The document discusses how globalization has impacted Brazil's economy over the past two decades. It notes that while Brazil experienced high growth rates in the 1960s-1970s, its economic growth declined and it took on significant foreign debt. To address economic instability, the IMF and World Bank have intervened with policies and reforms. Globalization has both positively and negatively affected Brazil's economic growth, development, and living standards.

1. In
the
past
two
decades,
the
global
economy
has
become
increasingly
connected
with
the
advent
of
globalisa8on.
Globalisa8on
is
the
process
of
increased
integra8on
between
different
countries
and
economies
and
the
increased
impact
of
interna8onal
influences
on
all
aspects
of
life
and
economic
ac8vity.
Globalisa8on
can
have
a
posi8ve
or
nega8ve
effect
for
individual
economies
depending
on
the
structure
of
that
economy.
The
Brazilian
economy
is
classified
as
a
Newly
Industrialised
Country
or
part
of
the
‘BRIC’
emerging
economies,
being
third
largest
of
China,
India
and
Russia.
Brazil
has
had
fluctua8ng
economic
growth,
with
record
rates
averaging
6%
per
year
in
the
1960’s
and
9%
in
the
1970’s,
decreasing
rapidly
to
average
growth
rates
of
2.2%
in
2000.
However
economic
development
has
improved
steadily.
Economic
issue
is
an
aspect
of
the
economy
which
involves
something
about
the
economy
etc.
Globalisa8on
has
impacted
posi,vely
or
nega,vely
on
economic
issue.
In
order
to
improve
both
economic
growth
and
economic
development,
the
Brazilian
government
alongside
the
IMF
has
developed
a
range
of
shorter
term
micro
economic
policies
and
long
term
microeconomic
reforms
to
encourage
fiscal
discipline,
target
infla8on
and
float
the
Brazilian
currency.
As
well
as
increasing
investment
in
infrastructure
to
reduce
inequality.
Brazil’s
goals,
when
the
economy
as
first
opened
to
the
world
market
was
to
become
self
sufficient
by
minimising
dependency
on
imports.
However
the
economy
managed
to
become
more
reliant
on
and
more
influenced
by
external
economies
as
there
was
large
borrowing
from
overseas
to
fund
industrialisa8on.
This
led
to
significant
foreign
debt
and
created
a
suscep8bility
to
external
shocks
that
saw
growth
plummet
from
2.7%
in
the
980’s
to
2.2%
in
200.
Because
of
its
economic
instability,
global
ins8tu8ons
such
as
the
Interna8onal
Monetary
Fund
(IMF)
and
the
World
Bank
have
intervened
to
restore
the
economy.
For
example
the
2002
economic
crisis
saw
the
IMF
loan
US$
30
Billion
to
Brazil
which
boasted
investor
confidence
and
the
World
Bank
invested
US$
6
–
10billion
from
2002
to
2006.
Economic
growth,
development
and
quality
of
life
Brazil
has
experiences
lacklustre
performance
since
its
integra8on
into
the
world
economy,
with
real
GDP
growth
of
5.4%
(2008)
well
below
most
developing
economies,
par8cularly
the
East
Asian
na8ons,
the
main
reasons
for
this
have
been
Brazils
vulnerability
to
external
financial
shocks
as
a
result
of
large
borrowing.
External
instability
such
as
a
rise
in
the
US
interest
rates
caused
an
increase
in
the
debt
servicing
ra8o
to
102%.
The
debt
servicing
ra8o
is
the
propor8on
of
export
revenue
used
to
make
repayments
on
foreign
debt,
and
as
Brazil
was
unable
to
repay
debt,
the
real
depreciated
sharply.
Although
due
to
recent
trade
surpluses
and
growth
in
export
revenue
Brazil’s
debt
servicing
ra8on
fell
from
85%
in
2002
to
32%
of
exports
in
2007.
However,
Brazil
has
enjoyed
a
variety
of
benefits
to
economic
development
from
globalisa8on.
