Brazil In History Essay Example

freedom without social unrest. However, the education system requires improvement as the overall literacy rate for children above ten years old is approximately 75%.

Approximately 5% of enrolled students choose to pursue higher education, resulting in a workforce that is mainly semiskilled or unskilled. The shortage of managerial, supervisory, and technical personnel continues. In terms of living standards, the gross domestic product (GDP) per capita was around US$3,000 per year in 1993. There is an issue of income inequality with 1% of the population being extremely wealthy and 20% living in poverty.

In Brazil, a housing shortage is impacting 10 million families and 12 million peasants. This issue has caused the formation of rural squatter settlements as these individuals seek shelter. To address this problem, it is crucial to provide sufficient financial assistance for public housing, healthcare, education, and infrastructure. Additionally, Brazil confronts considerable obstacles in terms of crime and corruption. Nevertheless, the country boasts abundant natural resources including vast iron ore reserves that rank among the world's largest. Furthermore, it is emerging as a significant gold producer.

Table 2 depicts the large-scale mining of various metals and minerals in Brazil. The country's extensive river system presents immense potential for hydroelectric power, exemplified by the Itaipu dam project. In response to the oil crisis in the 70s, Brazil introduced the ProAlcohol program with the goal of producing alcohol fuel from sugar cane as a means to reduce reliance on imported oil. Table 3 illustrates Brazil's significant exports in agriculture, including soybeans, orange juice, coffee, and cocoa. Although possessing substantial fishing opportunities along its coastline, Brazil has not fully utilized this potential. Furthermore, Brazil's favorable climate and natural scenery

contribute to a flourishing tourism industry. Politically, after being under Portuguese rule for more than three centuries, Brazil became a republic (Federative Republic of Brazil) in 1889.

The Constitution of Brazil, enacted in 1988 and currently under review, governs the country. Brazil is composed of 27 states and the Federal District of Brasilia as its capital city. The states are divided into municipalities which are further subdivided into districts.

The federal government of Brazil consists of three branches: the executive, legislature, and judiciary. At the forefront of the executive branch is the President who oversees various executive departments and independent regulatory agencies.

The executive departments are represented by the appointed heads in the Cabinet. The legislative branch is formed by the Congress, consisting of the elected Senate and House of Representatives. The judicial branch is composed of federal, state, and local courts across the country, all led by the Supreme Court. In Brazil, despite having multiple political parties, they lack strong ideologies due to democracy being restored relatively recently in 1985. These parties typically represent specific economic groups and interests within Brazil. Following a period of industrialization resulting in high inflation and foreign debt, Brazil experienced a military autocratic regime from 1964 to 1989. It was not until Fernando Collor de Mello became the first president to be popularly elected since 1960.

Although the possibility of a military coup is unlikely, the military still holds considerable political power. President Collor enjoyed substantial support and made a commitment to reform the urgently required economic policy. His plan involved reducing tariffs, managing inflation, encouraging free trade, and downsizing the excessively large public sector. However, he stepped down in 1992 due to

corruption allegations.

The previous president, Itamar Franco, was viewed as lacking in direction when it came to economic decisions. Rather than focusing on reducing inflation, he prioritized promoting economic growth. Despite the existing substantial deficit, he attempted to stimulate growth by raising government expenditures. The present president, Fernando Henrique Cardoso, formerly served as Franco's finance minister. He implemented a stabilization plan that involved noteworthy economic liberalization and an increase in income taxes.

Luis Inacio Da Silva (Lula), leader of the Workers Party (PT), successfully implemented the Real Plan, which effectively reduced inflation and the federal deficit. Currently, he is advocating for the Constitution review, aiming to privatize state-run monopolies and distribute tax revenues more evenly. Lula's socialist principles prioritize social justice, imposing limitations on market capitalism, restricting integration with the global economy, providing debt relief, and expanding the role of the state. He represents the increasingly significant left wing of Brazilian politics.

President Cardoso responded to the call for improved public services by announcing that $500 billion of his proposed budget from 1996-99 would be allocated towards social services such as education and housing. However, critics were dissatisfied when Mr. Cardoso designated a majority of the social spending towards welfare payments. The Brazilian Church, with its significant influence in politics given the country's large Roman Catholic population of 71%, has historically played a crucial role in shaping policies.

