Brazilian Economy

Brazil's economy has been characterized by roaring growth, an extremely strong currency (the real), and increasing liberalization and investment. The sixth largest economy in the world by nominal GDP, it has taken numerous and significant steps during the two-term tenure of Lula da Silva and his predecessor Dilma Rouseff, to fight inflation, poverty, unemployment, and integrate the formerly inward-looking economy into global markets.

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Itaipu Hydroelectric Dam

With a GDP per capita of $12,900, it is characterized as a developing economy. Although poverty has been greatly reduced, and currently only 8.5% of Brazilians are technically below the poverty line, income inequality remains a problem.

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The Economic Miracle
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In 1993 Brazil was facing economic ruin, with an annual inflation rate of 5,000%. With the introduction of a new currency, the real, and a series of administrations that ushered in economic liberalization, Brazil overcome significant obstacles, and brought about nothing short of an economic miracle. What is truly impressive is not only the strength of Brazil's statistics, but the diversity and breadth of its economy. In the industrial sector Brazil produces everything from automobiles, planes, steel, and cement, to computers and consumer electronics, and petrochemicals. It is self-sufficient in oil, having pioneered deep-water extraction methods, and is a notable producer of ethanol.

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Brazil has undertaken an impressive construction schedule of hydroelectric dams, which currently account for 90% of Brazil's electricity. Brazil currently has two nuclear power plants, and has ambitious plans to build 19 more by the year 2020. Brazil's agrobusiness sector is strong and thriving, let my cattle farming, which unfortunately, has the unwanted side effect of destroying the Amazon rainforest. However, Brazil's agriculture sector has long been noted for its economic efficiency. Brazil's mining sector is strong, with companies like Vale and Usiminas playing a large role in the economy.

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Furthermore, a major component of Brazil's phenomenal growth has been its scientific and technological development, which has attracted significant foreign investment. While in the last decade, Brazil averaged $2 billion annually in foreign direct investment, in this decade it has averaged $30 billion a year. Brazil, along with Mexico, has also been at the forefront in the rise of multinational corporations, which have spread throughout the South American continent and beyond. Companies such as Petrobras, Ambev, and Banco Bradesco have highlighted this phenomenon.

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Towards the Future
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Brazilian Steel PlantDespite the incredible success of the last fifteen years, Brazil faces problems of maintaining growth while minimizing inflation, as well as dealing with shocking inequality of wealth distribution, and high crime levels. As the service and industrial sectors continue to expand, Brazil is certain to spend more money on social welfare spending and alleviating poverty.
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One of the greatest challenges also faced by Brazil in the future is an ironic byproduct of its own phenomenal success: now that the real is so strong against other major world currencies such as the dollar, pound, and euro, Brazilian exports have become significantly expensive. President Dilma Rouseff recently called upon the United States and Western European nations to take steps to alleviate this serious problem for Brazil. Despite these problems, what is certain is that Brazil has charted a wise economic course, and is well positioned in the global economy heading into the 21st century.
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