Despite its status as one of the developing countries' acknowledged leaders, Brazil is growing below the global average. A BBC news report points out that the culprit is largely attributed to poor governance. The government is said to be slow to act on critical measures that will boost the country's productivity and it has a not so wise spending policy.

In regard to its vital ports:

"With the depth we have now we can take ships of up to about 60,000 tonnes," says Fabricio Piero Domenico, the port's commercial director.

"But if we dredged the channel just a few metres deeper we could take ships of up to 120,000 tons, and that would give us a reasonable capacity."

However, that dredging has been delayed for years by bureaucratic wrangling, an example of how red tape and poor infrastructure are holding Brazil back.

Concerning the country's spending policy;

"In recent years it has increased taxation, but less and less of it is being invested.

It is being spent on pensions and other types of social security payments. Yet Brazil still has millions of poor, who earn so little they don't have enough money to buy things that would boost the domestic economy.

All this means that, unlike China or India, Brazil's current growth rate is not being sustained by rapid industrialisation or domestic demand, but by the high prices the rest of the world is willing to pay for its commodities and raw materials.

When that demand falters or prices fall, Brazil may well find it has missed a golden opportunity for rapid economic development."

No comments: