Brazil

What is (or was) holding back Brazil’s growth?

Brazil is the world’s seventh largest economy in the world. Brazil is also the founding member of United Nations and BRICS and also the world’s largest producer of coffee. Brazil’s economy has seen periods of hyper-inflation, stable economic growth and a period of strong economic growth in recent years. Though Brazil has got lots of positive factors that could increase its growth, it still faces both internal and external threats that could prevent this growth.

Corruption: A common issue that all BRIC nations faces today is corruption. Corruption is a big issue in India when the government was involved in a scandal for allocation of spectrum 2G telephone licenses in 2011.Brazil scored 43 in 2014 on Corruptions Perceptions Index. Even it led to the recent protests in 2013. Even the current government of Brazil is embroiled in a huge corruption scandal that involves Petrobas oil firm.

Income Inequality: Though the GINI coefficient, a measure of income inequality, has reduced, it has reduced only slightly. The important factors that contributes to income disparity are:

a. High Taxes: Brazil’s heavy taxes on consumer products puts a heavy burden on the poor. The tax rates are also so skewed and favours the high income group and burdens the low income group.

b. High Land ownership: In Brazil, large scale producers occupy most of the land and it is very difficult for family farm owners to compete against these producers. This resulted in lots of family farm owners to incur huge losses that forced them to shut down their agriculture business.

Crime rate: Brazil has got one of the highest crime rates in the world. Brazil is also one of the highest cocaine import country in the world. Also the crime rate along with income inequality encourages people to resort to violence to survive in their daily lives.

Ease of Doing Business: Though Brazil’s government encourages foreign investment, Brazil still ranks in the...