Brazil on the international arena

The BRICS - Brazil, Russia, India, China and South Africa - have recently played an increasingly prominent role in the world stage. And it's not just the huge resources of these countries, but also in their growing share of world GDP.

BRICS group - almost 30 percent of the globe, 40 percent of its population and 20 percent of world GDP. Of its participation in the global economy, "five" exceeds the Eurozone countries. BRICS contribution to the growth of world exports – is 15 percent, and high investment attractiveness of the BRICS - the share of member countries account for half of all foreign investment.

Each member of the BRICS has advantages. The economies of the BRICS complement each other. Five seeks to increase the role of developing countries in the world. State BRICS support mechanism "Big Twenty" as the main instrument of world cooperation. In addition, they support the reform of the global financial system. It is necessary due to the fact that the main economic activity shifted to the fast developing countries, according to the head of the BRICS. Also, "five" opposes trade protectionism, the strengthening of the dominant role of the UN in addressing the maintenance of peace and sustainable development.

Brazil is rich in various natural resources. In addition, the South American country boasts of advanced industrial technology, as well as relatively developed financial markets.

“Being part of the BRICS does not limit Brazil's autonomy, nor are there any membership fees (as for the UN and many other international bodies). Brazil's BRICS membership does not complicate its ties to any other partner such as the United States, Argentina or the European Union. Finally, BRICS summit visits are usually combined with bilateral meetings (in this years’ case, with India's Manmohan Singh) which would have to take place anyways.

The potential benefits, on the other hand, are significant. BRICS membership has boosted Brazil's international standing. It helps strengthen Brazil's ties to international actors who are set to take a leading role in the 21st century - something of great economic and political importance to Brazil's long-term national interest” (Post-Western World, 2012).

Brazil is the most similar to Russia among the BRIC countries (relatively speaking, of course). Fernando Henrique Cardoso, former president of Brazil and a prominent sociologist once described his country as a “tropical Russia.” These two giants are close in terms of population as well as their gross products per average capita. They are the most endowed with natural resources within the BRIC group, far outstripping India and China. Further, they are unique in the world in terms of their ecological reserves, land resources and fresh water reserves. Brazil has achieved impressive gains in avio-construction, as well as in the metallurgical and biotechnological fields. It is the world’s leading producer of biological fuels. The Brazilian economy used to be quite deficient in energy reserves. This was probably its weakest point. However, the recent discoveries of large oil and gas reserves may transform the country into an influential exporter on the global market within only a few years. In addition to its huge natural resources in other fields, Brazil’s new energy potential will undoubtedly strengthen the country’s rising prospects within the BRIC group. It is obvious that the Latin American giant is little integrated into the global economy, which it is attempting to resolve through the significant results it has achieved over the past several years. Its rise has been marked by its ability to be attractive to the countries in the region. Its continued activities within MERCOSUR in the South American Community of Nations on the one hand, and its opposition to the ALCA project on the other are no accident. It also recognizes the necessity of further strengthening its entrenchment in the South as a geopolitical reality.

New trade possibilities are appearing for Latin American and other developing countries.

Does Brazil deserve the backlash? Some of the criticism is misplaced or inaccurate. Unemployment is low, wages rising and foreign direct investment pouring in ($67 billion in 2011, a record). Most economists reckon that Brazil can continue to grow at around 3.5% without triggering higher inflation. Many countries would love to have Brazil's highly productive farms and its big new oilfields, two of the sources of its commodity dependence. Compared with Russia, China and even India, Brazil more clearly enjoys the rule of law. Its welfare state represents a defensible political choice for a country of yawning inequalities. Above all, Brazil's strength is a democracy that has yielded broad political continuity and economic stability.

Even so, its government must start to confront the country's weaknesses. That 3.5% growth rate may seem lavish by Western standards, but it is below both what Brazil needs to be to continue recent social gains—and what it could be. Some of the sources of the faster growth of recent years may now be exhausting themselves. These included a bonus from the stabilisation, opening and reform of the economy in the 1990s, and a huge lift in the country's terms of trade, thanks to China's appetite for commodities. Henceforth Brazil's labour force will not grow as fast, even as the pension bill rises. Domestic credit cannot go on increasing at today's rate, as households are starting to struggle with debt (see article).

At the same time, Brazil has turned itself into a very expensive place to do business. The government blames the currency for this; it has go ne to great lengths to drive its value down. But the government itself is responsible for much of the “Brazil cost”. Not only has the tax burden risen from 22% of GDP in 1988 to 36% today, but the tax system is absurdly complex. Most of the money goes on over-generous pensions and wastefully big government, rather than transfers to the poor.

The minimum wage is now three times that of Indonesia or Vietnam (no wonder manufacturers are struggling). Businesses face pointless regulation. Lack of investment means freight costs are high. And the state has started messing around with business: a rule that 65% of equipment for the deepwater oil industry must be produced at home guarantees that developing the new fields will be slower and costlier than it need be.