10 Reasons Why Brazil Will Become A World Super Power
I have now lived in Brazil for close to 7 years. I have married a Brazilian woman, and I have two children, one which was born in Rio de Janeiro. So I am very embedded in Brazil, but I believe that I can state in an unbiased manner why I believe that Brazil is set to become an economic super power. When I look at the facts, it is a stark and scary difference to compare the fundamentals of the American economy with that of Brazil.
1. No wars or enemies
Only 25 years ago, Brazil was a military dictatorship. But since that time, Brazil has avoided military conflict. This of course is in stark contrast to the United States, where we manufacture reasons to go to war (weapons of mass destruction).
2. Made in Brazil
By and large, Brazil’s trade policy has been protectionist. Still today, many conveniences of American modern life are either non existent or very expensive. One area where they could improve greatly is in technology such as computers. Computers are still very expensive in Brazil and hence internet adoption and basic computing skills lag behind other developed nations. That said, the upshot of this policy is that Brazil produces almost everything it consumes. A great example are cars. Cars are affordable in Brazil, and I would say that 90% of the automobiles in Brazil are made in Brazil.
Contrast this with the United States. If you want to buy a vase or a cutting board, they are all made in China. All of the basic commodities of life in Brazil are manufactured and consumed internally.
3. High interest rates
As I have stated, I am truly afraid of the American economic system that now has interest rates pegged at zero. I believe that the countries that have the highest interest rates will fare the best during the economic melt down. High interest rates also encourage savings rather spending. Furthermore, high interest rates can be lowered to provide an economic stimulus for the economy.
I have been very fortunate and have been moving down large percentages of my savings into the equivalent of Brazilian T-bills. When I first purchased my apartment in 2003, interest rates were sitting at 20%. Since that time, it has dropped to 13% in 2008 and 9% in 2009. That said, I am much happier making 9% on my money here in Brazil than 0% in the United States.
4. Natural resources galore
I am astounded with the naturals resources in Brazil. Brazil is a huge land mass that is actually larger than the 48 continguous states of America. On this land is incredible wealth. Brazil is the largest exporter in the world of wood and one of the largest exporters of copper. But it does not end there. The number of fruits and vegetables in Brazil are astounding. Just going to the super market for an American is confusing because they have everything that American’s are accustomed plus so much more. I have just finished doing a bunch of Googling, but could not find anything. I would bet however if there was an index to measure the natural abundance of a country, Brazil would be the winner.
5. No natural disasters
In the United States, we all pay more for insurance because of natural disasters. In Myrtle Beach, it is for hurricanes, in the mid-west for tornadoes, and on the west coast, for earthquakes. Brazil has no natural disasters. There is some small amount of flooding in some areas but that is it.
6. Lots of water
In addition to all of the natural resources, Brazil has an abundance of water. It rains in Brazil a lot. In some parts of the United States such as California and Nevada, water will always be an infrastructure concern. In Brazil, none.
7. Oil aplenty
Off the coast of Rio de Janeiro, one of the largest oil finds was discovered. It will take years to drill, remove and distribute this oil, but Rio de Janeiro is beginning to feel like a boom town. All the major oil companies in the world are establishing operations here in Brazil. The Brazilian PetroBras is positioned to catapult into a top tier energy provider during the next decade.
8. Leading producer of alcohol
Brazil is also the world’s largest exporter of ethanol. As long as I have lived here, Brazil has always been energy independent. More importantly, all of Brazil’s cars are manufactured to burn both ethanol and gasoline. Furthermore, the country’s infrastructure is already set up so that all “gas” stations handle both alcohol and gasoline. Note: ethanol is always about 30% cheaper than gasoline.
9. Government runs a surplus
The United States is so upside down, it is painful to watch. The trade deficit plus the federal deficit will be enough to sink the United States. On the other hand, Brazil is running a surplus on federal spending and also on trade.
10. Infrastructure
I am not very traveled throughout Brazil, but I recently visited Goiânia and Anápolis, both north of Rio de Janeiro. Goiânia has a metropolitan population of around 2.2M which makes it roughly the size of Pittsburgh. I visited the city and it is full of life, shopping malls, and it is a world class city. I also visited my wife’s home town of Anápolis, which has a population of 320,000. Much smaller in size, but again a city that is well developed. Brazil has a lot of the infrastructure to grow substantially in the decade to come.
Conclusion
Brazil is not without its problems. Government corruption is documented in the paper almost daily. The gap between the rich and the poor is the largest of any developed country. This results in higher violence levels in Rio de Janeiro and São Paulo. However, I believe that Brazil will grow and prosper despite these inherent problems.
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March 23rd, 2010 at 9:06 am
Having spent a fair amount of time in Brazil myself Robbie, I couldn’t agree with you more. It isn’t a perfect country, but Brazilian people are born built within themselves, a resiliency forged from almost constant disappointment over the years in their government and the corruption they have seen. They are starting to figure out that this toughness has allowed them to move ahead of the rest of the world in so many ways. Brazilians know how to live life to it’s fullest in spite of adversity. They party and comingle together with a great sense of pride in their country. The Olympics are about to introduce to the world what you and I found out about many years ago. Rio is called A Cidade Maravilhosa for a reason…The Marvelous City, things will never be the same!