Economic
development
is
a
broad
measure
of
welfare
in
a
na8on
including
health,
educa8on
and
environmental
quality
as
well
as
material
wealth.
The
opening
of
Brazil
to
the
foreign
financial
market
has
allowed
for
financial
inflows
to
fund
growing
industrialisa8on.
Over
the
past
20
years,
investment
in
infrastructure
has
seen
health
care
provisions
increase
life
expectancy
from
63
in
1980
to
72
in
2006.
Funding
industrialisa8on
from
integra8on
into
the
global
financial
market
has
also
led
to
increased
investment
in
capital
goods
and
the
manufacturing
industry,
increasing
employment
opportuni8es.
However
the
vulnerability
of
the
Brazilian
economy
as
a
result
of
financial
integra8on
has
led
to
fluctua8ons
in
unemployment.

2. Compared
to
other
developing
na8ons,
Brazil
has
maintained
a
substan8al
level
of
living
standards.
As
well
as
the
rise
in
life
expectancy,
the
adult
literacy
rate
has
increased
from
82%
in
1990
to
88%
in
2006,
and
primary
educa8on
from
86%
to
98%
between
1991
and
2006.
This
increase
has
been
part
a
goal
to
increase
workforce
produc8vity,
and
export
produc8vity
in
the
process
by
increasing
educa8on
funding
from
4.6%
to
7%
of
GDP.
This
is
an
indirect
benefit
of
globalisa8on
as
interna8onal
compe88veness
is
necessary
to
remain
economically
stable
in
today’s
integrated
economy.
Rising
living
standards
are
reflected
in
the
HDI
which
measures
economic
development
in
terms
of
life
expectancy,
educa8onal
levels
and
material
living
standards.
Brazil’s
HDI
has
increased
from
.680
in
1980
to
.800
in
2008,
ranking
70th
in
the
world.
Despite
these
developments,
Brazil
is
far
from
reaching
the
status
of
a
developed
na8on.
Distribu;on
of
Income
and
wealth
Brazil
how
suffered
historically
from
high
income
inequality,
and
economic
instability
has
only
added
to
the
problem.
The
GINI
co-­‐efficient
which
measures
an
economies
level
of
inequality
is
56.6,
an
while
the
top
10%
of
high
income
earners
hold
47.1%
of
na8onal
income,
the
poorest
50%
earn
just
11.9%.
8.2%
of
Brazil’s
popula8on
live
in
absolute
poverty;
that
is
living
on
less
than
US$1
a
day,
which
is
lower
than
China’s
16.6%,
but
s8ll
significantly
high.
While
Brazil’s
Gross
Na8onal
Income
is
US$893
billion
and
ranked
11thm
the
CNI
per
capita
is
only
US$8700,
illustra8ng
the
disparity
between
high
and
low
income
earners.
Globalisa8on’s
contribu8on
to
Brazil’s
vulnerability
to
external
downturn
impacts
hassled
to
fluctua8ons
in
unemployment.
The
Argen8nean
crisis
in
2002
for
example
led
to
high
unemployment,
and
excessive
infla8on
had
adverse
effects
of
low
income
earners,
worsening
income
inequality.
Environmental
consequences
The
natural
environment
is
central
to
Brazil’s
economy,
yet
has
proved
to
be
a
source
of
challenge.
Globalisa8on
and
the
overseas
demand
for
commodi8es
has
fuelled
the
rate
at
which
resources
in
Brazil
are
consumes.
The
Amazon
rainforest
is
crucial
to
both
domes8c
and
global
ecosystems,
however
logging
reached
record
highs
in
2004,
with
26
000
km2
of
land
cleared
in
the
year
alone.
Brazilian
government’s
dependence
on
Trans-­‐na8onal
Corpora8ons
to
provide
basic
services
has
led
to
spending
being
focused
on
non-­‐structural
areas.
This
has
resulted
in
less
than
10%
of
waste
water
being
treated
and
almost
½
of
solid
waste
remaining
uncollected
and
causing
health
problems
as
only
58%
of
the
popula8on
lives
in
housing
connected
to
a
sewerage
system.
