Brazil - Economic analysis of government's policies, investment climate and political risk.
THE
McKEEVER INSTITUTE
OF
ECONOMIC POLICY
ANALYSIS
BRAZIL: Economic Policy Analysis
This site presents an analysis of the Brazilian government's economic policies
compared to a list of 34 economic policies as prepared by student Ms. Rosangela Nicolini with the McKeever
Institute of Economic Policy Analysis (MIEPA)in the Fall of 2004. To read the analysis
scroll through this site. To learn more about the background policies,
click here
Introduction and Policy Recommendations
To learn more about MIEPA, click here
Return to MIEPA's Home Page
Several foreign born students living in California have completed a
study of their home country governments' economic policies as compared
to the MIEPA list of policies as outlined above. The study on Brazil is
shown below. The ratings herein are based on the following rating scale:
RATING SCALE
5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 1996. Used herein with permission]
To read a disclaimer about the analysis in this file, scroll to the
bottom of the file.
Return to MIEPA's Home Page
BRAZIL:
Comparison of Brazil's economic policies to MIEPA criteria as prepared
by native student of Brazil, Ms. Rosangela Nicolini, studying in San Francisco in
Fall 2004. This study updates an earlier study of Brazil completed in
2001.
RATING SUMMARY:
POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE
1 5.0 15.0 15.0 100%
2 2.0 6.0 15.0 40
3 1.0 3.0 15.0 20
4 5.0 15.0 15.0 100
5 3.0 9.0 15.0 60
6 4.0 12.0 15.0 80
7 3.0 9.0 15.0 60
8 1.0 3.0 15.0 20
9 1.0 3.0 15.0 20
10 2.0 6.0 15.0 40
11 5.0 15.0 15.0 100
12 1.0 3.0 15.0 20
13 2.0 4.0 10.0 40
14 5.0 10.0 10.0 100
15 1.0 2.0 10.0 20
16 1.0 2.0 10.0 20
17 1.0 2.0 10.0 20
18 1.0 2.0 10.0 20
19 3.0 6.0 10.0 60
20 1.0 2.0 10.0 20
21 3.0 6.0 10.0 60
22 3.0 6.0 10.0 60
23 2.0 4.0 10.0 40
24 1.0 2.0 10.0 20
25 2.0 4.0 10.0 40
26 1.0 2.0 10.0 20
27 3.0 6.0 10.0 60
28 3.0 6.0 10.0 60
29 3.0 3.0 5.0 60
30 1.0 1.0 5.0 20
31 3.0 3.0 5.0 60
32 1.0 1.0 5.0 20
33 5.0 5.0 5.0 100
34 1.0 1.0 5.0 20
TOTAL 80.0 179.0 375.0 47.7%
===== ====== ===== =====
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INDIVIDUAL POLICIES
1. Freedom from internal control: 5.0
High score to Brazilian government because Brazilian
citizens are free to relocate throughout the country.
In addition, all citizens are free to engage in any
business activity, as long it is a legitimate
activity.
Source:
1) Personal
2. Freedom of speech: 2.0
Brazil has laws protecting the freedom of speech for
all; however, for a person to exercise his or her
rights of freely speak can be a dangerous move. In
Brazil, crime and corruption are a problem. The police
and judicial enforcement rarely bring justice to those
who lost their lives while freely speaking out against
corruption. "Don't speak otherwise?" is a common
advise to hear if you had born in Brazil. Even people
in high ranks of the government try to stop those who
exercise their rights of free speech. Brazilians
worldwide were embarrassed a few months ago, when the
Brazilian president, Lula, used his power to revoke
Larry Rohter's, NY Times reporter, visa. Rohter wrote
an article about the president's habit of drinking,
but luckily, the Brazilian judicial system stopped the
president's goal. It is always important to remember
that in Brazilian history, many people were not that
lucky, and many Brazilians had lost their lives after
exercised their rights of free speech.
Source:
1) "Corruption remains the same in Brazil," by Carmen
Gentile - www.washtimes.com/upi-braking/2004
2) IPI -
www.freemedia.at/Death_watch/d-watch2004.html#Brazil
3) Personal
3. Effective, fair police force: 1.0
Brazilian citizens feel unsafe while walking in the
streets; therefore, low grade to Brazil. Brazilians'
perception of unsafe could range from 43% through 59%
in some cities, like Sao Paulo and Rio the Janeiro.