May 11th, 2010 at 11:02 am
Hi Robbie I am a chinese student learning in The University of Manchester in Uk. Thanks very much for you article about Brazil becomming a superpower because it greatly enlightened me about my presentation! Thanks!
September 16th, 2010 at 7:49 am
This is a very interesting article from a lay person about Brazil. My assumption is that you are not in an ivory tower analyzing economic and political data tu put forth your conclusion. If you are please forgive me.I do not know if the facts are accurate but it looks good on paper. One of the concerns would be whether the transition after the elections will be smooth, to my knowledge there are no indications to the contrary. Also, after Lula is gone whether the new lady in charge is going to follow his liberal in the outside but conservative in the inside economic policies. And of course there is always the assets which we are all very familiar with and has no place in this comment. Keep sharing your thougths.
Miguel Angel
October 18th, 2010 at 8:11 pm
I think this article is very realistic about the country. There is a lot of opportunities and good news about Brazil, but this good scenario coexists with the “old Brazil” of corruption and poverty.
On the other hand, the situation is improving each year, and we can expect that the country will be developed in 2 decades…
February 20th, 2011 at 9:59 am
I would take issue with one point Rob makes here, because IF NOT for an extremely generous move by the U.S. gov’t in the 1970′s Brazil would be a 3rd world backwater this very day. Brazil was so far upside down in DEBT that their nations financial outlook was truly GRIM (don’t believe me look it up someplace there has to be info on it) owing hundred’s of millions of dollars in development loans to the United States that were completely forgiven, written OFF the books 100% in around ’78 or ’79.
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Brazil has done some things right although Rob’s rosy description of Brazil is aimed at the ‘reasonably well to do’ here in the U.S., people who have the ready cash to travel and observe Brazil’s abundance first hand.
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Then of course there is the ongoing HOT conflict in the streets of Rio de’Janeiro between the destitute and the Gov’t..
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Brazil is a pretty place with lots of the good stuff, but I would point out that Brazil suffers from regular flooding NOT just an offhanded flood once in a while, plus I would add that Brazil recorded a 5.1 magnitude Earthquake a week prior to this most recent Christmas, Natural disasters?? Yeah. Oh, almost forgot LAST Spring here in the U.S., Brazil experienced a Hurricane Catarina and I admit they are rare for Brazil there is ONLY 30 years of recorded data to compare Brazil’s history of hurricanes to, so the jury is out on that portion of Brazil’s Natural disaster happenings.
May 8th, 2011 at 12:14 am
Interesting read. One thing I will note is that when I first visited Brazil way back in February 1990, the first thing that struck me was that even back then, alcohol made from sugar cane was already being used in many cars in Sao Paulo. They didn’t run as well as gasoline driven cars, but I was quite impressed nonetheless. That first trip was a glimpse into a Brazil with massive hyperinflation, a closed business society where imported items were not to be found, a very different place than when I returned for another visit in 1998.
Regards from Los Angeles, CA
July 21st, 2011 at 6:15 pm
Realistic? Positively not enough! at the days of franktic inflation there was a saying here that – Brazil was much bigger than its evils.
Inflation is mostly gone but the evils persist. Most of them have roots elsewhere: evil capital return expectations from all over banks and groups abroad, evil exploring of labor and natural resources at all possible levels, evil destruction of flora & fauna aiming at nearly nothing positive, but cheer aimless destruction for immediate gain & profit; and the evils still go on with no end at sight.
Most people worry about operational costs (custo Brasil) but seldom invest, so that this cost is curtailed.
Traditional ways of doing certain operations still prevail, but people wish magic solutions, jumping up and burning phases (the french brûler étapes) in order to attain these immediate-return goals & continue the farse endlessly.
This is not how it should be, and all Brazilians will pay dearly for it in the near future: just look at the nasty stance of its education; only now, many years pass’d, became object to some philosophy (mind you: philosophy !!! ) not of positive investing action.
These guys in power here are surely unaware of the many ways the World balls run . . .
Naïve, innocent, pure and silly, most of them.
Or as we say: é uma brincadeirinha brasileira . . .
(ask your Brazilian friends what does this mean)
August 7th, 2011 at 3:38 am
Not everything is made in Brasil. If you go to the store you will see that many of the good are made in China.
Cars are not so affordable due to the very (42% and up) high taxes. Yes, most of the cars are made in Brasil, but the Chinese are now selling cars in the big cities. They are cheaper, come with a 3 year vs 1 year warranty and come complete as everything made in Brasil requires you pay extra for it (heat, ac, stereo,airbags, etc.).
The government runs a surplus because the country has the highest taxes in the world and the government keeps finding new reasons to raise them a bit more. It’s expensive to support such a large amount of corruption and socialism.
I’ve lived in Brasil for over 6 years now and I agree, it’s not perfect. It is better than the chaos that reigns in the US now.
January 14th, 2012 at 6:59 am
On paper brazil looks good. The people are also lazy the people who work the hardest get paid nothing and are terrible with people in a professional environment. Its a very dirty place and outsiders will always look at it that way. Everyone is corrupt and it is dangerous everywhere. The only thing brazil has going for it is the amazon and they are destroying that too. Everyone here is in debit up to there eyes because a pair of shoes cost over 400 reais. Good luck. People make the difference and brazil doesn’t have them. Everyone here is busy on their facebooks or their orkuts. Even in government offices.