INTERNATIONAL POLITICAL ECONOMY

International political economy (IPE) is as academic discipline in the social sciences, it basically helps to analyze the international relations of a country with the help of political economy. The discipline of international political economy is a combination of political science, history, economics, cultural sciences and sociology. It is also a field which is based upon the international trade and finance of the country’s economy plus it also provides policies that help the trade of the country i.e. the country’s fiscal and monetary policies. International political economy is based on 2 dimensions, they are 1) the first dimension is based upon the concerns that cause international economic and political trends in the economy, which can be found on the international and as well as domestic level and 2) the second dimension of IPE is based on foreign economic policies are very important for the global environment of the country and in this case would be Brazil. (Frieden & Lake 1999)

BRAZIL

Brazil is in the Eastern South America, it is slightly smaller than United Sates. Brazil is the largest and the most populated country in South America. Brazil has natural resources in abundance and still it is an economically underdeveloped country of the world. The natural resources of the Brazil are bauxite, gold, iron ore, manganese, nickel, phosphates, platinum, tin, uranium, petroleum, hydropower and timber. As it is a known fact that Brazil is one of the most populated country in its region, a census was conducted in 2000 and it was found out that the country had a population of 169,799,170 and still it is the most socially unequal country. (CIA- The World Fact book – Brazil 2008)

The agricultural products of Brazil are coffee, soybeans, wheat, rice, corn, sugarcane, cocoa, citrus and beef. The major exports of the country are manufactured goods, iron ore, soybeans, footwear and coffee. The major imports are machinery and equipment, chemical products, oil and electricity. And the major industries of Brazil are textiles, shoes, chemicals, cement, lumber, iron ore, steel, aircraft, motor vehicles and parts, other machinery and equipment. The government type in Brazil is federative republic.

INTERNATIONAL POLITICAL ECONOMY OF BRAZIL

Historical Development

The historical development of Brazil starts, when the Portugal Empire lost their standing in the Asian territory and turned their attention towards the country of Brazil. The Portuguese then intensified the cultivation of sugarcane, cotton and spices. And with this kind of agriculture spread there was a great need of manual labor and to fulfill that demand a great deal of slaves were bought to Brazil from Angola and Guinea.

In 1580 the Portugal army captured Paraiba and then later on Sergipe. And then 1603 the Portugal army conquered Ceara and then later on the state of Para where the founded the city of Belem. A great deal if expeditions were sent in the 16th and the 17th Century. But more were sent at the end of the 17th Century when gold was found in the interior of the country. Along with gold, diamonds were also found in abundance, this caused a gold rush, and people flocked to Brazil just because of this, and due to this gold rush the agriculture system of the country were heavily devastated. The adventurers were the ones who use to go on these expeditions; these expeditions were called the banderiantes, why because these people used to travel under the flag of their leader. (Portugal: Historical Setting 2008)

In the 19th Century the Amazon (i.e. Brazilian Amazon region, which cover 60% of the Brazilian national territory) boomed due to the rising demand for rubber and the bubble for rubber burst when the rubber market collapsed in 1910. The agricultural interest was again renewed in the 60’s and 70’s and major developments have taken place ever since then.

As it is known that since rubber demand had declined in the 19th Century, the Japanese took over those plantations and started to grow pepper in 1930’s, when they settled in Brazil. By then jute was also being produced on commercial basis and these products that is pepper and jute was being exported to US and Europe (i.e. two-third of the production). Another area that was developed in the 19th Century was the massive cattle ranches all over the country.

Other developments were also taking place, for example, one of the first roads was built in the country. This road stretches from the capital of Brasilia to Belem, which is at the mouth of the Amazon River; this road is somewhere around 2100 km long. And other developments have taken place as well like cities being developed etc.  (WORLD write: Brazil Exchange)

Political Development

            Brazil got its independence in 1882; the country has been in a political and social crisis again and again that is it is a never ending story. These kind of political issues have slowed down the development of Brazil. When we are viewing the development of Brazil, we have to remember that the country took its independence from Portugal just over 100 years ago and still the country is struggling to become a developed country.  And during this whole time period the country has been more instable than stable.

The Brazilian government has a very shaky and an instable past, the government of Brazil is mostly compromised of a military and a civilian background where the military of the country has ruled for 21 years. The country also has a history of dictatorships, resignations by the presidents, suicides and overthrows by the military and vice versa. Due to these kinds of shifts in the govt. it has become difficult for the people of Brazil to trust their government, leaders or even believe in their justice system. (Hodne 2004)

            From 1889-1930, Brazil was a democratic country, but this democracy ended when the government was overthrown by the military when they took over the country. The military coup put Vargas into power. Vargas at first was heavily supported by the elites of the country but this soon quickly declined. He remained in power until 1945, then from 1945 onwards till 1961, elections for presidents were held (after every four years). During this time period Vargas was re-elected through the election for the presidency, and to become the president Vargas had to resign from his military post. And instead of doing that Vargas committed suicide.

