Brazil has used various economic strategies to promote growth and development. These include fiscal stimulus strategies to increase infrastructure spending, social welfare programs to reduce poverty, and trade policies to protect domestic industries. Brazil has also liberalized its economy through trade agreements and reforms to attract foreign investment. As a result of these strategies, Brazil has experienced increasing GDP growth rates and structural changes to employment away from agriculture and toward services. However, globalization has also increased inequality and environmental pressures that Brazil works to address through continued economic development strategies.

1. HSC- Economics Topic One ; The Global Economy Samantha Chiu
Ms.Cuke
Outline the features of globalisation and evaluate economic strategies of a country
other that Australia in achieving economic growth and development
Globalisation is the process of increased integrations between different economies and
the increased impact of international influences on all aspects of life and economic
activities . Globalisation is able to link individual economies through international1
trade and investment. Globalisation can have impact on a nation’s growth and
development, trade and investment, environment and inequality. Brazil government
has used micro and macro economic strategies such as the Financial Integration
Strategy, PAC, Fiscal Stimulus Strategy, Bolsa Familia Strategy to bring about
economic growth and development. Economic growth refers to the ability of nations
to purchase goods and services in a set period of time; this purchasing power is
measured by real GDP. Economic development is a measure of quality of life, types
and nature of employment and unemployment, role of government in health care,
education and welfare, and its environment quality.
Brazil a Newly Industrialised Economy (NIEs) has a population of 192 million (2007)
is characterized by sophisticated development of manufacturing, service, agricultural,
and mining sectors. From 2003 to 2007, Brazil achieved records of trade surpluses
and the first account surpluses since 1992, these made Brazil outweighing all the
other South American economies. Brazil is starting to increase its market involvement
amongst the global economy; its GDP has increased from 4 % in 2006 to 5% in 2008.
Globalisation has impacted on Brazil’s trade and investment pattern, Brazil’s
increasing participation in the global economy has contributed to a structural change
in employment. This economic growth strategy has resulted in the increase
importance of the tertiary sector, and it now comprises as one of the major export.
Brazil’s economy was dominated by agriculture (primary) and manufacturing
(secondary) sectors, (50%, 1990), it has decreased to 35% in 2007, and this has cause
unemployment for low-skill labour. In 2004-2008, this strategy has result in Brazil
experience an average annual growth of 21%. The slowdown of the global economy
has resulted a trade surplus shrunk by 38 %. The increase annual growth rate is
experienced due to the structural reforms that the government has undertaken.
Since 2007, Brazilian strategy sought to prevent inflation from eroding economic
growth by a process of monetary correction—that is, by the legal revaluation of fixed
assets, such as real estate, debits in arrears, and the face value of bonds, to reflect
inflation. This technique, which requires extensive government control over the
economy, was intended to prevent inflation from distorting the relative values of
various types of holdings. It was also disastrously inflationary.2
Australia in the Global Economy Pg3, Tim Dixon, and John,Mahony.1
http://www.nationsencyclopedia.com/Americas/Brazil-ECONOMIC-DEVELOPMENT.html2
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2. HSC- Economics Topic One ; The Global Economy Samantha Chiu
Ms.Cuke
The Financial Integration Strategy is a recent macroeconomic growth strategy within
Brazil and other nations has allowed transnational corporation to conduct Foreign
Direct Investment (FDI) in Brazil; in 2008, FDI encounter close to 3 % of its GDP.
This trend is driven by the FDI in the mining sector. As well as other sectors such as
retail, finance, construction, and telecommunication, chemical, pharmaceutical,
automotive and mechanical industries. The increasing investments by Transnational
Corporations (TNCs) not only provide employment opportunities for highly skilled
labour, as well as increasing competition amongst local firms and TNCS. This has
resulted in better quality of goods and services in theses industries, hence improved
standard of living. With increasing participation in the workforce (unemployment,
reach 12% in 2004, but drop to an average of 8% in 2008-2009), government receive
increase revenue in their budget which then can be used to pay its foreign debts
A Macroeconomic Fiscal Stimulus strategy was introduced by the Da Lula
government in 2007 to promote economic growth and development. PAC (Growth
Acceleration Programme) aims to increase GDP growth to 5%p.a, where it ensured
$250bn was spent on public infrastructures. Tax exemption in certain sectors to
encourage investment and provide government funding in industries such as
construction, digital, technology, transport has reduce costs for Brazilian businesses
and stimulate medium productivity growth. This is a successful strategy as the
Government has confirmed that a second PAC will be planed for 2010 , as well as its3
success of increasing Brazil’s success in creating opportunities for foreign investment.
