Comments on: World Bank: The Cost Of Brazil’s Closed Economy /2015/02/07/world-bank-the-cost-of-brazils-closed-economy/ Dedicated to EM Investing Tue, 09 Feb 2016 15:05:43 +0000 hourly 1 http://wordpress.com/ By: Neil Turner /2015/02/07/world-bank-the-cost-of-brazils-closed-economy/comment-page-1/#comment-3298 Sun, 08 Feb 2015 16:53:49 +0000 /?p=5915#comment-3298 As an American anthropologist living in Brasil for over seven years, my research has revealed that this article strikes at the heart of several factors constraining economic growth in Brasil. Historically, one must remember that this mentality “defensive trade policies” is not something new to Brasil. Brasilian policy makers have almost always had a fear of being exploited by foreign businesses. For example, in the early decades of the twentieth century, Brasil found itself in the midst of economic crisis and social unrest. This crisis was brought on by a failed attempt to modernize only through its export agricultural industry. By 1930, a military junta brought Getúlio Vargas into power and he attempted to modernize the country through a corporatist approach. This involved setting up a network of state enterprises aimed at bolstering domestic production. Under Vargas, trade unions were subordinate to modernization and a repressive state apparatus went into effect. However, Brasil soon discovered that it could not survive economically cut off from the rest of the world. The Import Substitution Model was a governmental economic plan that made use of trade restrictions, subsidies, and fiscal incentives that supported the development of national industries producing for internal markets, however, without need to compete for efficiency or cost. Although by the 1960s and 70s, there were many foreign companies doing business in Brazil such as GM, Fiat, Volkswagen, Ford, Chrysler, companies strong in energy, chemicals, pharmaceuticals, and information technology, these multinational companies had to coexist with state-owned corporations in oil, electricity, telecommunications, and steel production. The financial system was dominated by state-owned banks and were closed to foreign companies, and made use of high tariffs to protect Brazilian and local branches of multinational companies.

When we consider the cultural aspects at work, we must remember that Brasil is the only country in South America whose people speak the Portuguese language. This factor has two consequences; one positive and the other negative. On one hand, it acts as a culturally unifying factor among Brasilian people. On the other, it culturally isolates Brasilians from other populations in South America who share a Spanish cultural heritage. Both of these considerations have impacted Brasil’s manner of conducting business; one socio-economically and the other socio-culturally.

Sources: Schwartzman, Globalization-Poverty-Social Inequality, 2003, page 9; Maarten van Klaveren, An Overview of Women’s Work and Employment in Brazil, Amsterdam Institute for Advanced Labor Studies-AIAS, 2009, page 8.

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