The Rot at the Heart of the Brazilian Economy
Brazil is headed for catastrophe this year, unless it finally reckons with decades of failed economic policy.
Christopher SabatiniChristopher Sabatini is an adjunct professor at Columbia University's School of International and Public Affairs and executive director of the nonprofit Global Americans. Previously, he was the founder of Americas Quarterly.
The problem goes beyond passing tough measures through a difficult congress. After nearly a century of hot-house autarkic capitalist development, are the country’s political and economic elite and its citizens ready to open up to the global economy? For all their talk of the importance of markets, Brazil’s industrialists remain quietly committed to cheap credit and protection. Rather than build a globally competitive manufacturing base — a noble and important goal — many of these protections have coddled industry, fueled corruption, and stifled competitiveness. Brazil’s best, most competitive producers are in commodities like agriculture. But the risk of betting on commodities and an overheated domestic market are already clear. Unfortunately, an active, powerful constituency for reducing social payouts and opening up the economy to the global market doesn’t exist. At the same time, budget cuts and austerity will dampen the main source of Brazil’s growth outside of commodity exports: its large domestic economy.
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