Crime rates have been increasing, and many are not
reported. This perception frequently can compromise
one's decision of opening a small or media enterprise.
Police fails to assure safety for citizens as well for
business. Into the large corporations such fear is
reduce due to fact that large companies can afford to
pay for an team of security guards.
Source:
1) www.zonalatina.com/Zldata194.htm
2) Personal
4. Private property: 5.0
High score for Brazil because anyone, citizens or
noncitizen, are allow to own private properties in
Brazilian territory. Governmental offices issue a
title of property, which guaranty one's ownership of a
real, personal, or intellectual property. The process
of issuing a property title can be somewhat time
consuming; however, when the process is due, the owner
is protected by laws, and enforced by judicial system.
In addition, some Southern cities had successfully
settle negotiations over public land in order to help
low income citizens to own a private property.
Source:
1) Dennis Borges Barbosa & Melissa Barros Tavares
Pereira - www.nbb.com.br
2) Personal
5. Commercial banks: 3.0
The banking system in Brazil has been improving over
the past few years; however, more than 50% of the
Brazilian population has no means to ever get a bank
loan, neither open a bank account. The first problem
is that millions of Brazilians have low income. The
second problem lies on the credit bureau, which has a
deficiency on tracking one's credit history. Most
Brazilians prefer to use the direct financing system,
in other words, a store finances one's purchase,
breaking it in small monthly payments, and charging
very high interests. If the individual do not pay his
or her bills, then the store can confiscate the
product, and report his or her name to the credit
bureau. The credit bureau tried to maintain an updated
data; however, by law if an individual has been with
bad credit over a period of six years, he or she can
apply for exoneration of credit, in other words, he or
she will have his or her credit clear out without any
expenses. Such process can prevent commercial banks to
rely on accurate data from the credit bureau, and
banks can have a hard time to evaluate the risks of
loaning money to an individual. New laws and
efficiency on the credit bureau will have to happen
before Brazilian and banks can have a better
relationship.
Source:
1) Banco Central do Brazil - www.bcb.gov.br
2) Personal
6.Communication systems: 4.0
Brazilian communication system is good. Cities and
countryside are equipped with many means of
communications (phone, cell phones, fax, television,
radio) with exception of computer. The use of
computers as a mean of communication is a process that
has been growing in Brazil, but due to the high cost
of computer hardware it still a slow growth. The most
popular mass communication is television, and
Brazilians love soap opera. TV networks strategically
start the TV news between the hours of the most
popular soap opera, seven to eight p.m. In addition,
house and cell phones became more affordable for
Brazilians since the Brazilian government had
privatized its telecommunication corporation. There is
a real potential growth for computer in Brazil. It is
believe that soon, the Brazilian government will
facilitate and lower taxes for import of computers,
which will make computers much affordable item to
Brazilians.
Source:
1) COPETRAC - www.geocities.com/copetrac/portal1.hmtl
2) Personal
7. Transportation: 3.0
Brazilian transportation system is reasonable; it has
some good and bad sides. Brazil has roads, rail, air,
and ships, but not all works efficiently. Brazil is
fortunate because it has south to north regions
connected by the Atlantic Ocean. Therefore, the
navigation system is good for transporting large
volume of goods throughout the Brazilian coast, but it
is not good for transporting people due to long
journey. The Brazilian air system excellent, and
recently it is becoming more affordable to Brazilians,
but still not cheap to many. The railroad system is,
with exception of urban rails, in precarious
condition. It requires a great amount of capital
investment, mostly for repairs of rails, newer and
faster trains, more employees, and newer distribution
of rails throughout the country. In similar situation
are the roads of Brazil. Highways and interstates are
in great need for repair and expansion. Many
enterprises have difficulties in transporting goods
among states because the highways are very dangerous.
Brazilian highways and interstates are filled with
dangerous fissures on the road, not enough roads, and
damaged bridges. To make things worse, highway pirates
are a big problem in Brazil. Often, the news channel
announces the robbery of a loaded truck, and the death
of the truck driver. High rates of lost, employees and
goods, forces enterprises to reevaluate the company's
expansion due to high costs and risks of transporting
goods.
Source:
1) Governo do Brazil -
www.mre.gov.br/cdbbrasil/itamaraty
2) Personal
8. Education: 1.0
Brazil educational system is not satisfactory. Both,
lack of quality and quantity are the main issues in
Brazil. In 2000, the US Bureau statistics showed that
86.1% of Brazilians are literate. However, such data
failed to show the real literacy situation in Brazil.
