Brazil Enigma: Sustaining Long-Term Growth

Concordia University Portland Oregon
MBA 506 Business, Government & International Economy
Brazil Enigma: Sustaining Long-Term Growth

Submitted to

July 10, 2016

Brazil Enigma: Sustaining Long-Term Growth

Abstract.

In the last decade, Brazil is made a promising future economic success. Middle-class prosperity population creates economic, with GDP growth at a peak of 7.5% in 2010. However, the price of performing business in Brazil was harming domestic manufacturing and job market. Under Dilma Rousseff, economic growth becomes sour and difficult to control the inflation and exchange rate. Brazilian export becomes highly competitive.

Introduction

Brazil went from a remarkable economic boom to the painful crisis in its modern history in less than a decade. A growing middle class had fueled economic growth, with GDP growth reaching it was a peak of 7.5% in 2010. However, the high cost of conducting business in Brazil, known as "Custo Brasil," was damaging domestic manufacturing, while overwhelming foreign investments threatened to overrun the Brazilian markets. Brazilian economic growth is stalled and needs renovation. Due to economic instability, the import and export had been decreasing creating the deficit on the domestic market. The deficit creates the chain reaction of the high taxation and money inflation.

Under President Dilma Rousseff, economic growth stall, and the Rousseff administration has a dilemma to find the best solution to reducing inflation, maintaining a flexible exchange rate, and improving the competitiveness of Brazilian exports.

Background

Brazil is the largest country in South of America with developed farmer’s land and reach of the nature resources. The Brazilian economy is overpowering other South American countries and has a strong position in the global market. Since 2003 Brasilia improve the domestic economic stability and reduce credit (to other nations). The 2007-2008 global financial crisis had a negative effect on the Brazilian economy, demands on the world market of brazilin export had decreased.

Middle of the 1990 Brazil experience the high inflation, and it is hard to attract foreign investors. However, Brazil tight up the regulation of currency and was able to stabilize the situation.  Around 2000 Brazil economy starts to grow again.  Due to high-interest rates in Brazil, made attractive to the foreign investors and creditors. Significant capital investment leads to the increasing the taxation on foreign investments.

Brazil has most economic potential in South American counters. However, differentiation in income is significant. The Brazilian economy has problems such as Brazilian cost, high inflation, and low GPD of the population. Brazil has difficulty in attracting t the high educated and skilled workforce.