The nature and impact of globalisation, causes many developing economies to
experience volatility of their exchange rate. Brazilian government has undertaken a
structural change strategy, a macroeconomic growth strategy in order to increase its
attractiveness; this prevents Brazil from merely borrowing from overseas. This
strategy promotes market reforms such as deregulation of industries, abolishing state
monopolies and prioritises low inflation as a major goal of macroeconomic policy, as
well as removing tariffs, strict tax and labour laws and any quantitative controls has
increase attractiveness. The success of this strategy has led to growth in commodities
which has helped Brazil in 2007 to achieve a trade surplus of $40 bn.
As part of the Memorandum of Economic Strategy, the real was floated in 1994 to
ensure macroeconomic stability and long term micro reforms. It promotes economic4
growth as it increased Brazil’s ability to withstand external shocks, as its debts would
be repaid in real. It significantly reduce the amount of foreign debt to GDP, from 50
% in 1985 to 13 % in 2008 It has resulted in a number of economic benefits, as it5
allows greater flexibility to set domestic interest rates and ensuring the economy is
able to adapt to the falling demand of its exports. The increase ability to withstand
(4. Brazil’s recent policy development) Australia in the Global Economy Tim Dixon and John3
O’Mahony, 2010 edition
, ( 2.3 “And Brazil has suffered several exchange rate crisis”)4
Australia in the Global Economy, Tim Dixon and John O’Mahony 2010 edition pg 75
Source: Banco Central Do Brazil5
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3. HSC- Economics Topic One ; The Global Economy Samantha Chiu
Ms.Cuke
exchange rate crisis is a long term benefit, many economist agree that the floating
exchange rate has been one of the pillars of Brazil’s economic recovery.4 This
program was a success as it brought inflation under control and strengthened the
purchasing power of low income earners this programs has benefited Brazil
population to improve its standard of living, as well as a providing safety net for
foreign investors, hence increase their confidence.
In order to ensure its population have a sustainable economic growth and
development, microeconomic strategies since the late 1960s has had three prime
objectives. It aims to control of inflation, gradual improvement of the welfare of the
poorest sector, and a high economic growth rate.
Beside economic growth, an economy can be measured by economic development.
The quality of life can be reflected by the GDP rate, as the higher the well being of
people, the more they can export. The Human Development Index (HDI) is an index
used to rank countries by level of "human development", which usually also implies
whether a country is developed, developing, or underdeveloped . Just like other South6
American neighbours, Brazil has a history of economic boom and bust and its
development has been hampered by high inflation and foreign debt.7
Being co- leader of G20, is an economic development strategy which allowed Brazil
to challenge the rule of WTO in 2007. It challenged WTO’s decision to sign an
arrangement allowing domestic products to copy expensive HIV drugs produced by
American company. This has demonstrated Brazil willingness to champion the
interests of developing countries in the international trade arena and further increase
its international trade attractiveness .8
In Brazil, 30% of its population living below poverty line and a third of these people
living in ‘ absolute poverty (living on less the US$ 1.25 one day). When it comes to
the non- economic factors such as education and health, it has increased its adult
literacy rate by 7 % since 1990, also an increase of life expectancy from 67 years old
(1990) to 73( 2006), with an HDI(rank) of 79. Brazil implemented many economic
developments, which allowed it to embark on sustainable economic development.
These strategies include Sistema Único de Strategy (SUS) and Bolsa Familia
The Sistema Único de Strategy, an economic development strategy ensures that the
healthcare system is fair, universal and comprehensive. This is achieved by strict
regulations by the government. In this strategy, implementations must be planned and
supervised directly by the population, as it conduct conferences in local, city, state
and national health councils. This is regarded as a very advanced form of direct
democracy and has established the guidelines for many similar initiatives in sectors
other than health all over Brazilian society.As demonstrated in FIG 1, life expectancy
has increased from 67 to 73 years old. The constant improvement of medical services,
http://en.wikipedia.org/wiki/Human_Development_Index6
http://news.bbc.co.uk/2/hi/americas/country_profiles/1227110.stm7
(2.2 But Brazil has been slower in embracing free trade)8
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4. HSC- Economics Topic One ; The Global Economy Samantha Chiu
Ms.Cuke
enable the government to maintain health of the population as well as experiencing
strong economic growth.
The Bolsa Familia (Family Fund) Strategy is a micro reform to ensure sustainable
economic development. One of the major issues of globalisation is inequality; the
richest is 10 % of the population earns 49% of the national income, where the lower
50% Brazilians only earn 10% of the national income. This strategy gives 11.4 million
of Brazil’s poorest population up to 95 reals per month. This has cut down duplication
and resource wastage, and also regard as a most effective government programme to
relieve poverty. Brazil is on the path toward a new development strategy, which of
export substitution, it is hoped, will allow local government to address Brazil's severe
problem of unequal income distribution. 9
Since the early 1960s, the government has promoted special incentives to agricultural
and industrial enterprises as an economic development strategy that furthers the
development of the northeastern and northern regions of the country . This has10
increase the quality of these goods and service, this not only increase the economy’s
GDP ( as they are able to export more agricultural products), hence spend these
revenue in improving the standards of living by building infrastructures, providing
better education, water, shelter, and other basic needs.
