tag:theconversation.com,2011:/uk/topics/bric-2306/articlesBRIC – The Conversation2016-06-15T09:51:58Ztag:theconversation.com,2011:article/570292016-06-15T09:51:58Z2016-06-15T09:51:58ZHow did Brazil go from rising BRIC to sinking ship?<figure><img src="https://images.theconversation.com/files/126366/original/image-20160613-29229-1f6jjlr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Brazil's economy was once considered ready to take flight. What happened?</span> </figcaption></figure><p>Most of the headlines in recent weeks have focused on Brazil’s troubling <a href="https://theconversation.com/with-dilma-rousseff-impeached-brazil-is-set-for-years-of-political-turmoil-57689">political crisis</a>. But the country is also in the midst of a deep economic recession.</p>
<p>The economy has been shrinking since the second quarter of 2014. It contracted by 3.8 percent in 2015 and is expected to shrink by a similar amount this year. Earlier this month, the Organisation for Economic Co-operation and Development (OECD) said it sees the <a href="http://www.wsj.com/articles/oecd-sees-brazils-economic-slump-stretching-into-2017-1464796561">recession continuing into 2017</a>.</p>
<p>Yet it was only in 2009 – in the middle of the global financial crisis – that the <a href="http://www.economist.com/node/14845197">Economist magazine featured a story</a> entitled “Brazil takes off,” with a photo of the Corcovado – the iconic statue of Christ that overlooks Rio de Janeiro – launching like a rocket. That article emphasized why Brazil deserved to be one of the “BRICs” – the rapidly growing economies including Russia, India and China that now account for nearly 25 percent of global GDP.</p>
<p>How could the outlook for Brazil have changed so rapidly? Is this sort of boom and bust unprecedented or a recurring theme in Brazil’s history?</p>
<p>In this article, we provide a historical perspective on the current economic crisis, relying on our own scholarship and years of analysis of the Brazilian economy.</p>
<h2>Brazil arrives</h2>
<p>Brazil has been knocking at the door of the developed world for quite some time.</p>
<p>It has been dubbed the “<a href="http://www.nytimes.com/2011/11/22/world/americas/stefan-zweig-viennese-born-writer-gets-fresh-look-in-brazil.html?_r=0">country of the future</a>” since Stefan Zweig coined the phrase in the title of his 1941 book. And that <a href="https://theconversation.com/brazil-no-longer-the-country-of-the-future-59505">future seemed attainable</a>.</p>
<p>From 1900 to 1980, Brazil had one of the fastest-growing economies in the world. <a href="http://www.ggdc.net/MADDISON/oriindex.htm">Income per capita rose faster</a> in Brazil than in the U.S. The country was transformed from a rural, agricultural economy – producing coffee, sugar and other products for export – into an urban, industrial powerhouse. </p>
<p>Yet a closer look at Brazilian economic history reveals frequent cycles of boom and bust, where considerable optimism fell by the wayside, leaving behind unfulfilled dreams. The future, it seems, has always been just around the corner. </p>
<p><a href="http://www1.folha.uol.com.br/mercado/2016/03/1749299-recessao-economica-atual-deve-ser-a-pior-da-historia-do-brasil.shtml">Several analysts</a> in Brazil have begun to repeat the claim that the current recession is likely to be worse than what Brazil faced in the 1930s. While technically correct, in our view, this is not the appropriate comparison. </p>
<p>Brazil did quite well in the 1930s relative to many other countries. After growing at over 10 percent a year in 1927 and 1928, the Brazilian economy only contracted in 1930 and 1931. The recession was then followed by eight years of fairly robust growth. </p>
<p>The 1980s and early 1990s were a much more painful time in Brazil, following a particularly potent boom known as the “Brazilian Miracle.” We return to a comparison with this period below.</p>
<h2>State-led industrialization and the ‘Brazilian Miracle’</h2>
<p>Following World War II, Brazil’s federal government began to plan for economic development and target industrialization and high rates of growth.</p>
<p>Juscelino Kubitschek became president in 1956 and <a href="http://www.pressreader.com/belgium/the-wall-street-journal-europe/20160425/281749858539213">promised to deliver</a> “50 years of progress in five.” This was a period of immense optimism, and Brazil seemed like an endless construction site, with highways, buildings and industries popping up throughout the country.</p>
<p>As a symbol of this progress, Brasilia was inaugurated in 1960 as a planned capital city with a modernist architecture. Yet the optimism of the 1950s quickly gave way to the political turmoil of the early 1960s.</p>
<p>When Jânio Quadros abruptly resigned the presidency in 1961, the left-leaning Vice President João Goulart took office. His support of labor rights, land reform and other populist policies led to his removal by the <a href="https://www.amazon.com/Politics-Military-Rule-Brazil-1964-1985/dp/0195063163">military in a 1964 coup</a>, with the support of the Brazilian elite and U.S. government. The generals would run the country until 1985. </p>