However
there
have
been
government
ini8a8ves
that
incorporates
integra8on
to
create
posi8ve
effects
in
the
environment.
A
program
to
domes8cally
produce
ethanol
in
response
to
oil
price
shocks
in
the
1970’s
has
created
employment
for
more
than
1
million,
with
expor8ng
to
na8ons
such
as
US
and
UK.
The
program
has
also
promoted
Brazil’s
domes8c
motor
vehicle
industry
which
produced
2.6
million
cars
in
206
and
allowed
manufacturers
to
compete
globally.
Ethanol
produc8on
also
reduces
greenhouse
gas
emission
by
around
30%
improving
air
quality
and
reducing
respiratory
health
issues
such
as
asthma.
Interna;onal
convergence
Interna8onal
convergence
refers
to
the
increasing
similarity
of
economic
condi8ons
in
different
economies
as
a
result
of
globalisa8on.
The
Brazilian
government
responded
to
globalisa8on
in
the

3. twen8eth
century
with
protec8onist
policies
that
isolated
the
economy
in
contrast
to
export-­‐led
South
East
Asian
developing
na8ons.
Brazil
opened
its
economy
to
global
financial
market
not
to
increase
integra8on,
but
to
fund
industrialisa8on
in
order
to
develop
a
self-­‐sufficient
domes8c
economy.
However,
the
reliance
on
foreign
borrowing
resulted
in
the
accumula8on
an
unsustainable
foreign
debt
and
made
the
economy
prone
to
changes
in
the
global
economy.
In
the
late
1990’s,
Brazilian
government
opened
up
to
free-­‐trade
by
implemen8ng
reduc8ons
in
industry
protec8on
with
tariff
levels
falling
from
32.2%
to
10.8%
between
1990’s
and
2004.
Brazil
has
joined
many
interna8onal
ins8tu8ons
in
a
move
to
increase
interna8onal
convergence,
such
as
being
a
prominent
member
of
the
Cairns
group
of
17
agricultural
trading
na8ons,
leading
a
group
of
developing
economies
known
as
the
G20
to
advocate
fairer
deals
for
agriculturally
based
poorer
na8ons,
and
joining
another
33
countries
to
form
a
Free
Trade
Area
of
the
Americas
(FTAA).
Brazil
is
also
a
part
of
APEC
and
has
supported
the
forma8on
of
Mercosur;
a
union
between
Brazil,
Argen8na,
Paraguay
and
Uruguay
enabling
tariff
free
trade.
This
integra8on
has
contributed
to
the
increase
in
economic
growth
and
development,
with
growth
increasing
from
2.2%
in
2000
to
3.4%
in
2007
and
the
HDI
increasing
from
.680
in
1980
to
.800
in
2008.
While
Brazil
employed
protec8onist
policies,
there
was
lijle
convergence
with
the
global
economy
apart
from
a
vulnerability
to
external
shocks.
The
adop8on
of
policies
incorpora8ng
globalisa8on,
Brazil’s
economy
has
become
increasingly
to
similarly
placed
economies
such
as
South
East
Asian
developing
na8ons.
Trade,
investment
and
TNC’s
Historically,
Brazil
has
taken
a
cau8ous
approach
to
global
trade
flows,
preferring
to
focus
on
developing
domes8c
industry
to
subs8tute
imports
for
domes8cally
produced
goods,
with
a
fear
that
opening
to
trade
will
threaten
domes8c
industry.
Brazilian
strategies
have
been
protec8onist,
employing
tariffs
of
up
to
36%
and
subsidies.
While
this
kept
import
levels
down,
it
decreased
Brazil’s
interna8onal
compe88veness.
Between
1965
and
1983,
Brazil’s
exports
remained
a
stagnant
8%
of
GDP
while
export
driven
economies
such
as
South
Korea
saw
exports
grow
from
9%
to
37%
of
GDP
in
the
same
8me.
These
trade
barriers
increased
Brazil’s
CAD,
deprecia8ng
the
Brazilian
reai
and
lowering
economic
growth
and
development.