Unfortunately, Brazil has high rates of grade
repetition and dropouts. Only 45% of first grade
students will make through high school. About 31
million students had repeated at least ones a grade in
school. Around 50% of the Brazilian students are not
well prepared to perform, in class, exercises or
debates about the subjects' equivalent to their grade.
Only 3% of Brazilian students are considered to
equally perform as a student from developed countries
would. To make things worse, Brazilian educational
system has been increasing the number of "acelerado"
courses. In other words, if a student had repeated few
grades, and if this student is behind, he or she will
be able to attend a special class that give him or her
the chance to jump one, two, or three years in one
semester. Such data clearly shows how precarious is
the Brazilian educational system.
Source:
1) Folhaonline, by Heloisa Helvecia -
http://www1.folha.uol.com.br
2) Unicef - www.unicef.org
3) "Causes and consequences of grade repetition:
evidence from Brazil," by Joao Batista Gomes-Neto,
Eric A. Hanushek, Oct 1994 v43 nl p117(32).
9. Social Mobility: 1 .0
Low score to Brazil because one's ability to create
wealth is filled with barriers, especially for low
background citizens. It is important to say that if
one's will is strong, he or she might have a chance to
advance economically; however, such dream is not a
reality to millions of young Brazilians. First,
Brazilian education system does not embrace the
minority groups. Ironically, the public universities,
free education, are primarily composed of elite youth,
and private universities are composed of poor or
middle class youth. Several philanthropic entities
focus on helping Brazilian kids to develop some kind
of skills, in order to help them to get a job, but
these entities mistakenly forget to encourage and
educate kids to pursue an academic life. In general,
Brazilian society believes that if one has born poor,
he or she will never make a good living.
Source:
1) Unicef - www.unicef.org
1) Personal
10. Freedom from outside control: 2.0
Theoretically, Brazilians are free from outside
control; however, the Brazilian government owes $ 500
billions of dollars to the International Monetary
Fund. Therefore, the IMF heavily influences the
Brazilian government decisions on money expenditure,
and other financial decisions. In other words, freedom
from outside control is only in theory for Brazilians.
Source:
1) EIR -
www.larouchepub.com/other/2002/2943lula_braz.html
2) Personal
11. Foreign currency transaction: 5.0
Brazilian government requires that all business
transactions be made in Brazilian currency (reais),
and all foreign currencies must be converted before
any business transactions; therefore, high score to
Brazilian legislators.
Source:
1) Governo do Brasil - www.mre.gov.br
2) Personal
12. Border Control: 1.0
Despite of the Brazilian government efforts to
control it's border, such deed has not been
satisfactory. It is important to remember that Brazil
has borders with 10 other South American countries,
and its border extension is around 10,000 miles.
Brazil's border control is a problem because of the
smuggling of drugs, money, and arms. First, possible
coming from Colombia, drugs enter illegally in Brazil
territory, and then they are ship to Europe. In 2003,
the Brazilian federal police caught around 7.3 tons of
cocaine, 128 kilograms of crack, and 157.7 tons of
marijuana. Second, Brazilian laws are very strict
about gun control; however, one can buy any kind of
gun in the black market. In the poorest neighborhoods,
called favelas, kids 10 or 12 years old carry gun
machines to defend the "boss"--drug lord. By Brazil's
borders or via shipment, illegal guns enter in Brazil
territory, and then they are sell in black market; it
is not difficult task to buy an illegal gun in Brazil.
Third, in Brazilian territory anyone, citizen or not,
can open a bank account and deposit huge amounts of
cash, without being question about the nature of the
money. It is concluded that Brazil has serious
problems of smuggling, and such receive a greater
attention of Brazilian legislators.
Source:
1) US Department of State - www.state.gov
2) Hizbollah in South America, by blnca Madani -
www.jdo.org
3) Personal
13. Currency: 2.0
Brazilian government requires that only one currency
be use inside the country, and the Brazilian currency
is called the "real". However, many businesses will
accept dollar or euro as form of payment for good or
services. Many Brazilians will save the foreign bills
as form of investment because they believe that such
currencies will rise in value, and if they not, at
least it will not devalue as reais would. In addition,
some fortunate business people prefer to be paid in
dollar because it, later, will be transported outside
the country.