In recent years, the Vatican has become more controlling of the Church, leading to a more conservative approach. Despite this, there is still a left-leaning social action wing within the Church that greatly impacts voting outcomes. The Brazilian Church is closely connected to the less privileged population and expresses support for

the PT (Worker's Party). With democratic elections returning, it is expected that political turmoil will soon decrease. However, President Cardoso may encounter difficulties from an overrepresented Congress representing poorer northern regions. This hinder progress on Constitution Amendments that are favored by local businesses and influential figures.

In his first year, President Cardoso's economic reform initially achieved success but requires more power to drive further advancements. Brazil's economy, ranked as the tenth largest globally, experienced significant growth from the mid-1960s to the late 1970s. However, the 1980s were characterized by economic instability, high inflation, and escalating debt (See Table 4). Recent reforms have effectively revitalized growth and reduced inflation (See Table 5). Presently, Brazil faces key challenges of sustaining growth and effectively managing inflation.

Brazil is a country renowned for its cultural diversity and fusion of individuals. Brazilians are frequently perceived as passionate, open-minded, and patriotic, especially when it concerns soccer. The nation has a historical background encompassing battles for independence, the formation of the Republic, and recent demonstrations against violence in Rio de Janeiro. Throughout these eras, notions of liberation and optimism have persisted. Nevertheless, Brazilians also tend to lean towards conservatism, especially regarding religion. Similar to other tropical societies, leisure and relaxation take precedence for Brazilians. The standard workweek consists of eight hours from Monday to Friday.

Besides statutory holidays, the annual Carnival brings business operations to a halt from Monday to Wednesday. Recreation activities primarily occur outdoors, making the most of the tropical climate. Despite being under a democratic system, society remains highly stratified, with a small group of business elite and landowners dictating major policies. The Congress is predominantly composed of white individuals. A

hundred years after the end of slavery, black communities still lack sufficient political representation, education, and housing.

The social structure varies across regions, with the South being highly industrialized and emphasizing individualism and social mobility. In contrast, the rural North follows a traditional agricultural system known as fazenda, which features a dualistic structure with landlords as the upper class and others in the lower class.

In the traditional agricultural society, powerful fazendeiros sought to control government policies by extending their power into the political system. As a result, the current government is facing significant resistance to land reform in the North. This hierarchical relationship is closely connected to clientelism, where superiors grant favors to inferiors, creating indebtedness and moral obligations while ensuring a steady supply of labor or scarce skills. In urban areas with high unemployment rates, job opportunities are offered in exchange for loyalty and support in elections. This concept of an "extended family" is the basis of human relationships in Brazil. The Executive branch bears much of the responsibility for forming and implementing trade and industrial policies in the National Strategy Institutional Framework.

The current government has simplified and eliminated numerous regulations related to trade and tax concessions that were previously complex. The investment code, which was once complicated, has also been simplified and made more liberal, although a few constraints still remain. The Ministry of Economy, Finance, and Planning (MEFP), led by Pedro Malan, is the primary agency responsible for the economy. The MEFP oversees several regulatory agencies that include: BACEN-Central Bank (responsible for monetary policy, foreign exchange controls, monitoring of foreign capitals and profit remittances, regulation of banks and financial institutions), CVM-Securities Commission (responsible

for securities markets and listed companies), CADE-Administrative Council for Economic Defense (monopoly, cartel, and antitrust monitoring), INPI-National Institute of Industrial Property (focused on technological development), CDI-Industrial Development Council (involved in industrial development and granting fiscal incentives), and DECEX-Foreign Trade Department (responsible for foreign trade and control of export and import licenses). In the formulation of economic policies, the government maintains communication with the private sector, allowing their participation in sectoral chambers and special committees. Additionally, policy reviews are occasionally conducted by research institutes.

