Brazil Under Lula: Off the Yellow Bric Road

1784 words 8 pages
Question 1:

1. Situation Analysis
Brazil is being considered as a growing economy. In fact the country, one of the BRIC nations is seen by analyst of Goldman Sachs as one of the five nations that will be at the top of all nations with regard to a country`s GDP (The Goldman Sachs Group Inc., 2007). To understand Brazil`s current situation and how the country may be able to grow out of this position as a global player in the near future aiming a better globalization of the country by the year 2050, one has to see Brazil within a bigger frame. Within this frame, actions taken have to be integrated into the five obstacles Brazil currently faces.

1.1. The five obstacles Brazil has to overcome (Brazil Cost)
There are five obstacles
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Some financial issues need to be solved. So is the tax rate not favorable, as it is way too high with 72% (in 2006). The cost of hiring and firing workers is too high as well, which makes Brazil unattractive for new businesses. Unattractive as well for new businesses is the long lasting regulatory process before a business is allowed to start operating. Interest rates are too high, with 48.7% (in 2006) for lending and 15.3% (in 2006) for investing. Further has Brazil a quite low percentage regarding its savings with only 22% (in 2006) and the GDP is at worst compared to the other BRIC nations.
Another major problem the county has to solve is its Inequality. Even though financial measures were taken, inequality is not going to be solved that way. Sticking with the agricultural business might be profitable for the short-run. However future trends show that Brazil should engage more in the manufacturing industry. Key for 2050 is know-how, meaning that a country with a great population should build on its citizen. They should be seen as the capital of tomorrow. The government budgeted quite a high amount for higher education, but did miss out to stimulate the early education. By doing so inequality was even further build out. If Brazil wants to foster from its human capital it has to start budgeting fair amounts for elementary and secondary school, so Brazil can gain from its people by 2050.

Question 2:

3. Recommendation