Source:
1) Governo do Brazil - www.mre.gov.br
2) Personal
14. Cultural, language homogeneity: 5.0
Brazilian official language is Portuguese, and all
schools must educate its students in the official
language. In addition to Portuguese, a large
percentage of Brazilian population also speaks Spanish
because both languages are very similar in
backgrounds. English and French languages are optional
in school, and German and Italian are spoken in
certain Southern regions. Guarani and Tupi are spoken
in some native Brazilian tribes. According to 2000 US
Bureau, Brazil is composed of 55% white (Portuguese,
German, Italian, Spanish, Polish) citizens, 38%
mulattos, 6% of African Brazilians, less than 1% of
native Brazilians, and 1% of other ethnicities
(Japanese, Arab, Amerindian). Brazil has, in large
part, mix of ethnicities, and its citizens take great
pride while identifying themselves as a mixed
population. Generally speaking, the market segregation
is not affected by language or cultural differences
because Brazil is mostly homogeneous. The main
religion in Brazil is Roman Catholic, with reaches 80%
of population, followed by other Christian religions,
and African religions.
Source:
1) US Bureau - www.cia.gov/cia/publications/factbook
2) Unicef - www.unicef.org
15. Political effectiveness: 1.0
Brazilian legislators are far from calling themselves
effective in work. Brazilian economy still has
non-satisfactory fluctuation, more than 40% of the
population lives in total poverty, infant mortality is
high, transportation and educational system have big
issues to be solved, and crime and corruption are a
huge problem. After Fernando Henrique Cardoso, former
president, first year in office, several denounces
came about some Brazilian legislators being involved
in scheme and corruption scandals. Such news did not
surprise most Brazilians, except for the fact that
someone had the courage to speak out.
Daily, such scandals are increasing and openly
denounced in Brazilian newspapers. Brazilians are
still waiting to see which, those who had abused of
their positions for personal profit, will go to jail.
Too many legislators are involved in these scandals;
it is logical that political effectiveness is in
absence.
Source:
1) "Human Rights in Cardosos's Brazil," by Linda
Rabben - www.crab.rutgers.edu/~goertzel/rabben1000.htm
2) Personal
16. Institutional stability: 1.0
Brazil has no yet achieved institutional stability.
Government, courts, school, business, and specially
law enforcement are struggling to bring solid bases of
stability for Brazil. Fernando Henrique Cardoso,
former president, did a good job in recognizing the
state's responsibility for the injustices during
dictatorship. On the other hand, violations of human
rights still an issue in Brazil, Inflation seems under
control for now, but Brazilians had experienced
inflation as high as 5,000 percent a year, during late
80's. Most recently, the revocation of rules, and
addition of new provisions are still happening in
Brazil. Therefore, skepticism is among Brazilians, and
international observers.
Source:
1) "Human Rights in Cardosos's Brazil," by Linda
Rabben - www.crab.rutgers.edu/~goertzel/rabben1000.htm
2) Personal
17. Honest government: 1.0
In 1992, a former Brazilian president, Fernando
Collor de Mello, was impeached from the office for
having been involved in a extortion scheme that robbed
millions of Brazilians savings account. Since then,
the honesty among Brazilian legislature is strongly
doubtful. Most recently, scandals involving federal,
state, and municipal office members continue to leave
the Brazilian population skeptical. Since Collor's
impeachment, it seems that the democracy process has
been improving; however, it will take generations
until Brazilians can trust again in their government.
In addition, Brazilian government will have to make an
extreme effort to end corruption in public sectors.
Source:
1) Corruption remains the same in Brazil, by Carmen
Gentile - www.washtimes.com/upi-breaking/2004
2) Political corruption in Brazil -
www.zonalatina.com/Zldata194.htm
3) IACC (International Anti-Corruption Conference)
www.transparency.org
"The Federal Court of audit in Brazil TITLE
Institutional Arrangements and its Role in Preventing
Fraud and Abuse of Public Resources, by Bruno Wilhelm
Speck.
4) Personal
18. Common laws: 1.0
Brazilian judiciary system has some flaws. First,
Brazil has a considerable number of laws, acts,
normative, and decree-laws with combine can make
justice officials and lawyers stressed and confused.
In 1988, Brazilian government tried to improve this
situation by passing a constitutional provision with
implements the mechanics of creation of new laws.
Second, most Brazilians cannot interpret the Brazilian
constitution mainly because it is written in an
excessive elaborate way. Millions of Brazilians have
no idea of their constitutional rights; therefore,
these members of society are vulnerable.
