The Globalization In Brazil

Brazil and its economy have gone through major changes in recent years, including the recent recession in 2015-16. It was at one point considered one of the most unequal societies, however, in recent years this has been changing. Government programs aiming to reduce poverty have been successful at promoting economic development and improving public welfare. There are still steps to be made, but major improvements have still occurred. Economic growth has been less successful, as the Brazilian government is reluctant to accept globalisation policies; this exempts Brazil from many of the negative effects of globalisation but also means Brazil doesn’t receive some of its positives.

Brazil’s highly effective welfare policy, Bolsa Familia, has increased economic development in Brazil while protecting it from globalisation. Bolsa Familia, Portuguese for Family Allowance, is a welfare program introduced by President Lula in 2003. It consists of small cash payments given to poor families in exchange for keeping their children in education and getting them their vaccinations – if students miss too many days of school or vaccination for too long, they are dropped from the program.

This form of purely domestic aid to poverty-stricken citizens reduces the influence of globalisation in Brazil. In February 2011, 26% of the population was receiving Bolsa Familia payments. This program has been very effective, as it identified as a major factor in the 27.7% drop in poverty in President Lula’s first term. Since the program’s introduction in 2003, GNI per capita has increased from $2,980 to $9,140 in 2018, with a peak of $12,810 in 2013 (before the recession).

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Brazil’s HDI ranking has also increased noticeably since 2003, as seen in this graph from the 2019 Human Development Report: 

These pieces of data show a significant increase in income and a reduction of poverty in Brazil. The increasing GNI per capita shows that citizens are receiving higher levels of income on average, and the increasing HDI shows an overall increase in what was once one of the most unequal societies in the world. This was all done with no direct intervention from globalisation, as the government used welfare and discretionary funds to pay for the program, seeking no help from international organisations – in fact, in 2003 the flow of foreign direct investment dropped by 45%. The successful implementation of this welfare program without much assistance from globalisation-induced policies protects Brazil from the adverse effects a loan from another country would have done to the economy. Bolsa Familia is a successful and productive government policy. Brazil’s welfare policies have been very effective at both increasing economic development and protecting it from globalisation. 

Brazil’s use of its natural commodities in its trade promotes economic growth and supports globalisation’s impact. Brazil’s trade is heavily reliant on natural commodities, with its three largest exports, iron ore, soybeans and oil, comprising of one-third of total exports. Most of this trade is with China, a country with a very high demand for commodities, especially in recent years. Brazil also benefited from the commodities boom in the 2000s, increasing growth from this sector. This creates economic growth; however, this reliance on commodities for trade can leave the economy vulnerable if the countries receiving the commodities decide to look for natural resources themselves. This economic strategy is an example of globalisation. According to OEC, Brazil’s export economy is the 22nd largest in the world. In 2017, they had a total of US$219 billion in exports. Brazil engages with many different global trade partners, with China receiving 19% of its exports. Other major trading partners are the United States and Argentina. Brazil has even created a customs union bloc with four other Latin American countries, Argentina, Paraguay, Uruguay and Venezuela, called Mercado Común del Cono Sur, or Mercosur. 

Trade within the block is mostly tariff-free, another example of Brazil accepting and pursuing further globalisation. As they utilise trade blocs and have successful export industries, Brazil has certainly used and adopted many positive aspects of trade globalisation. The majority of Brazil’s exports are commodities and natural resources. This is common among many economies in the global market that aren’t the United States or Great Britain. China in particular imports many commodities from different countries, a fact Brazil’s government has capitalised upon. This can leave Brazil vulnerable to a loss of trade as the commodities market is quite volatile, but still takes advantage of the positive side of globalisation and promotes growth for Brazil’s economy. The use of its natural resources in Brazil’s trade system and the establishment of tariff-free trade blocs promotes economic growth for Brazil and increases globalisation’s impact.

Brazil’s economy does not rely very heavily on trade, and as such is not affected heavily by globalisation. As discussed above, Brazil trades its natural resources and commodities in the global market, and especially with China. The Brazilian government has also established a trade bloc with little to no tariffs, encouraging free trade and globalisation. However, on the whole, Brazil is still opposed to globalisation. The citizens do not have a high opinion of it as a financial crisis in 2002 in Argentina affected brazil due to their close economic relations. There were again concerns about economic failings Argentina in 2014, and how they would affect Brazil. The economy is still not as closely intertwined with the world yet; while exports did give US$219 billion in profit to Brazil in 2017, as mentioned above, the total GDP for Brazil in 2017 was US$2.056 trillion. The tariffs in Brazil are also very high and meant to be restrictive. The government is more cautious than most other large countries about the negative aspects of globalisation (for example, unrestricted financial flows). The government even restricts short term financial speculation by foreign investors to reduce globalisation’s negative features. The government is also very slow in liberalising trade flows between countries outside of its trade blocs (Mercosur, BRIC, etc.). 

Brazil, on the whole, has elevated tariffs and tougher regulations in factor markets; because of these factors, it remains isolated compared to most other economies in the world. Even as the 22nd largest exporter in the world, Brazil remains comparatively isolated, gaining most of its GDP internally. Brazil has managed to massively reduce the percentage of its population under the poverty line (earning less than US$1.90/day) and increase welfare and education as well as pull the country out of a recession. There are still improvements to be made to infrastructure, but the improvements since the 1990s have been immense. Brazil has managed to do this while remaining isolated trade-wise and without receiving nearly as much aid as other countries. The country had one of the world’s strongest share markets in 2016. The government even has a US$380 billion foreign currency reserve and has maintained a slight trade surplus since 2016. The lack of globalisations interference in Brazil’s recent growth and development means that it has avoided many of the negative impacts that globalisation can have on a developing country. No doubt Brazil could have progressed even further in some areas with the extended help of international organisations, but the country has managed to achieve much of its progress in many areas without the support of them. Brazil’s economic growth and development do not rely heavily on trade, and as such does not undergo many of the negative impacts of globalisation.

Overall, Brazil has improved and continued to improve even through a recession. There have been massive reductions in poverty levels and an increase in average income. The country’s isolation from other economies has not been disastrous; instead, Brazil has been able to avoid the negative side effects of globalisation. Economic growth and development have continued without much assistance from other nations or organisations. Ultimately, the economic strategies implemented by Brazil’s economy have been effective at promoting economic growth and development and addressing the effects of globalisation.