Questão 30654

Oil could transform Brazil's economy. But not necessarily

for the better

The legend is that Brazil never lives up to its vast potential.

    When Stefan Zweig, an exiled Austrian writer, said in 1941

    of his new home that it was the “country of the future”,

    popular humour quickly added “and it always will be”. More

5  recently, when Goldman Sachs classified Brazil together

    with Russia, India and China as the “BRIC” countries that

    collectively represent the world's economic future, there

    was much complaining that its mediocre rate of economic

    growth condemned it to be an intruder in such dynamic

10 company.

    Yet there are reasons to believe that South America's

    economic powerhouse of 190 million people is starting to

    count in the world. Economic growth has risen steadily,

    to 5.4% last year. That is modest by Chinese standards—

15 but the comparison is misleading. Brazil enjoyed Chinese

    rates of growth in the third quarter of the 20th century.

    That was when it was almost as poor as China. It is much

    harder for a middle-income country, as Brazil now is, to

    grow at such rates. And now it looks as if Brazil will

20 become an oil power, too.

    Brazil's previous growth boom was derailed by debt and

    high oil prices, a collapse that obliged its then military

    government to give way to civilian rule. The early years of

    restored democracy saw chronic inflation, economic torpor

25 and political drift. In the past decade and a half, however,

    under reforming democratic governments, Brazil has

    conquered inflation, opened a protected economy to the

    world and begun to tackle its social problems. Poverty

    and inequality are falling steadily.

30 All this has gradually created a new mood among business

    people. Brazilian companies, traditionally inward-looking

    family-owned affairs, are going to the stockmarket to raise

    funds, in many cases to finance expansion abroad. Some,

    such as Vale, the world's second-biggest mining company,

35 and Embraer, its third-largest maker of civilian aircraft,

    both privatised in the 1990s, are well-known. A string of

    others are about to become so.

    Many of these companies are linked to agribusiness or

    other primary commodities. Additionally, some economists

40 argue that Brazil is the beneficiary of a structural shift, in

    which the industrialisation of Asia and the rise of a new

    middle class in the developing world will keep commodity

    prices high. Besides, Brazil produces more than just

    soyabeans. It has a lot of manufacturing industry too. And

45 its newly discovered offshore fields of oil and natural gas

    may turn out to be bigger than those in the North Sea in

    the 1960s.

Oil wealth is lovely, of course. But it is also a cause for

    concern. The worry now is that a bonanza of oil will weaken

50 an already infirm resolve to dig deeper into the economy's

    structural problems. These difficulties include an

    oppressive tax system and a labour code that makes firms

    cautious in hiring. Between them these have confined

    some 40% of the workforce to the informal economy.

55 Compared with its past, Brazil is indeed doing much better.

    But before oil euphoria kicks in, Brazil's leaders should

    ask themselves why so many other countries have made

    bigger returns from a much smaller natural endowment.

In terms of reference, it is correct to affirm that