Source:
1) Doing Legal Research in Brazil 2002, by Edilenice
Passos - www.llrx.com/features/brazil2002.html
2) Overview of Legal System -
www.law.edu/elliot/sfeinle/Overview.htm
3) Personal
19. Central bank: 3.0
The Brazil Central Bank manages commercial banks and
currency in the country. While things have been
improving for the last 5-6 years, historically Brazil
has experience some of the worst inflation ever
recorded. At one point, it was as high as 70% per
month. In 1964, Brazil created the Central Bank, for
managing the commercial banks and currency. In
addition to out of control inflation, the bank was
considered to be out of control. One example is,
because of problems with the national treasury, the
Central Bank began issuing currency itself. However,
the bank did not do this to serve the needs of the
country, or the people, but solely for the needs of
the bank itself.
After bringing inflation down to a more reasonable
level, the Central Bank has remained a highly
political organization, regularly charged with
corruption by the media and the public. Government
investigations rarely lead to charges of any kind. As
recently as 1999, the Central Bank was charged with
mishandling an attempt to raise the minimum wage. The
result was a significant reduction in the value of
Brazil's currency, a loss of $1.2B(us), to the
taxpayers, and an equal profit for a small number of
private banks, personally selected by the central bank
to share in the illegal profits.This particular
investigation will conclude this year, with no charges
or convictions.
Source:
1) The Central Bank of Brazil (structure and
functions) - www.bcb.gov/ingles/himf1900.shtm.
2) "Something Rotten," by Paulo Rebelo -
www.brazil-brasil.com/pges/ecomay99.htm
3) Personal
20. Domestic Budget Management: 1.0
My score to the Brazilian government domestic budget
management is one (the lowest) because Brazilian
government has been consistently causing a budget
deficit in its domestic budget.
The Brazilian government's net income has been
negative over several years. In other words, the
Brazilian government has been spending more than it
collects from taxes each year. For example, in 1983
the budget deficit was $11.0B dollars (U.S.), in 1993
the deficit was $12.1B, and in 2003 it reached a high
of $18.5B. It appears that Brazilian government is
weak in caters to special interests.
Source:
1) The World Bank Group - www.worldbank.org/data
2) Personal
21. Government Debt: 3.0
Median score to Brazilian government because it must
reduce its external debt in order to not be vulnerable
to from outside control.
In 2003, Brazil's total external debt was $236.2B,
which is around 47.9% of GDP. This is a relatively
high percentage, but Brazil might not be considered
extremely excessive in debt. This is because the
percentage of its debt service is well below 50% of
its GNP. In 2003, the debt service percentage was
11.5%. Such a low percentage is good. However, this
11.5% of the GNP that did not go towards wealth
creation for Brazilians.
Source:
1) The World Bank Group - www.worldbank.org/data
2) Personal
22. Economic Statistics: 3.0
Brazilian government relies on statistical data from
several sources; for example, IBGE (National
Statistical Office), Ministry offices, and other
independent surveys like FGV (Foundation Getulio
Vargas), UNICAMP (University of Campinas), etc. For
most part, all sources produced reasonable statistical
data; however, the accuracy and plentifulness of such
surveys are not widely satisfying. The problem lies on
the use of non-standard mechanisms of surveying, which
also are consider outdated by nowadays economists.
Recently, the United Nations has proposed some changes
on the national statistical system; the Brazilian
institutions had accepted and improved some of the
mechanisms. Still, economists expect more improvements
before relying completely on Brazilian national
statistical data.
Source:
1) The United Nations Statistics Division - "Social
Statistics in Brazil: Producer and User Strategies" by
Maria Martha Malard Mayer, April 24 2003.
2) Personal
23. Protection of Public Health and Safety: 2.0
My score to the Brazilian government protection of
public health and safety is two because infant
mortality and mal-nutrition are the leading reasons
fo1r death among children between ages one to five.
Researches show that, at year 2003, 33 of every
thousand Brazilian babies die before their first year
of life and 37 babies will die before age five. Such
causalities might seem a small percentage to some;
however, it is important to comment that the data
might not be accurate. There are places in Brazil,
like Amazon and countryside of Northeast states, have
difficult access; therefore, doctors and hospitals are
difficult to reach. In these places, a person has to
walk for miles before finding a health clinic. In
addition, the rate of poverty is very high in these
states.
