Friday, December 31, 2010

Brazil and President Lula: Well Done

Brazilians have a lot to celebrate these days. They are in their way to become again the global power they already were before. It is not the first time Brazil is in such situation. In the sixties,(1968) it was among the eight world economies, and its potential on different areas placed it ,in a leading position for the XXI century along with other few Latin America countries.
As we approach the end of the first decade of this century, and we are about to begin the second one ,the usual end of the road kind of evaluation show Brazil as the shining star .In the year 2000 , Brazil was hope, ten years later Brazil is reality. It is within the selected group of economies (8th),which carry out the torch of global growth.
Very much of these achievement comes along with the implementation (1990) of moderate free market economics policies, integration to world economy and fiscal responsibility .As a result, Brazil has been gaining positions both politically ,as a global partner and economically ,in the competitiveness index as well. According to the World Economic Forum in the year 2009, Brazil catch up eight places in the competitiveness index, surpassing economies like Russia.
Brazil economic policies, represent the consolidation of a new approach to free markets economy policies, and an “investment friendly” State, which place Latin America, closer than ever to successful experiences of development known in the past, such that of the east Asian tigers. Of course there are differences, but Latin America pursuing the current path, is in the position to surprise global markets a few years to come .
On the other side, the Brazil trade composition is quite diversified, which is like a markets fluctuations insurance. It includes Latin America (25,9%), European Union(23,4%), Asia (18,9%) ,USA( 14 %) and others (18%).Besides, Brazil exports(60%) are mainly manufactured and semi manufactured goods.
President´s Lula Government made work, what Chilean Governments had made its brand since the nineties. In fact, both cases fit quite well with two new paradigms: Stability and Governance, as necessary (not sufficient, because good economic policies have no substitutes), condition for growth .Let take a look at both.
It is important to remember that before his first election in 2002, there were doubts about candidate Lula commitment with free markets policies, fiscal discipline and integration to the global economy. In those years, Chile was the only economy fully committed to growth based on free markets policies, and private sector investment. Other Latin America countries, were struggling with deep economic crisis on their own, somehow as part of the transition to a new stage, post Washington Consensus.
Thus, after being elected President Lula took the unexpected course, and decide to follow what former President Cardoso set in, although making the social progress an important target( zero hungry policies) . From then on, there were more than one reference in Latin America, in terms of economic policy, which allowed to create with other key countries, an huge geographic zone for trade and investment , creating the condition for Transoceanic routes, which will push further up these potential.
Governance is the second paradigm, which means that there is no way to make Government works with the country paralyzed by violence on the streets or business uncertainty. It is key to implement economic policies aimed at getting social balances, as much as economic growth .After all, wealth creation has its real meaning when more people have access to it . Governance support stability such that both add up not 4 but to 5(synergy).
President Lula is about to finish his successful Presidency, so Latin America will be grateful with his legacy.-