In terms of natural resources, Brazil has always been incredibly wealthy. Until the 20th century, the economy was based on a series of cycles that exploited a single export commodity: brazilwood in the 16th century, sugarcane in the 16th and 17th centuries, gold, silver, and gemstones in the 18th century, and finally coffee and rubber in the 19th century. Apart from these boom and bust cycles, agriculture and cattle-raising were constant activities, but both were mainly limited to local consumption. Industrialization began in the early 20th century but didn’t really kick in until the 1950s, which coincided with the beginnings of Brazil’s major automobile, petrochemical, and steel industries.
After a difficult sink-or-swim period that accompanied the opening up of the economy to the world in the mid-1980s, Brazil has enjoyed healthy growth rates of 4–5 percent a year. The country now ranks as the world’s 10th largest economy in terms of GDP (according to IMF and World Bank calculations), just behind Canada. Brazil’s economy is larger than that of all other South American countries and increasingly competitive, high-quality, and innovative Brazilian goods are steadily making their presence felt in international markets.
As a result of its newfound clout, Brazil is able to go head-to-head with the United States and Europe during global trade talks. Moreover, Brazil has been largely unaffected by the recent recessionary tendencies affecting the United States and Europe.
Rich in natural resources and capable of supplying most of its own needs in terms of food, primary resources, energy, and manufactured products, Brazil is extremely self-sufficient. Well prepared to withstand rising imported fuel and food costs that are proving devastating for other countries, the country also boasts a domestic market of 185 million people that have more disposable income to burn than ever before.
Brazil’s moderate climate coupled with its fertile soil and its immense territory makes it an ideal place for the cultivation of many crops. Brazil is a leading world producer of coffee, soybeans, rice, corn, sugarcane, cocoa, and citrus fruits such as limes and oranges (Brazil supplies 80 percent of the world’s orange juice). It is also the planet’s largest exporter of both chicken and beef (Brazil currently has the largest herd of cattle in the world). Brazilian land is some of the cheapest on the planet.
In recent years, feeling crowded on their small plots, an increasing number of European farmers have invested in vast farms in the Central-West and North, where they are amazed at how fast crops grow. Indeed, over the last two decades “agri-business” has become increasingly high-tech. As a result, today Brazil boasts one of the world’s most productive agricultural sectors.
Industry and Finance
Brazilian industry, which is extremely diversified and well-developed, currently accounts for around one-third of the country’s GDP. Although traditionally, major industrial activities have been concentrated in the Southeast (particularly São Paulo and Minas) and the South, in the last few years, significant investments have been made in the Northeast and the North.
Among Brazil’s leading manufacturing industries are the automobile, aircraft, steel, mining, petrochemical, computer, and durable consumer goods sectors. Additionally, the country has a diverse and sophisticated service industry. Financial services are particularly well-developed. São Paulo is Latin America’s largest financial center, and its stock exchange, Bovespa, is the second-largest equity option exchange in the world.
Brazil used to import 70 percent of its energy from overseas. However, since 2006, the nation has been capable of meeting all its own energy needs. Brazil is the world’s leading supplier of hydroelectricity. To date, more than 90 percent of the country’s electricity needs are supplied by enormous hydroelectric dams such as Itaipu in Paraná and Tucuruí in Pará. Brazil has also flirted with nuclear energy with the building of Angra I, Angra II, and the soon-to-be inaugurated Angra III reactors, all of which are located in an otherwise idyllic spot of coastline in the state of Rio de Janeiro.
In late 2007, as rising oil prices sent the planet into panic, Brazil became the envy of the many countries when the national oil giant Petrobras discovered a vast deepwater reserve off the coast of Rio de Janeiro. The so-called Tupi reserve is estimated to hold up to 8 billion barrels of oil and could lead to Brazil becoming the newest member of OPEC. However, it’s not as if Brazil is beholden to the increasingly coveted fossil fuel.
Following the first oil crisis of 1974, the government’s visionary solution was to begin converting sugarcane into ethanol as a cheaper and nonpolluting fuel for all vehicles. Today, Brazil is the world’s number one producer of sugarcane alcohol; all Brazilian vehicles are flex fuel models that run on gas, alcohol, and a mixture of both.
In the last decade, Brazilian tourism has developed enormously. Traditionally, aside from Argentineans who used to invade the southern coast before their currency took a nosedive, international visitors rarely ventured beyond Rio de Janeiro. Since 2000, there has been a major spike in tourists from North America and especially Europe. The increase is largely due to the proliferation of domestic charters and air routes as well as a more sophisticated tourism infrastructure, even in unspoiled destinations far off-the-beaten path.
In 2007, Brazil was the fourth-largest tourist destination in the Americas and the second largest in Latin America, after Mexico. However, much greater than the growth of international tourism has been the rise in the number of Brazilian themselves who are increasingly able to travel. Because of its endless natural attractions, Brazil’s major tourism niche is ecotourism, which has the advantage of providing sustainable development. Particularly in the North and Northeast, tourism is playing a pivotal role in the development of local economies.
At the moment, the still-growing sector accounts for 4 percent of GDP and, directly and indirectly, accounts for 7 percent of all jobs. Ranked in terms of number of tourists, Brazil’s most visited cities are Rio de Janeiro, Salvador, São Paulo, Florianópolis, and Foz do Iguaçu.
© Michael Sommers from Moon Brazil, 2nd Edition