Brazil is a socialist country; therefore, health
treatments and education are free for Brazilian
citizens, so more than 50 percent of the population
relies on the free public health services. Diseases
like Malaria, HIV, Measles, Polio, EPI, ARI, Hepatitis
3B, etc are almost eradicated in Brazil due to the
success of governmental programs; however, mal
nutrition still kill children and adults in Brazil. In
addition, the Brazilian government has poor management
of waste, and food inspections. The Brazilian
government has a long way to go before infant
mortality rate decreases to worldwide standards.
Source:
1) UNICEF - "At a glance: Brazil" -
www.unicef.org/infocountry/brazil_statistics.html
2) Personal
24. High Wage Policies: 1.0
My score to the Brazilian's wage policies is one (the
lowest) because its average per capita is not
acceptable.
Brazil has 21% of its total population living below
poverty, and 9.6 % living in extreme poverty. The GNI
per capita was U$ 3,900.0 at year 1999, U$ 2,860.0 at
year 2002, and U$ 2,710.0 at year 2003. The GNI
certainly has been declining, and so is the living
standard of Brazilian citizens.
Brazilian government has a long history of resisting
the increase of minimum wages. Its main reasons are:
a) if minimum wages increase the Brazilian government
will not have enough money to pay for all the social
security pensions, and governmental employees; b)
factory companies say that if minimum wages are
increased it would be catastrophic for the companies
growth, since their budget for wages and benefits will
increase tremendously. In addition, companies claim
that if the minimum wages are increase some companies
will be force to file for bankruptcy with leads to
lay-offs, and increase of national unemployment rates.
It is true that the benefits paid to the Brazilian
employees are many, and true that the social security
pensions are huge, with 65,8% expenditure of collected
imposts. But, the Brazilian government must find a
middle ground, so it could increase the minimum wage
without hurting the industry or pension beneficiaries.
Sources:
1) TWN-Third World Network - "The Brazilian Economic
Crisis," - www.twnside.org.sg.title/brazil-cn.htm
2) World Bank Conference - "Social protection
policies in Brazil," by Jose Cechin - d
3) Personal
25. Environmental protection: 2.0
My score to Brazilian environmental protection
policies is 2.0 (almost the lowest) because I believe
each country must have environmental laws, and each
must be reinforce without exceptions. Despite the fact
that Brazil authorities are trying to implement and
reinforce new environmental laws, they still have a
long way to go.
Brazil has some of the most strict environment
protection laws in the world; such laws are design to
protect citizens, the fauna, and flora of Brazilian
territory. Despite of the governmental efforts, the
process of reinforcing such laws has not been
successful; part of it is due to the inefficiency of
some governmental agencies. For example, the Instituto
Brasileiro do Meio Ambiente e dos Recursos Naturais
Renovaveis (IBAMA) is an the governmental agency
responsible for the formulation, coordination,
execution, and reinforcement of environmental laws.
The IBAMA has limited resources which makes difficult
the relationship and cooperation with business
entities. For example, before any business entity
receive a license to start the development of a
factory headquarters; this entity must present a plan
to IBAMA, which must contain details of the plan, and
its possible environment impact. The IBAMA has to
carefully analyze the business plan, increment further
discussions about environment impacts, and secure an
agreement with in the business must accept
responsibility, and with a prevention plan avoid
environment disasters. So far, business entities have
been resisting the implement of such law; they claim
that the negotiations with the IBAMA takes too long,
which leads the business in an increase of the budget
planning.
In addition of the IBAMA's limited resources and
difficulties in reinforcing the environment laws; the
second agent for the inefficiency this agency is the
fact that environment laws are relatively new, and the
agency and industry are not quite certain with actions
must prevail during this process.
It is expect that over the years, Brazilian
government must implement its environmental agencies,
and support it with an increase in budget, as well
trained and experimented employees.
Source:
1) Economic Institute of UFRJ - by Valeria da Vinha
(valeriavinha@ie.ufrj.br)
2) Personal
26. Strong army: 1.0
My score to Brazilian peaceful policies is 1.0 (the
lowest) because I believe every country must have a
strong army to defend it's citizens from a possible
invasion.
Brazilian army has old guns, not enough resources,
and inefficient training for mandatory recruiting. The
Brazilian army is truly in bad shape, and it even
fails to control internal problems; for example, the
Rio the Janeiro army fails to invade and restore
control in the "favelas"--dangerous mountains
controlled by heavily armed traffickers whose soldiers
are young kids who care semi automatics, or gun
machines.