In 1960 Janio was elected as the president but he gave his resignation after a few months and this issued cause the country to go into a constitutional crisis. In 1964 the military again overthrew the government of Joao Goulart, when he took over the government president Janio resigned. The military was again in power and was in power till 1985. In 1988 a new constitution of Brazil was created, where the powers of the president were limited.

Again in 2002 election were held and this time Luiz Inacion Lula da Lilva or just ‘Lula’ became the president. Lula is a strong union advocate and a former shoe shine boy, who comes from a humble working class family and who is also a member of the Worker Party in Brazil. Lula is still the president of the country that is for the past 6 years, when he was again re-elected for the presidency of Brazil in 2006.  (Hodne 2004)

            In the year 2003 the movement of Landless Workers launched a new way of farm occupations so that land reforms can be done more quickly by the government. And in 2004 the government of Brazil along with the governments of India, Germany and Japan, launched an application so that they can get a permanent seat on the UN Security Council.

Social Development

Social development can be defined as a process, whose outcomes are the transformation of social structures, which helps the society to improve. Society of a country is usually developed by the consciousness of the leaders and people. It must be remembered that social development is a long procedure and not a program that will develop the society in a short period of time and it should also be remembered that every social change that is conducted cannot be considered as development for the country, it may be bad for it. A society is based on 4 stages and they are survival, growth, development and evolution.

In 1930, the Vargas reform years, a law was passed called the ‘Organic Social Security Law of Brazil’. This law was passed for the security of workers, working in industries like, metallurgical, textile and other industrial workers and commercial, banks and store clerks. By 1960’s somewhere around 4 million urban workers were covered by this law. By 1976, the social security laws were combined together and by 1977, the following year; ‘The National System of Social Security & Welfare’ laws were created and established throughout the country.

The benefits that were included in this law are modest insurance against all kinds of accidents, pensions for old age people, funeral insurances, and medical, dental and hospital coverage for the employees by the employers and the government of Brazil. There is also unemployment insurance included in this law. The unemployment insurance will be funded by the government of Brazil. (Brazil-Social development 2007)

In 1988, maternity benefits were introduced in the country, under the new constitution. Due to this law, a great deal of employers started to ask their female employees to show sterilization certificates at the time of job interviews or they did not hire any female workers who were at the age of child bearing. By 1995, the government had banned all such kinds of activities and prohibited employers from asking their female workers to produce sterilization certificates or to even show them their pregnancy tests at the time of job interviews or any other time.

Brazil is being faced by another challenge and that challenge is of caring for millions of children who live on the streets and who are uneducated due to a bad education system in the country. These children do not have good health or are homeless again due to a lack of a good health care and housing system. These children do not even get 3 square meals a day and are mostly unfed due to a lack of food. It has been found out that one- third of the children population lives in poverty. (Brazil-Social development 2007)

Another problem that is being faced by the govt. due to these street children is that these kids get into drugs and sometimes the conditions are so very bad that these children conduct petty crimes like mugging people on the street or shop lifting or even stealing money from the shopkeepers. And the females usually get into prostitution so that they can make money for themselves, so that they can support their families. (Brazil- Social development 2007)

There is a great deal of racial discrimination in the country as well; this is another problem that is being faced by the government of Brazil. The Afro- Brazilians are usually given low paid jobs, these people live in poor conditions, and they have very few opportunities to study for higher education or get good paying jobs.

There is also a great deal of sexual harassment in the working place; almost every female worker is usually harassed by her employer in one way or another. And there are other issues that the government faces and they are domestic violence where the husbands usually beat up their wives and there is a lot of sexual violence in the country like rape. And sometimes t so happens that these crimes usually go unreported. (Brazil- Social development 2007)

Economic Development

            Economic wealth can be defined as the development of a country’s economic wealth and in our case it would be to develop Brazil’s economic wealth, so that the Brazilians well- being is well kept by the government of the country. It must be remembered that economic growth is different from economic development of the country, where economic growth can be referred as the increase in the country’s gross domestic product (GDP), real national income and so on and so forth. And whereas economic development is usually referred to the quality of life of people, and well- being of the community, growing incomes of the people and getting and retaining jobs.

Brazil’s economic policy since 1960’s is based on 3 primary objectives and they are as follows:-

·         Control of inflation

·         Gradual improvement of the welfare of the country’s economy

·         High economic growth rate

Under the finance ministers Mr. Roberto de Oliveriea Campos and Mr. Antonio Derfim Netto, the government fought to control the inflation and to stop it from increasing rapidly and to help the economy by economic growth through monetary correction. Monetary correction can be done through legal revaluation of fixed assets of the country (like real estates, debits in arrears, and the face value of bonds etc.). This monetary correction technique to become a success needs an extensive control on the economy by the government; so that it will be able to stop a rise in inflation of the economy. But in the end this monetary correction technique was not a success and not such a good idea, the failure of this technique created a high increase in the inflation at that time. Now the inflation of Brazil has gone down considerable. The inflation rate of the country is 4.1%.

Year
Inflation rate (consumer prices)
Rank
Percent Change
Date of Information
2003
8.30 %
42

2002
2004
14.70 %
21
77.11 %
2003
2005
7.60 %
176
-48.30 %
2004 est.
2006
6.90 %
156
-9.21 %
2005 est.
2007
3.00 %
88
-56.52 %
2006 est.
2008
4.10 %
112
36.67 %
2007 est.
(Brazil Inflation Rate 2008)

The 1975- 1979 development plan of Brazil was based on the economic growth, the economic infrastructure was based on the country’s energy, transportation and communication channels. The economic infrastructure received a 25% of the total investment that year. A special development plan was created called the ‘Palomazonia’; this plan was based on agriculture forestry, mineral exploitations and hydroelectric power.

In 1997- 1998 due to financial crisis in the country, the central bank of Brazil had to devalue the currency of the country by 45% and due to this cut down the economy should have gone in a recession but it did not. Instead the economy started to gain and grow from this decision. In 2001 economic growth slowed down due to an increase in the interest rates. And since 2002, due to the new elected president, the investors have been impressed by the tight fiscal and monetary policies of the country they have started to invest in the country. The HDI of Brazil is as follows in comparison with some other countries. (Brazil- Economic development 2007)

Brazil’s Human Development Index 2006 and Underlying Indicators in Comparison with Selected Countries

HDI value 2006
Life expectancy at birth(birth) 2006
Adult literacy rate(% ages 15 and above) 2006
Combined primary, secondary and tertiary gross enrolment ratio (%) 2006
GDP per capita(PPP US$)2006

1. Iceland (0.968)
1. Japan (82.4)
1. Georgia (100.0)
1. Australia (114.2)
1. Luxembourg (77,089)

68. Macedonia (TFYR) (0.808)
78. Jordan (72.2)
68. Qatar (89.8)
37. Germany (88.1)
75. Montenegro (9,250)

70. Brazil (0.807)
80. Brazil (72.0)
70. Brazil (89.6)
39. Brazil (87.2)
77. Brazil (8,949)

71. Kazakhstan (0.807)
81. Seychelles (72.0)
71. Dominican Republic (88.8)
40. Japan (86.6)
78. Macedonia (TFYR) (7,921)

72. Ecuador (0.807)
82. Algeria (72.0)
72. Peru (88.7)
41. Bolivia (86.0)
79. Dominica (7,715)

(Human Development Report 2008)

Bibliography

Brazil- Social development (2007), on 23rd December’08, from ;http://www.nationsencyclopedia.com/Americas/Brazil-SOCIAL-DEVELOPMENT.html;

 Brazil Inflation rate (2008), on 23rd December’08, from ;http://www.indexmundi.com/brazil/inflation_rate_(consumer_prices).html;

Brazil- Economic development (2007), on 23rd December’08, from ;http://www.nationsencyclopedia.com/Americas/Brazil-ECONOMIC-DEVELOPMENT.html;

CIA- The World Fact book – Brazil (2008), on 23rd December’08, from ;https://www.cia.gov/library/publications/the-world-factbook/geos/br.html;

Frieden, J A. ; Lake, D A. (1999), ‘International Political Economy: Perspectives on Global Power and Wealth’. Routledge

Portugal: Historical Setting (2008), on 23rd December’08, from ;http://historymedren.about.com/library/text/bltxtportugal29.htm;

Hodne, K (2004), ‘Political Development in Brazil’, on 23rd December’08, from

;http://homepages.gac.edu/~mgerstba/pol%20250%20papers/Hodne.pdf;

Human Development Report (2008), on 23rd December’08, from ;http://hdrstats.undp.org/2008/countries/country_fact_sheets/cty_fs_BRA.html;

WORLD write: Brazil Exchange (N.P.), on 23rd December’08, from ;http://www.worldwrite.org.uk/site/brazil/brazil.html;