Brazil's economy has experienced major transformations since 1990, aiming to liberalize trade, deregulate industries, and privatize state-run enterprises. Although the current economy is largely based on free enterprise, the government still plays a significant role in crucial sectors. The National Privatization Program was established to achieve privatization objectives, focusing on industries such as steel and petrochemicals. Constitutional Amendments were approved in July 1995 to permit private and foreign investment in oil, mining, electric power, and telecommunications. These reforms facilitated the introduction of Brazil's latest currency called real.

The implementation of deindexing prices and measures to lower inflation has resulted in significant growth and an influx of new investment. Projections indicate that by 2000, 12 multinational companies alone will invest $8 billion. The most notable achievement is the substantial reduction in inflation, which decreased from 3000% in 1989 to just 30% in 1995. However, the strength of Brazil's currency has led to an increase in imports, resulting in a trade deficit of $3.2 billion in 1995. To tackle this issue, the government introduced devaluation, import restrictions, tariffs, and quotas specifically for car imports. Additionally, there are concerns about the resurgence of inflation.

The system in Brazil

demonstrates inherent inflation due to private greed, insufficient management of public finance and enterprise, and a lack of oversight. Immediate reforms are necessary to address the following issues: improving the outdated and cumbersome tax collection system, distributing tax revenues more effectively, empowering the federal government with redistributive authority, shifting public responsibilities between the federal and state levels, reducing foreign debt, eliminating job security for public servants, replacing poorly operated state pension programs with private initiatives, privatizing and regulating state banks, ceasing uncontrolled lending to states, allowing joint ventures and private investment in remaining state-run enterprises, and removing restrictions on foreign ownership. Brazil's economy has traditionally relied on natural resources and agriculture, supported by its abundant human resources. The infrastructure was originally established during the colonial monarchy to supply resources for industries in the mother country. However, since the 1960s, industrial development has become a priority, primarily financed through international loans. As a result, Brazil's exports now consist of a more balanced mixture of commodities and manufactured goods (refer to Table 6). Following the debt crisis of 1982, significant trade surpluses had to be generated to service Brazil's foreign debt.

This was accomplished through import contraction, which reduced the value of imports from 7% to 4% of GDP between 1982 and 1990 (See Table 4). As trade barriers have been lowered, the situation is changing. In the North, a free trade zone was established in Manaus to attract businesses to the Amazon. The European Communities, the United States, Japan, and Argentina are the main trading partners. Over the last ten years, exports have increasingly been directed towards the United States and developing nations in East Asia.

The

proportion of Latin American countries has decreased from 18% to approximately 12%, indicating the uncertain economic conditions in those markets. (See Table 7) The majority of imports also come from the United States and Europe. Among Latin American countries, MERCOSUL countries and Chile are the primary sources of imports. (See Table 8) Brazil is a member of the Latin American Integration Association (LAIA) and was one of the founding members of the General Agreement on Tariffs and Trade (GATT). Imported goods from LAIA and Global System of Trade Preferences among developing countries (GSTP) members receive special tariff preferences. Brazil is also a member of the Southern Common Market (MERCOSUL), which aims to gradually eliminate all tariffs by 1995 in an agreement between Brazil, Argentina, Paraguay, and Uruguay. Additionally, there exists a bilateral agreement between Brazil and Argentina that would boost trade between the two nations. The success of these regional agreements may enhance the possibility of a future common external tariff.

Foreign investments in Brazil are encouraged and welcomed if they contribute to the country's long-term economic development. The Constitution emphasizes that these investments should be in the national interest. The local government particularly favors investments in agriculture, technology, labor-intensive industries, and the production of imported goods and goods that will increase exports. Foreign investors can also participate in the National Privatization Program by converting Brazilian foreign debt securities or subscribing to privatization funds. Although there are no federal tax incentives to attract foreign capital, some states and local governments provide tax concessions, particularly in the Northeast and Amazon regions. However, all corporations are subject to a 26% corporate income tax. The National Monetary Council closely

monitors foreign currency transactions.

Approval for all foreign currency loans must be obtained from the Central Bank. In times of foreign exchange shortage, the Central Bank takes control of repatriation and remittance requests for foreign currency and disburses it when it becomes accessible. As a result, there may be delays, but the Bank provides interest compensations. Certain industries deemed strategically important place restrictions on foreign ownership. These industries encompass communications, aviation, defense, classified government contracts, coastal and freshwater shipping, financial institutions, and privatized companies.

