A lot of people have said that Brazil is and always will be the country of the future. It's getting old to make jokes about how the country can't reach its full potential because people think it's impossible for it to do so. After coming out of a short recession caused by the global economic crisis of 2008–2009, Brazil's economy grew by 7.5% last year, much faster than the rest of the developed world. The country is now on track to maintain a growth rate of about 5% a year, which is more than double its average for most of the last 20 years. It looks like Brazil is the place of the future. And it is almost ready for the future. Brazil still has a lot to do, so almost. The Real Plan of 1994, which aimed to fight inflation, set the stage for security and growth. Its planners made a plan for growth that included structural changes that haven't been finished yet, like making big cuts to an over-burdened public sector. But the people and businesses of Brazil have been able to plan for the future in a way they never could when inflation was high. While investment and savings are still low, Brazil has started a positive cycle where higher wages and employment have led to a rise in domestic consumption, which in turn has led to more jobs, higher wages, and even more consumption.
The United States and Europe are both stuck, but Brazil is on a roll
For example, Brazil used to have yearly trade surpluses of about USD 15 billion with the US. Last year, they had a deficit of about USD 6 billion. This is because Brazilians are buying goods that people in developed countries are having to go without more and more. Can Brazil fill in the gaps in the world economy while the rich world slows down? That might be too much to ask. But many experts think that by as early as 2015, its economy, which is the eighth largest in the world right now, will be the fifth largest. What kind of business and society will it turn into is a big question. For a while, exports were what drove Brazil's recent growth. It quickly began to use its huge natural wealth, though a lot of it is still untouched. It is now the biggest iron ore exporter in the world. Twenty years ago, its farmers and ranchers turned it from a mediocre farming country into a global powerhouse. It is now the biggest exporter of beef, chicken, orange juice, green coffee, sugar, ethanol, tobacco, and the "soya complex" of beans, meal, and oil. It is also the fourth biggest exporter of maize and pork. In spite of this, the change in trade with the US shows that cheap imports are hurting Brazilian producers. Many businesses are still having a hard time because the government taxes too much and wastes money on bad infrastructure and other services, which often cancels out gains in productivity. Manufacturing is being hit even harder by a flood of cheap but better quality goods coming from China. Charles Tang is the head of the Brazil-China chamber of business and industry in Rio de Janeiro. He says, "Brazil has to decide what it wants to be." "It could be a country with high costs that isn't competitive; in that case, it could still do well as an exporter of goods." Instead, it can lower the custo Brasil, which is the local term for the extra costs of doing business in the country. This would increase industry production because the costs would be lower.
That being said, saying that Brazil is in danger of "deindustrialization" is possibly going too far
The people of Brazil are open and friendly, and they can also change and adapt quickly. In the past, businesses have been through worse, and if it's okay to make broad statements, Brazilians are naturally good at starting their own businesses. It's true that low standards in public schools often stop people from coming up with new ideas. It has done well anyway, especially when the public and private sectors work together. For example, Embrapa, a government agricultural research center, has done a great job of creating new crop strains that do well in Brazil's tropical environment. Biofuels are one area where Brazil can say it is the world leader. After the oil shock of the 1970s, it first tried running cars on ethanol. But when sugar prices went up, makers (who can easily switch between sugar and fuel alcohol) stopped making ethanol, leaving drivers stuck. A rebirth has been brought about by the recent development of flex fuel cars, which can run on gasoline, ethanol, or any combination of the two. This lets drivers choose based on price at the pump. Ethanol is now more popular than gasoline in Brazil, which is something the government likes to point out. It is now putting a lot of money into biodiesel as well. Once more, the government and business worlds have worked together. Since 2004, when the government started a program, most of the production has been done on family farms, using tropical crops like dendê (the African oil palm) and mamona (the castor oil plant). But as the program grew, soya quickly replaced palm oil as the main oil source for making diesel. By 2009, more than 95% of all biofuel made in Brazil came from soy.
Brazil made 2.4 billion liters of biofuel in 2010, which is about 22% of the total amount made in the world
According to data from the US National Biodiesel Board, the Union zur Förderung von Oel und Proteinpflanzen of Germany, the Argentinean Ministry of Agriculture, and Brazil's National Petroleum Agency, that puts it just behind Germany with about 23 percent and ahead of the US with about 18 percent. "This year, we think Brazil will pass Germany and become the world leader in biodiesel," says João Artur Manjabosco, who is in charge of sales for biodiesel at the farm Camera Agroalimentos. Biodiesel is mixed with diesel made from solid fuels, which is similar to how ethanol is mixed with gasoline. Under a scheme run by the Brazilian government, a mix of 2 percent was allowed from 2005 to 2007 and had to be used starting in 2008. The plan was to raise this to 5 percent by 2013, but instead it was raised to 3 percent in July 2008, 4 percent in July 2009, and 5 percent in January 2010.Manjabosco says, "If the mixture stays the same, we expect economic growth to bring biodiesel use in Brazil to 4.2 billion liters by 2019." "But we think that by 2019, the mix will have grown to 10 percent." That is a huge amount of biofuel, and Brazil is able to supply it.
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