Around
the
1990’s
however,
Brazil
began
to
adopt
a
more
externally
based
economic
strategy
with
tariffs
falling
from
32.2%
to
10.8%
between
1990
and
2004
and
a
removal
of
all
quan8ta8ve
restric8ons.
The
reduc8on
of
trade
barriers
has
greatly
increased
Brazil’s
economic
integra8on,
with
foreign
trade
increasing
from
0%
of
GDP
to
26%
from
1995-­‐2006
and
also
an
increase
in
export
growth
from
6.1%
to
10.5%
from
1985
to
2005.
It
has
also
led
to
22%
growth
in
commodity
demand,
resul8ng
in
a
$40
billion
surplus
in
2007.
The
opening
of
Brazil
to
the
global
trade
market
has
improved
its
interna8onal
compe88veness
and
added
to
economic
growth
and
development.
In
terms
of
investment,
Brazil
has
been
quite
open
to
foreign
financial
flows,
funding
industrialisa8on
through
foreign
borrowing
in
order
to
reduce
dependency
on
imports
and
remain
self-­‐sufficient.
However
one
of
the
most
disadvantageous
impact
of
globalisa8on
on
Brazil’s
economy
has
been
the
accumula8on
of
the
highest
foreign
debt
in
the
developing
world,
making
the
economy
vulnerable
to
external
shocks.
In
1982,
Brazil’s
debt
servicing
ra8o
reached
an
unsustainable
102%,
resul8ng
in
the
reai
deprecia8ng.
This
was
due
to
an
increase
in
US
interest
rates.
Since
then,
Brazil
has
aimed
to
increase
foreign
investment
rather
than
borrowing
to
fund
capital
for
economic
development.
It
has
also
moved
towards
industry
deregula8on
to
increase
compe88on.

4. Strategies
to
increase
investor
confidence
have
led
to
a
significant
increase
in
the
involvement
of
Trans-­‐na8onal
Corpora8ons
in
Brazil.
TNC’s
are
global
companies
that
dominate
global
product
and
factor
markets
and
are
important
in
telecommunica8ons,
chemical,
pharmaceu8cal,
automo8ve
and
mechanical
industries.
Between
1994
and
2004,
Foreign
Direct
Investment
flows
averaged
2.3%
of
GDP
and
rising
commodity
prices
due
to
Brazil
being
an
emerging
economy
has
resulted
in
Brazil
receiving
US$
34.6
billion
FDI
inflows
in
2007.
These
inflows
have
spread
to
other
economic
sectors
such
as
retail,
financial
services
and
construc8on
as
well
as
Brazilian
TNC’s
expanding
into
other
La8n
American
economies
such
as
Petrobas.
Overall,
Globalisa8on
has
had
a
posi8ve
effect
on
TNC’s
by
increasing
investor
confidence
in
the
economy.
However,
the
vola8lity
of
investment
in
Brazil
and
a
reliance
on
TNC’S
for
primary
produc8on
create
more
exposure
to
external
shocks.
Like
many
developing
economies,
Brazil
has
experiences
a
series
of
exchange
rate
crises
as
a
result
of
it’s
isola8onist
industrialisa8on
strategies
which
led
to
an
uncompe88ve
export
sector.
Globalisa8on
has
increased
the
vola8lity
of
the
reai,
as
specula8ve
foreign
investors,
during
a
global
financial
downturn
will
opt
for
stable
economies
rather
than
developing
economies,
pulling
out
of
Brazilian
stock
markets
and
reducing
demand
for
Brazilian
currency
causing
deprecia8on.
From
the
1950’s
un8l
the
early
1960’s,
the
government’s
ajempt
to
establish
a
fixed
exchange
system
resulted
in
currency
crises
which
saw
infla8on
rise
to
over
1000.
The
government
then
decided
in
1994
to
introduce
a
new
currency,
the
reai,
and
to
peg
this
to
the
US
dollar.
The
success
of
this
was
short
lived
as
the
Asian
crisis
caused
investors
to
pull
out
of
Brazil
forcing
Brazil
to
float
the
currency.
