FIFA Confederations Cup, effectively managing and containing the smaller-scale protests that did occur, and critically, avoiding the heavy-handed tactics that only aggravated matters in 2013. They were helped by two additional factors. First, many Brazilians who had previously engaged in legitimate and peaceful protest activity during the Confederations Cup were alienated by the violent tactics of anarchist groups, the so-called Black Blocs, with whom they did not want to be associated.  Second, in keeping with custom, most Brazilians cared more about watching the matches than taking to the streets. Even Brazil’s crushing loss to Germany—an event that caused security directors to collectively hold their breath—failed to galvanize the masses to take back to the streets.

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