Social-Economic Aspects of Brazil and Mexico

SECTION 1        SOCIAL-ECONOMIC ASPECTS OF BRAZIL AND MEXICO

1.1                History and general numbers

Both countries are former colonies that were inhabited in the past by Indian tribes. Mexico under mostly Spanish regime and Brazil mostly under Portuguese. The languages stayed.

Brazil has 8.514.877 km2 (5th). As part of South America it has 208.862.818 inhabitants^[1], mainly Roman-Catholic. It is a federal republic with 26 states and it has the ninth economy in the world with a GDP of 1.909.386 mio US dollars.^[2] Which makes 8.810 dollar per capita. Its GDP (PPP) per capita was $15,919 in 2017.^[3]

Mexico 1.964.375 km2 (14th), As part of North America it has 124.5574.795 inhabitants counted in 2017 (63,6 per km2), mainly Roman-Catholic. It is a federal republic with 31 states and has the twelfth economy in the world. In 2017 the gross domestic product (GDP) per capita was US $ 9,896. Corrected for purchasing power this is even US $18,765.

Prosperity in both countries is very unevenly distributed. In Mexico the highest 20% accounts for 55% of incomes. 17% of the population lives below the poverty line. Moreover, there are major differences in the level of prosperity per region.

The currency of Mexico is the Mexican peso (MXN), which has existed in its current form since the worthless old peso was replaced in 1993. The currency in Brazil the Brazilian Real (BRL) and it replaced the short-lived Cruzeiro Real.

1.2                Recent social-economic developments in Brazil

Brazil has the largest economy in Latin America. It has developed agricultural, mining, industrial, and service sectors. It has an abundance of natural resources such as petroleum, iron ore and agricultural products. Brazil is increasingly present in foreign financial markets and is one of the four BRIC countries.

Brazil pegged its currency, the real, to the U.S. dollar in 1994. However, after the East Asian financial crisis, the Russian default in 1998 and the series of adverse financial events that followed it, the Central Bank of Brazil temporarily changed its monetary policy to a managed-float scheme while undergoing a currency crisis, until definitively changing the exchange regime to free-float in January 1999. Brazil received an International Monetary Fund rescue package in mid-2002 or $ 30.4 billion, then a record sum. Brazil's central bank paid back the IMF loan in 2005.^[4] Inflation monitoring and control currently plays a major part in the Central bank's role of setting out short-term interest rates as a monetary policy measure.^[5]

Between 1993 and 2010, 7012 mergers & acquisitions with a total known value of $ 707 billion with involvement of Brazilian firms have been announced.^[6] The year 2010 was a new record in terms of value with US $ 115 billion of transactions. Corruption costs Brazil almost $41 billion a year alone in 2010.^[7]

Brazil also has a large cooperative sector that provides 50% of the food in the country.^[8] The world's largest healthcare cooperative Unimed is also located in Brazil, and accounts for 32% of the healthcare insurance market in the country.^[9]

The industry - from automobiles, steel and petrochemicals to computers, aircraft and consumer durables - accounted for 30.8% of the gross domestic product. [247] Industry is highly concentrated in metropolitan Sao Paulo, Rio de Janeiro, Campinas, Porto Alegre, and Belo Horizonte. Brazil has become the fourth largest car market in the world. [250] Major export products include aircraft, electrical equipment, automobiles, ethanol, textiles, footwear, iron ore, steel, coffee, orange juice, soybeans and corned beef.

Economic growth in Brazil increased particularly sharply during the years 2004 to 2013. It benefited from the strong global demand for raw materials and energy. The prices of ores and oil rose sharply, making the country a good living on exports. The high inflation of the early 1990s was again fully under control in 1998. In 2013 GDP per capita peaked at US           $ 13,200.

Unemployment fell and reached a low record in 2014. Partly due to a halving of the oil price and corruption problems around the state oil company Petrobras, the country ran into economic problems. Public expenditure and income diverged, resulting in a substantial budget deficit and increasing government debt. In 2017, GDP per capita fell by a quarter compared to 2013. There is a lot of trade with the European Union, the United States, Argentina and Japan. Except for Argentina countries that are not close.