Since,
economic
performance
has
improved,
with
the
reai
reaching
R1.60
against
the
US$.
In
the
long
term,
a
floated
currency
may
see
greater
currency
stability.
The
Brazilian
stock
exchange
is
the
BM&F
Bovespa,
which
is
the
3rd
largest
in
the
worlds.
Brazilian
banks
depend
upon
capital
accounts
for
10
to
20%
of
funds;
as
these
directly
influence
the
supply
of
foreign
exchange
shares
become
suscep8ble
to
external
shocks.
For
example,
29th
September
2008,
when
the
House
of
representa8ve
rejected
the
US
bailout
plan,
the
Dow
Jones
dropped
7%
while
the
Bovespa
dropped
9%
The
Interna8onal
Business
refers
to
fluctua8ons
in
the
level
of
economic
ac8vity
in
the
global
economy
over
8me.
As
a
result
of
Brazils
high
levels
of
foreign
debt,
the
economy
is
incredibly
vulnerable
to
movements
in
the
IBC.
When
there
is
global
economic
growth,
interest
rates
rise,
increasing
the
cost
of
debt
servicing.
Brazil’s
debt
servicing
ra8o
reached
102%
in
1982
due
to
rising
US
interest
rates
which
forced
the
currency
to
depreciate.
During
an
economic
downturn,
investment
decreases
which
also
depreciates
the
currency
as
there
is
a
decrease
in
investor
demand.
However
recent
government
strategies
to
reduce
overall
debt
and
shin
debt
from
public
to
private
sector
has
reduced
Brazil’s
sensi8vity
to
the
IBC.
However,
the
categorisa8on
of
Brazil
as
a
BRIC
economy
shows
that
steady
improvement,
in
economic
development
through
government
ini8a8ve
such
as
the
PAC-­‐
growth
accelera8on
program
may
well
see
Brazil
becoming
one
of
the
drivers
of
the
Global
Economy
by
2050.
This
can
be
seen
through
Brazil’s
large
popula8on,
rapid
economic
growth
and
contribu8on
to
reducing
absolute
poverty.
In
response
to
globalisa8on,
the
Brazilian
government
has
implemented
a
number
of
policies.
The
current
macroeconomic
policy
was
nego8ated
between
Brazil
and
the
Interna8onal
Monetary
Fund
in
2002
with
a
main
aim
of
minimising
external
shocks.
Brazil
agreed
to
a
Fiscal
Responsibility
Law
to
ensure
fiscal
policy
was
aimed
at
reducing
public
debt.
Under
the
law
the
government
must
target
a

5. primary
fiscal
surplus
of
4.25%
of
GDP
which
was
almost
met
in
2007
at
4.0%
of
GDP,
but
has
now
been
raised
to
4.3%
with
fears
of
infla8on
.this
strategy
has
helped
resolve
public
debt
from
59%
of
GDP
on
2003
to
42.2%
in
2008.
In
regards
to
monetary
policy,
the
Brazilian
Central
Bank
has
maintained
an
infla8on
target
to
suppress
infla8on.
In
2004
strong
economic
growth
increased
infla8onary
pressure
saw
the
Central
Bank
increase
the
cash
rate
from
3.25%
o
19.75%,
which
eased
pressures
and
saw
the
infla8on
target
reduced
to
4.5%.
However
infla8onary
pressures
re-­‐emerged
and
infla8on
rose
to
5.6%
in
2008.
Brazil’s
interest
rate
is
one
of
the
highest
at
8%,
but
8ght
monetary
policy
is
expected
to
con8nue.
The
government
had
also
targeted
microeconomic
policy
by
introducing
the
PAC
growth
accelera8on
program
which
aims
to
raise
economic
growth
to
5%
per
year.
It
involves
a
planned
US$250
billion,
to
which
the
World
Bank
contributed
$6
-­‐
$10
billion
to
invest
In
construc8on
technology,
transport
and
electricity;
to
reduce
business
costs
and
s8mulate
produc8vity
growth.