5.1.5 Rapid Economic Development in LICs/NEEs - Brazil Case Study

Global Importance of Brazil:

• Economic Standing:
  • In 2024, Brazil became the world's 8th largest economy (GDP).
  • 5th largest exporter of food globally.
• Geographical and Political Significance:
  • Accounts for over 50% of South America's territory, population, resources, and wealth.
  • Peaceful relations with neighbors since 1860.
  • Member of the G20, a group of the 20 most important nations in world financial affairs.

Development Context:

• Development in Brazil is influenced by unique political, social, cultural, and environmental factors.

Political Context:

• Colonial History:
• Portuguese colony until 1822.
• Largest Portuguese-speaking country.
• Stability and Diplomacy:
• Politically stable with neighbours.
• Last conflict in 1860.
• International Alliances:
• Member of BRIC (Brazil, Russia, India, China).
• BRIC nations expected to be major suppliers of manufactured goods, services, and raw materials by 2050.

Social Context:

• Diversity:
• One of the most multicultural and ethnically diverse nations due to mass immigration.
• Sports Culture:
• Strong football culture.
• Hosted the World Cup 6 times and the Olympics in 2016.
• Urbanisation:
• In large cities like Rio and Sao Paulo, 1/5th of the population lives in slums.

Economic Context:

• Food Exportation:
• Major commodity is food.
• 5th largest exporter of food globally.
• Oil Industry:
• Significant oil exports since 2007.
• Leading oil distributor globally.
• Wealth Distribution:
• High disparity in wealth.
• Richest 10% earn 42.7% of the nation's income.
• Poorest 34% earn less than 1.2%.

Environmental Context:

• Deforestation:
• Significant loss of natural vegetation in the Amazon.
• Since 2006, an area the size of Greece has been lost.
• Climate Role:
• The Amazon Rainforest is the largest carbon sink in the world.

Economic Transition:

• Shift in Economy:
  • Transitioned from primary-based (agriculture, extractive industries) to secondary (manufacturing) and tertiary (services, knowledge industries).

Sector Breakdown:

1. Primary Industry 📝 (e.g., Agriculture):

• Now employs 1% of the workforce.
• Decreased by 20% in the last 40 years.

2. Secondary Industry 📝 (e.g., Manufacturing):

• Employs 26% of the workforce.
• Provides reliable jobs and boosts economic development.
• Selling manufactured goods overseas increases income.

3. Tertiary (Services) and Quaternary (Knowledge) Industries:

• Employs 73% of the workforce.
• Economy becoming more balanced.
• Growth in finance sectors.

TNC CASE STUDY: BP in Brazil

Overview of TNCs:

• Trans-National Companies (TNCs):
  • Operate in multiple countries.
  • Example: BP, one of the world's largest oil producers.

Benefits of TNCs in Brazil:

• Economic Development:
  • Increase manufacturing industry.
  • Bring benefits to operating countries.

Advantages of BP in Brazil:

1. Employment:

• Creates jobs 📝 (e.g., BP brings in 7,000 jobs to Brazil).

2. Investment:

• Oil TNCs invested $160 billion in Brazil.
• BP has 21 oil exploration sites in 16 states.
• BP Charity foundation has spent $2 billion since its launch.

3. Community Support:

• Donated $2 million to fight COVID-19 in rural communities.

4. Renewable Energy:

• Investing in biofuel energy, generating extra 2,000 jobs.

5. Tax Contribution:

• Pays $108 million in tax to Brazil.

Disadvantages of BP in Brazil:

1. Profit Repatriation:

• Some profits leave Brazil as BP is a British company.
• Paid $2.6 billion in UK tax in 2019.

2. Environmental Impact:

• Oil spills causing environmental problems.
• 2019 spill devastated 2,500km of coastline, killing 800 endangered turtles.
• 2011 oil spill damaged coral reefs.

3. Economic Control:

• TNCs can relocate at any time, causing instability.

