Review of The Impact of Globalization in Brazil

“Globalization has produced a new level of interdependence among us and is strong evidence of a new era,'' stated Eduardo Paes, the mayor of the city of Rio de Janeiro. As mentioned, globalization has prospered countries around the world and this particular essay will explore the impact of globalization in Brazil, a country in South America. Brazil has shown a vast amount of improvement in its economy via social and economic globalization. In addition, direct investments, international trade, as well as sports platform significantly contributed to the growth of the country.

Brazil has experienced economic instability, high inflation, and poverty for many years. However, due to globalization, Brazil now has the biggest economy among Latin America with GDP of $2.1 trillion. Brazil’s freedom of trade has been increasing the foreign direct investment income, which allowed economic growth in the country. It has been revealed that Macroeconomic policies have made Brazil as the leader of foreign investment. Here, macroeconomic policies include “inflation targeting policy,” which was launched for financial framework in 1999. This supplanted the “Plano Real policy,” which was instituted for the purpose of exchange rate mechanism for stabilizing inflation. This policy has further improved the level of unemployment and inflation rate. The rate of unemployment has decreased from 12. 3% to 4.7% in 2003. Similarly, it is evident that macroeconomic policy has clearly stabilized the inflation rate as the difference between August 2019 and previous month is only 0.21% (Trading Economics). Moreover, during the 1980s, Brazil was a developing country, as they were not fully engaged in international trade. However, as markets were surrounded by diverse trade barriers, it significantly affected the rate of foreign direct investment. In 2008, foreign direct investment inflow in Brazil has reached the highest point, $45 trillion, compared to 1980, which the inflow was about $1.5 billion. It has been revealed that due to its massive inflow from foreign direct investment, Brazilian development bank has a larger lending portfolio than the World Bank. To add on, when financial crisis hit Argentina and Mexico in 1997, contrastingly, there was an economic recovery in Latin America, which attracted foreign investors.

Moreover, it is evident that foreign trade in Brazil has significantly impacted the country in various areas. According to the World Bank, it has been revealed that Brazil’s main trading partners are European Union, China, United States, Argentina and Japan. In 2017, Brazil was known as the 22nd largest exporter in the world by gaining over $2019B (OEC). 11. 8% of the Brazil’s export is from Soybeans, followed by Iron Ore, which represent 9. 2% of the total exports (OEC). To add on, Brazil has imported about $140B in 2017, which allowed the country to reach the 31st largest importer in the world. Main import is refined petroleum, which account for 8.1% of the imports. Similarly, vehicle parts represented 3.62% of the total imports in Brazil (OEC). Furthermore, Brazil is maintaining a positive trend balance of $78.3B (OEC). Likewise, Brazil has expanded trade with developing countries for better inflows. During 2000 to 2003, exports to Africa increased by 1123%, Middle East by 1097%, Eastern Europe by 1086% and finally Asia by 846%. Due to its expansion of trade and investment, Brazil is emerging as a powerful economy around the world.

Beside its economic growth, social and cultural globalization significantly impacted Brazil. FIFA World Cup was hosted in Brazil during 1950 and 2014, which represent one of the countries that have hosted the most World Cups. Frank Blackmore, the KPMG senior economist, stated “Brazil’s tourism rate is around 20% higher than it would normally have been for this season of the year”. It has been revealed that World Cups in Brazil contributed 6% of the country’s growth, specifically increasing the GDP (Jaishankar). Likewise, it is believed that for every ten tourists, one job is created, which will further decrease the unemployment rate in Brazil. The influence of the World Cup in Brazil is significant that it is further positively affecting the economy via inflows.

To conclude, due to trade liberalization, foreign investment, and immense engagements in World Cups, Brazil’s economy was dramatically elevated and further formed the country as a developed region. To add on, globalization led Brazil to receive power within international organizations and has risen as an impactful country regarding international policies.

References

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