Monday, March 23, 2020

Brazilian Economy Essays - Public Finance, Austerity,

Brazilian Economy An Economy Recovering From Chaos. Brazil earned the reputation of being a "miracle economy" in the late 1960s when double-digit annual growth rates were recorded and the structure of the economy underwent rapid change. Since 1981, however, Brazil's economic performance has been poor in comparison to its potential. The country's dramatic reduction in output growth, which averaged an annual GDP growth of only 1.5 percent over 1980-93, reflected its inability to respond to the events of the late 1970s and 1980s. Some events that took place during this period were: the oil shock, increases in real interest rates, the debt crisis, and the resulting cutoff of foreign credit and foreign direct investment. These shocks, in combination with poor management of public finances and heavy state intervention, resulted in large fiscal deficits at state and federal levels. Even if the fiscal deficits were reduced after 1990, deviating policies generalized indexation, and exchange rate management contributed to keeping inflation high and increasing. Monthly inflation skyrocketed from 3 percent in the late 1970s to 50 percent in mid-1994. The country's income distribution, already poor, worsened drastically in the 1980s. Against these conditions, the success of the Real Stabilization Plan in effect since mid-1994, which has reduced inflation to an annualized rate of about 15 percent, stand out noticeably. Growth rates were satisfactory in 1994 and 1995 at 5.8 and 4.2 percent, respectively (Page 45-47). From Portugal's discovery in 1500 until the late 1930s, the economy relied on the production of primary products, such as sugar cane for exports. Portugal subjected it to a strict enforced colonial pact, or imperial mercantile policy, which for three centuries heavily restricted development. The colonial phase left strong marks on the country's economy and society, lasting long after independence in 1882. Significant changes began occurring only late in the eighteenth century, when slavery was eliminated and wage labor was adopted. Important structural transformations began only in the 1930s, when the first steps were taken to change it into a modern, semi-industrialized economy. These transformations were particularly strong between 1950 and 1981, when the growth rates of the economy remained quite high and a diversified manufacturing base was established. However, since the early 1980s, the economy has experienced substantial difficulties, including slow growth and stagnation. Nevertheless, the country still has the potential to regain its former dynamism. In the mid-1990s, it had a large and quite diversified economy, but one with considerable structural, as well as short-term problems. Socioeconomic transformations came about rapidly after World War II. In the 1940s, only 31.3 percent of its 41.2 million inhabitants resided in towns and cities. By 1991 its population had reached 146.9 million and 75.5 percent lived in cities, therefore creating two of the world's largest metropolitan centers ? Sao Paulo and Rio de Janeiro. The rate of population growth decreased for about 3 percent annually in the transition. By mid-1999 it had an estimated population of 166 million (Levine 200). The share of its primary sector in the gross national product declined from 28 percent in 1947 to 11 percent in 1992. Despite this reduction, the agricultural sector remains important. Although part of it is primitive and demanding, part is modern and vigorous. Brazil remains one of the world's largest exporters of agricultural products. In the same 1947-92 period, the contribution of industry to GNP increased from less than 20 percent to 39 percent. Its GNP per capita in 1999 was of $4,750 per year. The industrial sector produces a wide range of products for the domestic market and for export, including consumer goods, intermediate goods, and capital goods. By the early 1990s, it was producing about 1 million motor vehicles annually and about 32,000 units of motor-driven farming machines. On an annual basis, it was also producing 1.8 million tons of fertilizers, 4.7 million tons of cardboard and paper, 20 million tons of steel, 26 million tons of cement, 3.5 million television sets, and 3 million refrigerators. In addition, about 70 million cubic meters of petroleum were being processed yearly into fuels, lubricants, propane gas, and a wide range of petrochemicals. Besides, Brazil has at least 161,500 kilometers of paved roads and more 63 million megawatts of installed electric power capacity (Becker 88-90). Even with these figures, the economy cannot be considered developed. While the economic changes since 1947 raised the country's per capita income above US$2,000 in 1980, per capita income in 1995 was still only US$4,630. Growth and structural change have not altered significantly the country's extreme unequal distribution of wealth, income, and opportunity. Regardless of impressive rise in economic growth and

Friday, March 6, 2020

econs assignment Essay

econs assignment Essay econs assignment Essay An economist once said that most economic activities can be summarized as, â€Å"People respond to incentives. The rest is commentary† (Mankiw, 2008). This clearly highlights how vital it is the role of incentives in the field of economy. Incentive in short means the factor that benefits a certain group of people and encourages them to an option instead of other alternatives. The reason why people respond to incentives is because it benefits them and they often get more out of the same or lesser opportunity cost. Incentives can often be seen as a form of reward, resulting in a positive impact on people. Mankiw (2008), a renowned and experienced economist from Harvard University discussed the subject of his personal work incentives. He stated the worth of incentives that kept him working as well as the opportunity to work and earn some extra pay. In Malaysia, the Cooperatives and Consumerism Minister is attempting to pacify Malaysians by assuring them that the Government is trying their very best to maintain the fuel prices even tough global prices for oil are rising (The Star Online, 2011). If oil prices increase, prices for other goods will also increase as the same time and this would lead on a negative impact for consumers. This indirect incentive that the government is helping to lift is actually allowing better conditions for consumers. On a personal level, an example of incentive in our daily life is the usage of credit cards. Credit card is an important tool in today’s world with the incentives provided including low interest rates and longer term of minimal amount repayment. However, there are many stiff competitions between companies such as Visa, MasterCard and American Express offering the same service and the only way the companies can attract customers is with their incentives. Visa gives a percentage of the purchases as cash back from some cards; accrue points in reward programs from other cards that allow the customers to get merchandise for paying their debts on time (Ramachandran, 2009). Recently, there is a new scheme that allows young adults that are earning less than RM3, 000 a month to own their own home (The Star Online, 2011). These young adults could own homes costing from RM100, 000 to RM200, 000 with 100% loans. My cousin is a newly graduated doctor that soon to be finishing his house manship now could actually afford to get his own home. Before, he couldn’t afford the 10% down payment even after 2 years working. Since this new