Despite my negativism, many Brazilians have no reason
to worry about restructuring its army strength because
the country has no actual potential safety issues, so
far. In addition, during 1964 to 1985 Brazil was under
a severe military regime. Since 1985, Brazil had
restructured its democracy, and militarism became
discredited by the public view. Brazilian government
has primarily focus in stipulated peaceful agreements
and strength its international relations with
expectations that such measure maintain the nation's
safety. Nerveless, the under-estimate Brazil's
capability to defend it self is a mistake. Brazil is
the fifth biggest country in the word, it has 172
million people--most young, and it has enough natural
resources and infrastructure to build a strong army in
a relative short time.
Source:
1) Country Watch News - countrywatch.com
2) Personal
27. Foreign trade impact: 3.0
Reviewing the analysis between the years of 2001
through 2003, Brazil shows minimal signs of
vulnerability to outside forces. Brazil's foreign
trade impact ratio was 24.68% in 2003, 28.9% in 2002,
and 22.1% in 1999. It is likely that Brazil could
create more wealth to its citizens by increasing its
foreign trade impact ration close to 33%; however, in
the most recent year, the impact ration decreased over
the previous year.
Source:
1) Foreign Trade Online -
http://www.foreing-trade.com
2) Personal
28. Protection of foreign currency earning
enterprises: 3.0
My score to Brazil is 3.0 (middle range) because I
believe that any country must protect and promote
national enterprises; however, Brazilian government is
being over protective. It causes an unbalance cycle of
dependency among Brazilian enterprises, which have
more to lose because free market would promote
competition, and consequently it promote the
development of new technology and money flow.
Brazilian government has a long history of being over
protective toward its national enterprises. The means
in which the government uses as protection strategies
vary and it changes time to time. For example, Brazil
has an extended list of shipping requirements for
imported goods; these requirements cause a difficult
time to foreign enterprise, and the process of
shipping a nightmare. In addition, the import taxes
are high, restrictions on foreign-produce advertising
is a strict, and complex bureaucratic process--all
make foreign enterprises less capable to compete with
Brazilian enterprises in Brazilian territory.
Sources:
1) Official Journal of the European Union - European
Commission Directorate-General for Trade - by Mr.
Ignacio Garcia Bercero
2) Foreign Trade Online -
http://www.foreing-trade.com
3) Personal
29. Management of Foreign currency budget: 3:0
Throughout the late 1990's, Brazil produced foreign
currency budget deficits. Since 2000, Brazil has made
significant improvements in its exports, while total
imports have continued to decrease. The result is the
foreign currency budget nearly reached zero in 2002,
but unfortunately in 2003 produced a $25B surplus.
Brazil clearly needs to improve its consumption of
foreign products and services, or face large foreign
currency budget surpluses that will weaken the
economy.
Sources:
1) The World Bank Group -
worldbank.org/external/CPPprofile
2) Country Watch News - http://aol.countrywatch.com
3) Personal
30. Layers of collective action: 1.0
My score to the Brazilian policy towards layers of
collective action is one (the lowest) because I
believe that citizens and professors should locally
have much higher influence over schools' decisions and
budgets. The Brazilian central government pays for
most of the schools costs; therefore, the federal
education agency dictates how money should be spend in
schools. In addition, this agency makes most of the
rules, and decides most of the subjects that Brazilian
students will learn during their school years. Parents
and professors have a minimum influence over the
disciplinary subjects, and expenditure of budget.
Citizens pay taxes with goes to the central
government; the central government redistribute the
budget to states; the states redistribute the money to
schools--all this absurd redistribution of money only
increases the costs for the central government offices
with consequently reduces the amount of budget that
should be sent to schools. The private school and
private universities have more freedom to choose how
budget expenditures; however, they too have to follow
many of the federal education agency. The Brazilian
educational system is archaic; students learn to
memorize subjects, but not often they learn to analyze
data for future references. Outragesly, Brazilian
professors and school staff do not receive their
monthly salaries--with sometimes can happen for
months--because of budget problems and money
redistribution from the central government.
Sources:
1) Jose Tavares de Araujo Jr.
http://www.mre.gov.br/cdbrasil/itamaraty
2) Personal
31. Pro business climate: 3.0
Many Brazilian citizens dream with the idea of
opening their own business; however, due to high
taxation, and labor benefits Brazilians are skeptical
about the risks of opening a small or median
enterprise. Nerveless, Brazilians citizens welcome new
business enterprises because it generates jobs for the
citizens. On the other hand, there is a popular
believe that if one opens a business enterprise he or
she must dodged taxes. Brazilians often avoid paying
taxes, as much and as long as they can, because they
not believe in the socialist system.
