based in this reading. what's the political and envirmental changes in Brazil. explain what any of these two changes could mean to the future of Brazil's "cultural values"?
Brazilian Economic Reform and Recent Challenges http://en.wikipedia.org; http://www.wto.org/ Over the past two decades, Brazil's economic reform In 2002, Luis Inacio Lula da Silva won the presiden- and progress have been nothing short of spectacular. tial elections, and he was reelected in 2006. During his Beginning with a comprehensive privatization program government, the economy began to grow more rapidly. in the early and mid-1990s under which dozens of In 2004 Brazil saw promising growth of 5.7 percent in state-owned enterprises were sold to commercial inter- GDP; following in 2005 with 3.2 percent growth; in ests, Brazil has transformed itself from a relatively 2006, 4.0 percent; in 2007, 6.1 percent; and in 2008, closed and frequently unstable economy to one of the 5.1 percent growth. Although the financial crisis caused global leading "BRIC" countries and the anchor of some slowdown in Brazil's economy, it has weathered South American economic development. Brazil's the period much better than nearly every other econ- reforms, which have included macroeconomic stabiliza omy in the Western Hemisphere. From 2009 to 2011, tion, liberalization of import and export restrictions, and Brazil was the world's fastest-growing car market. By improved fiscal and monetary management, reflect a 2011, the size of the Brazilian economy had surpassed definitive break from past inward-looking policies that that of the United Kingdom. characterized much of Latin America in the 1960s and The years since the financial crisis have been more 1970s. A critical milestone was the introduction of the challenging for the Brazilian economy. Oil producer Plano Real ("Real Plan"), instituted in the spring of 1994, OXG entered bankruptcy in late 2013-the largest which sought to break inflationary expectations by peg- corporate bankruptcy in South American history. Polit- ging the real to the U.S. dollar. Inflation was brought ical corruption, including the exchange of millions in down to single-digit annual figures, but not fast enough bribery and money laundering between Brazilian poli- to avoid substantial real exchange rate appreciation ticians and state-owned oil producer Petrobras, low- during the transition phase of the Plano Real. This ered consumer confidence. Petrobras lost nearly 60 appreciation meant that Brazilian goods were now percent of its value between the last quarter of 2014 more expensive relative to goods from other countries, and early 2015, and the Bovespa, Brazil's stock index, which contributed to large current account deficits. slid sharply downward. Between 2011 and 2015, the However, no shortage of foreign currency ensued real depreciated nearly 50 percent in relation to the because of the financial community's renewed interest U.S. dollar. By 2015, the economy had slipped into in Brazilian markets as inflation rates stabilized and recession, and in 2016, the president was impeached memories of the debt crisis of the 1980s faded due in part to alleged connections to the Petrobras The Real Plan successfully eliminated inflation, after scandal. many failed attempts to control it. Almost 25 million Despite the current struggles, there continues to be people turned into consumers. The maintenance of promise for Brazil's future. Brazil remains the second- large current account deficits via capital account sur- biggest destination for foreign direct investment into pluses became problematic as investors became more developing countries after China, and many Brazilian risk averse to emerging market exposure as a conse- companies continue to expand in the international quence of the Asian financial crisis in 1997 and the arena. Embraer (ERJ), the global leader in small and Russian bond default in August 1998. After crafting a medium-sized airplanes, is now the world's third-largest fiscal adjustment program and pledging progress on manufacturer of passenger jets after Boeing and Air- structural reform, Brazil received a $41.5 billion IMF-led bus. Odebrecht, the Brazilian business conglomerate in international support program in November 1998. In the fields of engineering, construction, chemicals, and January 1999, the Brazilian Central Bank announced petrochemicals, is responsible for building a number of that the real would no longer be pegged to the U.S. large infrastructure projects around the world, including dollar. This devaluation helped moderate the downturn roads, bridges, mass transit systems, more than 30 air- in economic growth in 1999 that investors had ports, and sports stadiums such as Florida International expressed concerns about over the summer of 1998. University's FIU stadium. Brazil remains the world's larg- Brazil's debt to GDP ratio of 48 percent for 1999 beat est exporter of several agricultural products including the IMF target and helped reassure investors that Brazil beef, chicken, coffee, orange juice, and sugar, and the will maintain tight fiscal and monetary policy even with country's international trade and investment relation- a floating currency. ships continue to diversify considerably to include man- The economy grew 4.4 percent in 2000, but prob- ufacturing and services. lems in Argentina in 2001, and growing concerns that the presidential candidate considered most likely to win, leftist Luis Inacio Lula da Silva, would default on the debt, Source: Garry Kasparov, "Putin's Gangster State," The Wall Street Jour- triggered a confidence crisis that caused the economy nal, March 30, 2007, p. A15; The Economist Intelligence Unit, Country to decelerate. Poverty was down to near 16 percent. Report: Russia (Kent, U.K.: EIU, 2007), p. 7; "Trust the Locals," The Economist 382, January 25, 2007, pp. 55-56
