Economy
Edward Finney
Oct 23 2008

For decades the world has been waiting for the sleeping giant of the south to wake up and take it´s place in the world. It has finally awoken!

The past several decades have been a disaster forBrazil. It has had all the basic ingredients to be a first class nation but inept government, corruption, and inflation has keep it in the developing world. In 1964, the military took over in a bloodless revolution and democracy didn´t return until the 1990´s. During the first years ofmilitary rule, Brazil underwent an economic awakening that was considered the Brazilian miracle and seemed to be propelling Brazil into a first class nation. It didn´t because of all the traditional reasons of ineptitude and mismanagement. To keep up the Miracle, the currency printing presses were put to work and the nightmare of inflation swept into the nation and slowly started down the long road to devastation. Inflation, and then later hyper-inflation keep Brazil on it´s knees until the mid 1990´s when thePlano Realcame in to being. Inflation stopped over night and Brazil began thelong road to recovery.

In the early 2000´s, Brazil elected it´s first left wing president who was determined to help the poor of his nation. Lula, as he is popularly called was uneducated and from the poor NE State ofPernambuco. His reign was looked at with horror by the traditional white rich ruling class but the reign of Lula turned out to be successful beyond belief. His plan to improve the life of the poor class by raising the minimum salary, giving money to poor families to keep their kids in school and several other measures created a consuming class that stimulated manufacturing. Providing easier credit so the former non-consumers could buy those formerly unavailable things like TV´s, refrigerators, stoves, furniture etc opened an internal economic boom that continues today.

At the same time this was happening,China, the other awakening giant, started the industrialization that demanded raw materials that Brazil had in excess. Exportation increased in geometric proportions because of China and other nations that were experiencing a boom also.Iron ore, aluminum, nickle, soy beans and soy oil, wheat and flour, orange juice, coffee, beef,chicken, sugar, and slowly, manufactured items like cars and machinery. Brazil´s export market has helped it improve the infrastructure of the country to help it on the road to industrialization which should continue for many years.

On top of the internal and export market improvement, immense off shore oil discoveries have propelled Brazil to have the 3rd largest oil reservers in the world and oil exportation has just started in ernest. Brazil will be a large exporting nation in a few years as the discoveries are brought on-line. Brazil will be self-sufficient in fuel andpetroleum productsnot only because of the oil discoveries but because of the enormous land mass in production withsugar canefor ethanol. Brazil can produce ethanol cheaper than anyone because of the sugar cane which doesn´t take food producing land out of production like corn does. Land for food production like grains and beef are still available in excess, providing the capability of increased supply of food stuffs for the export market.

Will Brazil ever enter the first world? On the surface it looks like yes. The present world financial crisis however could be a negative factor in the future growth of Brazil. Until recently, the government insisted that Brazil was immune from the Sub-Prime crisis that was affecting the US and slowly the rest of the world. The stronginternal marketand an improving export market seem to isolate Brazil from the problems of the 1st world. Now however, the worsing crisis with manybank failuresand tightening credit is beginning to affect credit in Brazil. The latest from the government is that Brazil will be affected by this crisis but it will not be in the magnitude of the 1st world.

In my opinion, Brazil is certainly destined for the 1st world and will be a major player in the future. However, the present world crisis is certainly going to be a factor in how fast this happens. So goes the world, goes Brazil.