Brazil's Hurdle to Economic Growth

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Brazil’s hurdle to economic growth

Corruption, infrastructure and socioeconomic inequalities among regions

Michal Martinek

Riccardo Pellegatta[pic 6]

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Table of Contents

1. Introduction        2

2. Analysis of Brazil current situation in corruption, infrastructure and regional differences and inequalities        3

2.1. Corruption        3

2.2. Infrastructure development        4

2.3. The relationship between regional differences and socioeconomic inequalities        5

3. Conclusions        6

4. Bibliography        7

5. Appendix        9

1. Introduction

Brazil is the largest economy of South America and the ninth largest in the world for nominal GDP, with 1,774,725 million of US dollars (World Bank, 2017). It is also the fifth largest country by both population and area, and the largest and most populous country in South America (Worldometers, 2017).

In the last two decades, Brazil has become one of the most important economies in the world. The country is part of the so-called BRICS (with Russia, India, China and South Africa), the group of emerging markets who are predicted to change the scenario and play a major role in the future of the global economy (Goldman Sachs, 2003). In fact, before the beginning of the recession and the consequent crisis in 2014, Brazil was among the fastest growing economies in the world. Especially in the period between 2002 and 2011, the country’s nominal GDP grew every year at an average rate of 4% approximately (World Bank, 2017). The majority of the national production derives from services, which account for 71,9%. The industry accounts for 22,2%, while agriculture contributes for 5,5% of the GDP (Indexmundi, 2017).

Currently, the country has to face a lot of challenges: recession, inflation, interest rate, low quality and high-cost transportation system, corruption, weak judicial system and many others. Moreover, there are inequalities among the population and between regions, the crime rate is high and excessive, and high level of bureaucracy also has an impact on the foreign investments.

In 2016 the Brazilian market should have continued in the growth. Moreover, the investments in infrastructures and other long-term development projects were about to begin. Instead, it was the worst year for the Brazilian economy in recent decades. Furthermore, the end of Brazilian economy slump is not known.