As a strategy to ensure its primary sector doesn’t continue to shrink, during the Doha
Round in 2005, Brazil refuse to remove subsidiaries for its agricultural products.
Although Brazil is criticised for its stubborn approach, it was necessary for the
government to protect it agricultural sector, as it contributes to one third of its export.
Brazil must ensure that strict regulations and tariffs on imported agricultural goods.
Rapid growth strategies often lead to environment being compromised in many
developing nations. The Brazilian government has used numerous economic
development strategies to protect the Amazon Rainforest such as Environmental
Crime Law 1998, creating protection areas to 12% of logging area. These strategies
are need because globalisation and the demand for commodities have increased the
rate of resource consumption in Brazil. These strategies were not effective as there
were lack of human and financial resources, poor communication among public
officials, lack of transparency, and poor performance of courts. This has result 13% of
the rainforest had been destroyed, Brazil has spent less percentage of its GDP on
environmental issues when compared to other NIEs.
In January 2007, an economic development strategy was used in respond to climate
change; that was to introduce the use of ethanol, as it reduces greenhouse gas
emissions of vehicles by 30%. This leads to improved air quality, and reduction in
respiratory health issues, also encouraged the development of Brazil’s sugar industry
which employs more then 1 million people. This economic development is further
sustained by a bilateral agreement between Brazil and US to share technology and
expertise relating to ethanol production, and to promote usage of ethanol in the global
automotive industry. This is a remarkable demonstration of faith in Brazil’s innovative
http://www.nationsencyclopedia.com/Americas/Brazil-ECONOMIC-DEVELOPMENT.html9
http://www.nationsencyclopedia.com/Americas/Brazil-ECONOMIC-DEVELOPMENT.html10
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5. HSC- Economics Topic One ; The Global Economy Samantha Chiu
Ms.Cuke
and world- leading approach to biofuel industry and the contribution to reduce
greenhouse gas emissions. 11
In November 2009, a strategy was used to further encourage economic development,
as they signed a bilateral agreement with France to fight global warming, before next
month's UN climate change conference in Copenhagen. They will pursue the goal of
reducing industrialised nations' emissions to 50% below 1990 levels by 2050 . The12
Brazilian government has announced that it aims to achieve a reduction of at least
36% on its carbon emissions by the year 2020. If it meets its pledge, greenhouse gas
emissions would be near 1994 levels. Brazil hopes to put pressure on richer nations to
declare their intentions and break the deadlock in the Copenhagen negotiations. The
government announced on 14 November 2009 that deforestation in the rainforest was
its lowest level since monitoring first began 21 years ago. 13
‘Ethanol: A successful Government Response to Globalisation’ – Australia in the Global Economy11
http://news.bbc.co.uk/2/hi/americas/8360738.stm12
http://news.bbc.co.uk/2/hi/americas/8360072.stm13
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FIG.1 Development Indicators of various economies
FIG1 : World Bank Development Indicators, 2009 *Source: Human Development Report; 2007/2008

6. HSC- Economics Topic One ; The Global Economy Samantha Chiu
Ms.Cuke
Bibliography:
Websites:
- http://www.nationsencyclopedia.com/Americas/Brazil-ECONOMIC-
DEVELOPMENT.html
- http://en.wikipedia.org/wiki/Human_Development_Index
- http://news.bbc.co.uk/2/hi/americas/8360072.stm
- http://www.indexmundi.com/g/g.aspx?c=br&v=74
- https://www.cia.gov/library/publications/the-world-factbook/geos/br.html
- http://en.wikipedia.org/wiki/Health_in_Brazil
- http://news.bbc.co.uk/2/hi/americas/country_profiles/1227110.stm
- http://news.bbc.co.uk/2/hi/americas/country_profiles/1227110.stm
- http://en.wikipedia.org/wiki/Doha_Development_Round
Books:
- Chapter one, Cambridge Economics HSC (Mike Hornsley, Edmund
Esterbauer, Lyn Kirkby, Anne Layman, Rachael Mules, Andrew Skehan) First
published in 2006,
- ‘ Case study – Brazil’ - Australia in the Global Economy, Leading Edge, Tim
Dixon and John O’Mahony 2010 edition
Others
Online powerpoint –
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7. HSC- Economics Topic One ; The Global Economy Samantha Chiu
Ms.Cuke
‘ logging in Brazil” - http://www.illegallogging.info/presentations/180106/
brito.ppt#267,9,Problems for effective enforcement
WC - 1994
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