Brazil's Relationship with the Wider World

Global and Regional Role:

• Larger Role in Regional and Global Politics:
  • Improved relations with immediate neighbours and global trading partners.
• International Trade:
  1. Trade Barriers and Investment:
  • Reducing barriers and encouraging foreign direct investment.
  • Major trading partners: Russia, China, India (BRICS).
  2. BRICS:
  • Countries with 3.1 billion people, representing 41% of the world population and 44% of global GDP.
  3. China:
  • Accounts for 46% of all Brazilian exports.
  4. G20 Member:
  • Group of 20 largest economies.
  • Involved in South America's trading group, Mercosur.
  5. UN Participation:
  • Founding member.
  • Participated in 33 peacekeeping missions worldwide.

Brazil's Relationship with Aid

Aid Necessity:

• 5th Largest Economy:
  • Despite size, benefits of NEE status are not evenly spread.
• Poverty Indicators:
  • Over 25% of the population lives on just $6 per day.
  • 6 million live in slums.
  • 50 million live in inadequate housing.
  • 50% in rural areas lack adequate healthcare.

Types of Aid Received:

• Annual Aid:
  • Action Aid began work in Brazil in 1999. The NGO teaches women and children about their rights to basic services such as healthcare, clean water and education. In 2019 alone, it provided Brazil with $3 million worth of aid…. The majority of this aid is long-term aid.

Aid Types:

Short-term Aid:

4. Emergency Relief:

• Addresses immediate crises.
• Foreign governments and NGOs provide aid.
• 📝 Example: Action Aid for disaster relief and health services.

5. Immediate Disaster Relief:

• Helps with short-term recovery.
• 📝 Examples: Aid for 2009 & 2011 oil spills.

Long-term Aid:

6. Development Focused:

• Helps countries become more developed.

7. World Bank Initiatives:

• $650 million for education programs.
• Literacy rates increased from 90-94% since 2008.

8. NGO Contributions:

• 📝 Example: Action Aid for rural families, drought resilience, rainwater collection tanks, and climate-resistant seeds.
• Provided 12,000 microloans for handpumps.

Improvement in Quality of Life:

• General Improvement:
  • Economic development over the last 40-50 years has improved quality of life.
  • More reliable, better-paid jobs in manufacturing.
  • Higher disposable incomes.
  • Increased spending on clean water, quality homes, and medical care.

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Education:

• Increased government spending on education to 19% of GDP.
• School attendance (4-7-year-olds) increased from 37% in 2000 to 61% in 2011.
• 78% of 15-19-year-olds in education.

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Healthcare:

• Healthcare spending increased from 6% of GDP in 1996 to 8.6% in 2012.
• Life expectancy increased by 10 years since 1980 (from 66 to 76).

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Access to Water:

• Improved access to clean and safe drinking water.
• 84% access in 1992 increased to 97% in 2012.

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Sanitation:

• Improved household and community access to sanitation.
• Access increased from 72% in 1992 to 81.6% in 2012.
• Improved sanitation reduced infant mortality rates from 76 to 14 (1980-2020).

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Jobs:

• Unemployment increased since 2016, from 9% to 12.6%.

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Environmental Impact:

• Focus on Development:
  • Economic development may come at a cost to the environment.
  • Main impacts: oil spills and deforestation.

Fossil Fuel Use & Oil Spills:

1. Energy Consumption:

• Increased with development.
• Fossil fuels (coal, oil) are affordable but polluting.

2. Oil Exploration:

• Caused 2 major oil spills (2019 and 2011).
• 2019 spill affected 2,500 km of coastline, leaked 1,000 tonnes of oil, killed 800 endangered turtles.

Deforestation:

1. Resource Demand:

• Leads to habitat destruction.
• Cattle ranching and businesses contribute to 80% of deforestation.

2. Urbanisation:

• Increased farming and urbanisation.
• 70-80% of forests lost.

3. Gold Mining:

• Increased 300% since 2010.
• Results in habitat loss and environmental degradation.