Brazil’s Economy – Which Way To Go?

October 8th, 2018

The case study on Brazilian economy Does the Global Economy Help or Hurt Developing Nations Like Brazil analyzes Brazil’s flexibility and tactical economic policies in regards to the state’s openness to globalization and the debate between state-led and market-led economy. In the case of Brazil, what matters more than the policies themselves is when the policies are applied. Brazil was open to the global economy after its slavery abolition in order to maintain a healthy GDP in the 1920s, but switched to enhance domestic economy and industrialization after the Great Depression. During the neoliberal years in the 1980s, the economy geared towards a market-led and open economy.

With Brazil’s presidential election having arrived and approaching the second round in a few weeks, Bloomberg compiles an article explaining the state’s political and economic situation at the dawn of the polls. The author points at Brazil’s fluctuating political situation with its previous president, Lula, imprisoned for his association with money-laundering and graft. Biller also explains Brazil’s fluctuating economic situation in recent years, having established somewhat of welfare policy and just barely recovered from its severe recession in 2017. He specifies that the economy now relies heavily on business investment, which “sank by 1.8 percent in the second quarter of 2018, the most since the recession, with election uncertainty weighing on decision-making.”

What global economy policy should Brazil’s next president establish in order to provoke business investment that influences the growth of the economy?

Although the far-left candidate believes in the strength of state-owned companies, it is important that the state opens its market to the global economy. Privatizing most of the companies and inviting foreign investment will boost employment and therefore the middle class. This is one of the main economic boosters, especially after the recession.

Sources:

J. Tyler Dickovick and Jonathan Eastwood, Comparative Politics: Integrating Theories, Methods and Cases (New York: Oxford University Press, 2016), 407.

David Biller, “’Brazil’s Highs and Lows,” Bloomberg, (October 5th, 2018) https://www.bloomberg.com/quicktake/brazils-highs-lows.