<p>Brazilian democracy and a more inclusive model of development were the principal victims. Growth, in contrast, quickly resumed, and this contributed to rapid poverty reduction. In what became known as the Brazilian Miracle, <a href="http://IPEAdata.gov.br">real GDP expanded</a> at over 8 percent annually in every year but one from 1968 to 1976. Poverty fell by over 20 percentage points from 1960 to 1980, even while <a href="http://www.worldcat.org/title/structure-and-structural-change-in-the-brazilian-economy/oclc/44851721">income inequality</a> continued to rise. </p>
<h2>What went wrong</h2>
<p>Unlike with the slowdowns of the 1930s and mid-1960s, the depth and length of the economic crisis of the 1980s were much more severe. </p>
<p>The global economy had changed in the 1970s and Brazil was slow to adapt. It relied on foreign debt to prolong the inward-looking industrialization model that had worked so well for decades, but this too came to an end in 1982 when a debt crisis erupted throughout <a href="http://www.dictionaryofeconomics.com/article?id=pde2011_L000243">Latin America</a>.</p>
<p>The optimism of the miracle years would be replaced by stagnation and hyperinflation. From 1981 to 1992, the economy experienced negative annual growth in five separate years, and <a href="http://IPEAdata.gov.br">annual inflation soared</a> into the thousands. Income per capita peaked in 1980 and would only permanently surpass this level again in 1994.</p>
<p>This was a “lost decade” for Brazil in terms of living standards, but popular discontent forced the military to exit power in 1985 and led to the writing of a new Constitution in 1988.</p>
<h2>Back to boom</h2>
<p>The foundations for the most recent cycle of growth and optimism were laid from 1994 to 2002.</p>
<p>First, after numerous failed attempts, in 1994 the government finally devised a stabilization plan – <a href="http://www.npr.org/blogs/money/2010/10/01/130267274/the-friday-podcast-how-four-drinking-buddies-saved-brazil">the Real Plan</a> – that succeeded in defeating hyperinflation. Then, from 1995 to 2002, a number of important policies were adopted under President Fernando Henrique Cardoso. <a href="http://www.brookings.edu/research/books/2011/startingover">These included</a> a modest reform of the public sector social security system, the creation of an anti-poverty conditional cash transfer program tied to kids going to school and the adoption of an important fiscal responsibility law that – 15 years later – would be used to justify removing President Dilma Rousseff from office. </p>
<p>Cardoso also made progress in adopting more sound macroeconomic policies as he let the exchange rate float in 1999 and then instituted a system of inflation and fiscal targets. While this was a period of slow growth and international turbulence, inequality began to decline for the first time in at least 30 years. </p>
<p>Luiz Inácio Lula da Silva <a href="http://www.livrariacultura.com.br/p/economia-brasileira-contemporanea-19452004-781630">pursued similar macroeconomic policies</a> during his presidency from 2003 to 2010, reformed the social security system and transformed and expanded the anti-poverty policies. With a much more favorable international environment, until 2009, and a strong commodity boom, the economy expanded at around 4 percent per year, and poverty declined by around one third. <a href="http://www.brookings.edu/research/books/2010/declininginequalityinlatinamerica">This was the first time</a> in at least 50 years that Brazil simultaneously experienced growth and a reduction in both poverty and inequality. </p>
<p>With rising living standards and falling poverty, Brazil once again entered a phase of considerable optimism. As Brazil paid off its debt with the IMF, the country began to discover large reserves of oil. International rating agencies elevated the classification of Brazilian foreign debt <a href="http://www.bloomberg.com/news/articles/2008-05-01/brazil-goes-investment-gradebusinessweek-business-news-stock-market-and-financial-advice">from speculative to investment grade</a>, clearing the way for U.S. pension funds to invest in Brazil. Among Brazilian policymakers, it became common to talk of “sustainable development.” </p>
<p>The optimism only intensified when Brazil <a href="http://edition.cnn.com/2007/SPORT/football/10/30/brazil.cup/">was chosen</a>, in 2007, to host the 2014 World Cup and the <a href="http://www.nytimes.com/2009/10/03/sports/03olympics.html">2016 Summer Olympics</a> two years later – in the middle of the global financial crisis.</p>
<h2>The financial crisis slowly grips Brazil</h2>
<p>President Lula initially dismissed the crisis.</p>
<p>In October 2008, <a href="http://oglobo.globo.com/economia/lula-crise-tsunami-nos-eua-se-chegar-ao-brasil-sera-marolinha-3827410">he said</a> that although it might be a tsunami in the U.S., by the time it arrived in Brazil it would just be a little wave. At a G20 Summit in London in 2009, President Barack Obama was caught on camera <a href="http://news.bbc.co.uk/2/hi/business/7978816.stm">calling his Brazilian counterpart</a> “the most popular politician on earth.” </p>