The ownership of foreign firms is generally allowed at 100%. However, national capital companies may receive temporary market protection or benefits for activities deemed important or for national development. While there are limitations on rural land ownership, there are no restrictions on owning urban land and buildings. Sao Paulo and Rio de Janeiro have principal stock exchanges where security markets are available. All public issues of securities must be registered with the Securities Commission (CVM), which can be a lengthy process. The Central Bank regulates banking and financing businesses.

Major banks in the private sector have formed financial conglomerates, which allow them to provide a comprehensive range of financial services through their subsidiaries and associated companies. It is important to highlight that Brazil is not considered an international financial center and therefore, offshore banking, trust, and financial services are prohibited. Although import tariffs in Brazil have historically been high, they are beginning to decrease. The maximum import duty rate was projected to be reduced to 40% by the end of 1994, with the modal rate estimated at 20%. Additionally, import procedures have been deregulated.

In addition to the 26% corporate tax, there is also a

15% tax applied to dividends. While a corporation can be fully owned by foreign entities, local participation in capital is encouraged by authorities. The director of the corporation must have a permanent visa and be a resident of Brazil, with no restrictions based on nationality. The labor force represents around 62 million people, which accounts for approximately 41% of the population.

It is projected that the percentage of women in the total workforce will increase, currently standing at 35%. Almost all employers are obligated to hire Brazilians, constituting at least two-thirds of their total staff in terms of both quantity and overall pay. Minimum wage regulations are in place, and labor unions have grown more active, particularly following the nationwide two-day strike in 1989. Federal laws govern patents and trademarks. Environmental consciousness has risen due to global influence, notably from the US.

The underdeveloped infrastructure in the tropical rain forest has limited its exploitation. The government-controlled railroad system has not undergone major modernization or improvement, although there are plans for extensions. As a result, road transport is dominant, but the highways are poorly maintained and new highway construction has been sluggish in recent years.

The airline network is well established and mostly owned by private entities. However, major cities face significant challenges with urban transportation. The postal system is also well developed. Although the telecommunication system has made notable advancements, it currently lacks further investment.

Telexes and electronic mail links are widely used by business and industry as efficient communication tools. Canadian Firms in Brazil have advantageous opportunities due to Brazil's extensive consumer base, proximity, and shared language and culture. Moreover, the favorable investment climate in Brazil is a

result of the current government's dedication to economic liberalization. To take advantage of these opportunities, interested firms should be willing to make a medium to long term investment that is subject to tight exchange control.

It is advisable to take precautions when dealing with the local government in Brazil due to its unstable and corrupt bureaucracy. It is also recommended to have connections with the political scene. Moreover, Brazil has a less advanced financial and industrial base, as well as a lower standard of labor productivity. Therefore, investing in employee training would be necessary. Canadian industries can benefit from Brazil's abundant labor force for labor intensive manufacturing processes such as textile and electronics.

There is significant potential in the agriculture, fisheries, and energy sectors. The country's large population, combined with the populations of the MERCOSUL countries, creates a massive consumer base for almost any product. If Brazil can maintain control over inflation and foreign debt, it has the potential to fulfill the promises it made in the 1970s as a developing country's economic miracle.

Bibliography

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4. Ian. "Magic Rio-ism." Time, 146, no. 24 (1995), 16.

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The text discusses the book titled "Hierarchy and Trust in Modern Mexico and Brazil"

written by Praeger in 1990. It also mentions two articles from the publication "The Economist" that focus on Brazil's survey and tax reform, which were published in 1995. Additionally, it briefly refers to author Teixeira, but does not provide any further information.

S. "The Changing Role of Education in Brazilian Society." In Modern Brazil, 71-95. John Saunders ed. Florida: University of Florida Press, 1971.

"The Fiscal Black Hole of Sao Paulo, and others," The Economist, v.338 (1996), 41-42. Trade Policy Review: Brazil. Geneva: GATT, 1993.

"Urban Crime: from Rio...,"

1. The Economist, v.337 (1995), 37. "Watch my hands," The Economist, v.337 (1995), 33-34.