Environmental Review of Brazil

Environmental Review of Brazil

Introduction

Brazil is the largest county in the region of South America and Latin America, and globally it is 5th largest economy. It is very eye-catching to an investor because of the growth potential and its strategic location while the overall political condition is very stable. Brazil has faced and overcome tough challenges since the great depression of 1930s. For a number of years Brazilian economy was categorized as an exporter of small primary products, but from the last two decades it is performing like an outlier. Today, it consists of large and diversified industrial sectors. Brazilian society is urbanizing on a continuous basis which is a positive indicator of economic development. Only 30% of the country's population was living in urban centres during 1940's, but now in 2008 after 6 to 7decades almost 85% of the total Brazilian populating has become urbanized (Terco, 2010). Counter's road network expands from 36,000 kilo meters in 1940 to 190,000 kilo meters in 2008.

This enhancement in the development of its economy arises from the policy shifts it adopted during last two decades. The overall growing investment climate is a result of tight monetary policy, economic competitiveness, Openness and controlled inflation. The Real Plan adopted in 1994 in order to control high inflation rates, and controlling depreciation of currency was the first step which played a very crucial role in the current stability and development of the country. In real plan, the new currency was introduced which ultimately reduced the inflation rate from 8% to 6% (Veiga, 2004).

Discussion

Policy shift

Till early nineties, Brazil was considered as an under developed country, the financial system was not properly managed or designed, Policies were designed for the shorter period of time. In 1999, a fiscal adjustment plan was adopted with the help of “international monetary Fund” to manage the macroeconomic imbalances prevailing in the economy. While In 2004-2007 under the supervision of President Lula (Mr Luiz Inacio “Lula” da Silva) a road map named “Plano Brasil de Todos” was designed and was approved by the congress. There were three major goals of this plan 1) Reduction of social inequalities 2) Sustainable growth through employment generation and income generation 3) Strengthen of democracy and expansion of empowerment (Barroso, 2013).

Policies of Lula were very moderate and were investor oriented. He approached foreign investors to bring their investment in Brazil by offering them several benefits such as Private property right, Honour promises and pay off debts and assert fiscal discipline. He gave complete freedom to the central bank of Brazil on making policies in the best interest of the economy. Expansionary monetary policy was adopted by lowering the interest rate to a level of 6% which made financing cheaper for investors to borrow money for investing it in different projects. Lula's policies were also become effective for the social development of the country. He lifted millions of people from poverty by escalating social and development projects. He preferred to increase tax brackets instead of ...