Brazil

Contents

Interesting FactsDemographicsMineral ResourcesHistory Emerging SectorsHow to do BusinessBibliography

Interesting Facts About Brazil

• The 5th largest country in the world• 1/3rd of world's potable water and rainforest• Has the 2nd highest number of airports in the world.• Brazil is the longest country in the world, and spans

approximately 2800 miles• Every Brazilian city has at least one soccer stadium!• Brazil, second-largest consumer of cocaine in the

world• Brazil is 100% energy independent

Culture

• 99% people speak Portuguese• Carnivals – Annual Festival (>6 Days)• Cuisine - Brigadeiros , Feijoda• Music – Samba , Bossa , Nova• Sports

Demographics

54%39%

6%1%EUROPEAN MIXED

EURO-PEAN AFRICANAFRICAN OTHERS

87%

13%

UrbanRural

0-14 Years 15-64 years >65 years

26.20

67.00

6.70

Age

Age (years)

Literates Illiterates0

50100150200 176.1

14.6

Literacy (Million)

Mineral Resources

Iron ore

Neobium

Bauxit

eGems

Man

genese

Total re

serve

s

15.23

92

12.4

90

2012.41

84.77

8

87.6

10

8087.59

Brazil ROW

Colonial Brazil &The Old Republic (1500–1930)

Populism and development (1930–1964)

Military dictatorship (1964–85)

Redemocratization to present (1985–Present)

Pedro Alvares Cabral April 22nd 1500Pedro II1822-1827Nov 15th 1889

General Fonseca26th Feb – 15th Nov 1891

 Getúlio Vargas

Import Substitution

Colonial Brazil &The Old Republic (1500–1930)

Populism and development (1930–1964)

Military dictatorship (1964–85)

Redemocratization to present (1985–Present)

Second Republic

• The overvalued foreign-exchange rate, established in 1945, remained fixed until 1953

• Foreign exchange controls to protect selected segments of domestic industry

• In 1953 a more flexible, multiple-exchange-rate system was introduced.

• As a result Brazilian economy grew . Annual GDP > 7%• Problems – Increase in Balance Of Payments

Colonial Brazil &The Old Republic (1500–1930)

Populism and development (1930–1964)

Military dictatorship (1964–85)

Redemocratization to present (1985–Present)

Military Dictatorship

• President Castello Branco Authoritartian regime• Technocrats and foreign investors• Economic Growth Economic growth took off at 11.3% per year State participation - 60% to 75% Capital formation - 15.2% of GDP to 20.3%• Student Opposition movement and labour union opposition• Guerrillas

Military Dictatorship• Oil shock• Borrowings from abroad• Inflation soared high High interest rates in US GNP fell by 2% in 1981 5% GDP for debt service• Depreciated exchange rate lead to expensive debt• Stress on exports and international relations• Largest external debt in world(70% of foreign debt)

Colonial Brazil &The Old Republic (1500–1930)

Populism and development (1930–1964)

Military dictatorship (1964–85)

Redemocratization to present (1985–Present)

Redemoacratization • José Sarney New constitution in 1988 Political transition lead to higher inflation &stagnancy Cruzado Plan 3 currency units: Cruzeiro, Cruzado & Cruzado Novo. Cancellation of interantional debt in 1988• Ferenando Collor de Mello(1989-1992): Collor plan I Collor plan II Change of currency from Cruzado Novo to Cruzeiro Bankruptcy and unemployment

• Fernando Henrique Cardoso(1995-2002): REAL PLAN

Action Effect Obstacles removal to foreign investment

Inflation dropped from 2600% to 50%.

Lowered tariff barriers GDP grew at the rate of 4% to 6%. Exchange market deregulation and liberalization

Purchasing power increased.

SOEs Privatization More foreign investments.Fiscal and monetary discipline in public sector

Unidade Real de Valor (URV) (1 URV = 1 US$)

Real was allowed to float within a band set. Reduce Expenditure by restructuring the government.

Luiz Inácio Lula da Silva(2003-2010)

• President Lula chose to maintain his predecessor policies. • Popular among lower class

Reforms ConsequencesInvestment in Infrastructure Foreign Trade increased

Tax Relief policy Surplus Reached $29 Billion

Expansion of Political Influence (G 20) Net Creditor for First Time after Decades

Beneficio De Prestacao Continuada(Benefit For Continuous Service)

More foreign investments.

Bolsa Familia

Dilma Rousseff (01/01/2011 – present)President Rousseff is the 36th President of Brazil. 1st woman President of the country 3rd most powerful woman in the world

Reforms ConsequencesInvestment in InfrastructurePoverty reduction initiatives

GDP grew 2.7% in 2011Expected to grow 2.5 % in 20124.1% in 2013

Reduction in Tax Imports Increase import of goods

Massive capital inflowsFX intervention

Foreign exchange reserves grew to around US$ 375bn

Privatization Unemployment rate reduced to an envious 5.8%

Science without borders

Brave Enough To Carry Brazil Forward

What Is Holding Brazil Back??• Policy Failures

– Excessive government expenses– Continued dependence on commodity exports– Corruption

• Cumbersome regulatory and legal framework– “Custo Brazil”– 152 days to register a business– Tax systems needs to be simplified & property rights are poorly defined

• Excessive Inequality– Top 10% of population = 43% consumption– Unequal education attainment– Unequal land distribution– Political disparity

• External Factors– US and Chinese Trade Policies– China – a friend and a foe

BRAZIL’S RANKING ON BUSINESS TOPICS

Emerging Sectors in Brazil• Infrastructure• Tourism• Healthcare• Real Estate• IT

Business Etiquettes• Make appointments at least two weeks in advance. • Never start into business discussions before your host does. Business

meetings normally begin with casual 'chatting' first• Be prepared to commit long term resources (both in time and money)

toward establishing strong relationships in Brazil. This is the key to business success

• Giving a gift is not required at a first business meeting; instead buy lunch or dinner

• Three-piece suits carry an "executive" connotation, whereas two-piece suits are associated with office workers. Conservative attire for women in business is very important. Also make sure your nails are manicured

• The colors of the Brazilian flag are yellow and green. Avoid wearing this combination in any fashion

Bibliography

• www.wikipedia.com• www.cia.gov• www.indexmundi.com• World Bank Report• The Economist• Forbes Magazine• KPMG and E&Y Reports• Breakout Nations – Ruchir Sharma