BRICS: B for Brazil

This is a back view of the colorful art piece located by Rosenthal Library. It really got me thinking about the economic role Brazil plays in the global market.

This is a back view of the colorful art piece located by Rosenthal Library. It really got me thinking about the economic role Brazil plays in the global market.

Rocinha, depicted here from an aerial view, is a favela in Brazil. I think that Queens College’s art piece, with its bright colors and structural form, accurately captures the cultural and energetic nature of the real favela. (After having taken Art History, I know how to appreciate the aesthetics, too!)

Rocinha, depicted here from an aerial view, is a favela in Brazil. I think that Queens College’s art piece, with its bright colors and structural form, accurately captures the cultural and energetic nature of the real favela. (After having taken Art History, I know how to appreciate the aesthetics, too!)

Walking around the Queens College campus this semester, you might have noticed a conspicuous change. I am not talking about the improved drainage system, most evident by the newly installed drain in front of Powerdermaker that successfully prevents flooding when it rains. (Although, it was about time!) Rather, I am referring to ‘Projeto Morrinho’, the art project on the stairs by the fountain next to the Rosenthal Library. At first I was rather annoyed by its inconvenient placement; I like sitting in that spot when it is nice outside. As I looked around and saw signs on the lampposts, I realized that this art project had something to do with the year of Brazil theme. It depicts a favela, which is a shanty town found in urban areas in Brazil.  Favellas came to being in the 1970s, when people began moving from their rural homes to the cities. This rural exodus was the major starting point in the developing urbanization of Brazil. In fact, Brazil has been playing an increasingly important role in the global economy as of late.

This map highlights the fact Brazil is relatively isolated geographically from the other BRICS countries. Impressively, it still maintains a relevant, important role in the global economy.

This map highlights the fact Brazil is relatively isolated geographically from the other BRICS countries. Impressively, it still maintains a relevant, important role in the global economy.

A clear indicator of Brazil’s significant role in the world economy is its inclusion in BRICS. The term BRICS, which stands for Brazil, Russia, India, China, (and South Africa) was coined by Jim O’Neil in a report he wrote under Goldman Sachs in 2003. In this piece, he claimed that by 2050, these four economies  (South Africa was tacked on later) would be wealthier than the economic behemoths of today, namely the United States and Russia. A rather bold assertion at the time, his conclusion was based on the fact that changes in political, economic, and social policies have been conducive to tremendous economic growth in the respective countries. Together, they could function as a force in the global market, thereby shifting the current powers.

Each country in BRICS has a unique part in contributing to the world economy. Brazil is known for being the largest exporter of resources (To learn more about Brazil’s environment, check out Songyi’s blog!). In fact, Brazil has the largest national economy in Latin America. It is a mixed market, meaning that people can trade freely, but with some government regulation. By trading a wide range of goods and resources, including aircrafts, electrical equipment, ore, and coffee, Brazil has created a highly diversified economy that is ripe for growth. As a result, it has been able to expand its capital markets, reach the lowest level of unemployment that the country has seen in years, and achieve consistent trade

As was highly publicized during the government shutdown, America owes creditors more than $17 trillion dollars. This number rises every second-in fact, by the time I post this, this amount will be completely obsolete!

As was highly publicized during the government shutdown, America owes creditors more than $17 trillion dollars. This number rises every second-in fact, by the time I post this, this amount will be completely obsolete!

surpluses. In short, their financial situation is much healthier, both in the short and long run, than that of America, which is struggling with a high deficit (owing others money) and a contracting economic market (in terms of the variety of goods that are produced).

O’Neil’s prediction was made when a graph of the United States GDP was growing. However, now that the GDP is well below what it should be, O’Neil’s prediction for the growth of BRICS might not come into fruition. The financial crash of 2007 had a widespread impact on every nation’s local economy, and consequently, behavior in the global market.

O’Neil’s prediction was made when a graph of the United States GDP was growing. However, now that the GDP is well below what it should be, O’Neil’s prediction for the growth of BRICS might not come into fruition. The financial crash of 2007 had a widespread impact on every nation’s local economy, and consequently, behavior in the global market.

While O’Neil’s argument had merit, there were some flaws that must be addressed. One of the most critical oversights was the fact that O’Neil assumed that there was a limitless supply of resources, such as oil and coal. In fact, there is a finite amount, and a country’s decisions and consequent behavior is based on the fluctuations of a resource’s availability. Brazil might be doing well at the current moment, but if there were to be a sudden scarcity of water, their economy would surely reach a standstill. Perhaps it would even plummet into a recession, unable to cope with this sudden obstacle. Another hurdle that O’Neil neglected to consider was the aftermath of a potential economic tumble in a world power’s economy. I am referring, of course, to the financial crash of 2007. At the time that O’Neil wrote this piece, Brazil and the other three countries might have been poised to dominate the word economy. However, the impact of the crash manifested itself in every country, in varying degrees. Suddenly, it is clear that even someone who works for Goldman Sachs is not infallible in his economic acumen.

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This picture poignantly depicts the worries of the Brazilian people. While the rest of the world is excited for the World Cup, local citizens are concerned with their own well-being. They would rather their money be spent in a way that improved their way of life, rather than preparing to host a major sporting event.

In the year of 2013, Brazil does not exactly appear to be on the track that O’Neil predicted. Indeed, it is engaged in trade with other countries. However, there are inevitable bumps in the road when it comes to achieving a country’s potential. There is a great deal of government corruption in Brazil; politicians rarely go to jail, even when found guilty of egregious crimes such as kidnapping and slave labor. I learned in microeconomics that government can make markets better off when they interfere, such as by ensuring that businesses charge fair prices. However, using funds for illegal purposes or in inefficient ways causes a nation to regress, not progress. The corruption, and national sentiment of frustration, came to light when the government wanted to implement a fare hike on public transportation. While a $.10 increase is miniscule compared to the frequent fare hikes

The proposed increase of (only) $0.10 sparked immense outrage, leading to violence in the streets.

The proposed increase of (only) $0.10 sparked immense outrage, leading to violence in the streets.

instituted by the MTA, it infuriated Brazilians. They were fed up with the fact that they had paid burdensome taxes but received pathetic public education and transportation systems in return. These taxes were mainly being spent on preparations to host the World Cup in 2014 (To learn more about the World Cup, check out Nick’s blog!) While the World Cup generates revenue from tourist spending, Brazilians have been suffering acutely from the current government prodigality. To be a thriving economy, a nation must invest in infrastructure and innovation that will be beneficial in the long run.

Brazil is a dynamic country with a unique culture and a fascinating history. While it used to be ignored relative to other countries, it should not longer get the cold shoulder.  While predicting what will happen in a country’s economic future is impossible, it is normal to make an educated conjecture as to what will likely occur. I personally think that Brazil will flourish over the next few decades, in comparison to other world powers. Granted, it has not been growing as fast as it should have because of the sluggish nature of the general world economy. Nonetheless, be on the lookout for a new key player in the global economy that will surely rival China as America’s number one trade partner.

By the way, the unit of money in Brazil is called the Real (not pronounced like the word meaning authentic, but rather ‘ree-al’.)

By the way, the unit of money in Brazil is called the Real (not pronounced like the word meaning authentic, but rather ‘REE-al’.)

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Published in: on December 18, 2013 at 7:04 pm Comments (0)


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