Sources:
1) Dennis Borges Barbosa & Melissa Barros Tavares
Pereira - http://www.nbb.com.br/publicmemos12.html.
2) Personal
32. Government enterprises: 1.0
My score to government enterprises is one (the
lowest) because Brazil still needs to focus in the
privatization of other governmental enterprises.
Recently, Brazilian government has privatized some of
the federal enterprises, with can be considering a
progress because none of these federal enterprises had
made a profit. However, Brazilian government still
owns some other enterprises for social concerns
purposes. For example, Petrobras is an oil exploration
company; some of the biggest Brazilians universities
are federal universities--with means own by the
government. In addition, the Brazilian government owns
nation wide schools, utility companies, hospitals,
post office agencies, police department, etc. Since
all the money collected from taxes goes to the central
government and it is redistribute to all of its
agencies and enterprises. The conclusion is if Brazil
continues to privatize its federal enterprises, its
citizens have more to gain since privatization leads
enterprises to competition and consequently to the
decline of prices and better quality of services.
Sources:
1) Federal Reserve of Brazil
-http://www.fazenda.gov.br/top.asp
2) Personal
33. International security agreements: 5.0
My score to Brazilian international security
agreements is five (the highest) because I believe
under the actual circumstances in Brazil; it has no
resources to be share with any other country. Brazil
has no mutual defense treaties with any country, and
its national army is in bankruptcy. Since 1985, when
the last military president--Joao Figueredo--announced
the return of democracy--part by uncontrolled high
inflation rate, and part by constantly national
protests--the support from the congress diminish
toward budgets for the army. Therefore, the Brazilian
national army is very much weak.
Sources:
1) Brazilian Embassy
http://www.brasilemb.org/economy/economy1.shtml
2) Personal
34. Protection of domestic enterprises from government
mandated costs: 1.0
My score to the Brazilian protection of domestic
enterprise policies is one (the lowest score) because
it has to find a middle ground in order to protect
enterprise's growth and workers' interest. Despite of
recent attempts of Brazilian legislators to protect
and encourage domestic enterprise growth, their
failure is quite clear. In my opinion, such failure is
due to high costs of labor force, and taxations. For
example, Brazilian enterprises are obligated to pay
federal, state, and city taxes, plus labor
obligations, and social security charges. The factors
to such taxations and obligations vary depending of
the type of business; however, it estimate that a
business enterprise will pay between 80% to 145% of
its monthly payroll in labor benefits, security
charges, and other taxations. In addition, there is 8%
for the FGTS--Guarantee of Term of Service Charge--and
a variation of 7.8 % to 21 % for the Social Security
Contribution. Such high taxations and obligations to
be paid lead Brazilian enterprises to continuously
imposing against the increase of minimum wage. Labor
obligations create cost more problems for Brazilian
enterprises; for example, every Brazilian citizen
works 12 months to receive 30 days full-paid vacation;
pregnant women have the rights to 3 to 6 months full
paid maternity leave; extra worked hours--every hour
that exceeds 44 hours weekly--are doubled paid. Brazil
is socialist country; therefore, the government, and
its citizens do not believe on the good intentions of
business enterprises towards the work force. This
distrustful relationship forms a confusing battle
among enterprises, whose capitalist view wants to make
a profit, and the government, whose socialist view
wants to protect the workers.
Sources:
1) Maria da Conceicao Tavares -
http://www.abordo.com.br/mctavares
2) Personal
Other sources:
1) Unicamp: University of Campinas -
hhtp://sisadm1.unicamp.br:8000/biblioteca/conteudo.html
2) IBGE - Geographic and statistic Brazilian Institute
http://www1.ibge.gov.br/english/estatistica/economia/cadastroempresa/default.shtm
3) Getulio Vargas Fundation
http://fgvdados.fgv.br/
3) TWN - Third World Network
http://www.twnside.org.sg/title/brazil-cn.htm
4) Mundo Joven (enter view with Jose Luis Fiori) -
http://www.mundojovem.com.br/capa11.htm
5) Correio da Cidadania (enter view with Jose Luis
Fiori) -
http://www.correiocidadania.com.br/ed220/politica.htm
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