<p>At first it seemed as if Lula might be right. Brazil had a single year of recession in 2009, and the economy rebounded by over 7 percent the following year. </p>
<p>But it soon became clear, as in earlier periods, that Brazil’s fate is very much tied to the health of the world economy and its choice of public policies. The economy came to a screeching halt in 2014, with zero growth, and contracted severely in 2015 and 2016. Simultaneously, the government deficit ballooned to over 6 percent of GDP in 2014 and over 10 percent in 2015.</p>
<p>President Rousseff, who came to power in 2011, disguised the deteriorating fiscal situation during the election of 2014, just as the <a href="http://www.nytimes.com/2015/08/09/business/international/effects-of-petrobras-scandal-leave-brazilians-lamenting-a-lost-dream.html?_r=0">corruption scandal</a> at Petrobras widened. This, together with a debt downgrade, provided the economic backdrop that led to her removal from office as she awaits an impeachment trial later this year.</p>
<h2>Three lessons from the past</h2>
<p>It is too soon to tell if the current recession will be more like the downturn of the 1930s or the “lost decade” of the 1980s. But there are several lessons that can be drawn from recent history that allow us to conclude that Brazil’s rosy future is still out of reach. We highlight three.</p>
<p>First, investments in physical and human capital were a central component of the development success stories in China and the East Asian Tigers. Brazil, in contrast, has repeatedly fallen short on these fronts. Most recently, Brazil squandered the opportunity presented by the commodity boom to invest heavily in infrastructure.</p>
<p>Second, Brazil’s history of runaway inflation was, in part, a reflection of the inability of successive governments to make difficult policy choices. Similarly, while the commodity boom lasted, the government seemed able to satisfy all demands – from raising the minimum wage and subsidizing national business “champions” to expanding cash transfers to the poor – all while it built stadiums for international sporting events and cut debt as a share of GDP. Now that the boom years have ended, the time for reckoning has arrived. Unfortunately, it is often the poor who pay the price. </p>
<p>Finally, Brazil needs deep institutional reforms in order to lay the groundwork for a successful 21st century. One of the most challenging reforms relates to the country’s dysfunctional political system. With over two dozen parties in Congress, it is extremely difficult to govern. This fragmentation creates an environment ripe for the kinds of corruption scandals witnessed in 2005 – with the bribery scheme in Congress – and again with Petrobras today. It is this political and institutional environment that contributes to mismanagement and corruption at all levels.</p>
<p>Unfortunately, whether <a href="https://theconversation.com/what-is-brazilian-president-dilma-rousseffs-real-crime-59363">President Rousseff</a> returns to office or is permanently removed, there are few grounds for <a href="https://theconversation.com/is-dilma-rousseffs-impeachment-a-coup-or-brazils-window-of-opportunity-59362">optimism</a> that these deeper problems will be addressed any time soon.</p><img src="https://counter.theconversation.com/content/57029/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Steven M. Helfand has received funding for research from the USAID, USDA, IFPRI, World Bank, IDB, OECD, IFAD, FAO, and Brazilian academic and research sources. </span></em></p><p class="fine-print"><em><span>Antônio Márcio Buainain does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Only a few years ago, Brazil was considered the global economy’s shining star. How did it fall so far so fast?Steven M. Helfand, Associate Professor of Economics, University of California, RiversideAntônio Márcio Buainain, Professor of Economics, Universidade Estadual de Campinas (Unicamp)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/564502016-03-17T22:06:21Z2016-03-17T22:06:21ZThe BRICs: battered, regressive, incompetent, and corrupt?<figure><img src="https://images.theconversation.com/files/115524/original/image-20160317-30247-18wdqv3.jpg?ixlib=rb-1.1.0&rect=0%2C451%2C3818%2C2274&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption"></span> <span class="attribution"><span class="source">Reuters/RIA Novosti</span></span></figcaption></figure><p>There’s an old joke about Brazil that suggests that it’s the country of the future – and it always will be. For a while this looked to be an anachronistic, possibly racist stereotype that had been decisively overturned by Brazil’s rapid economic development and competent-looking economic management. But as the administration of Dilma Rousseff descends into chaos amid accusations of corruption and incompetence, old doubts about the country are re-emerging.</p>
<p>Brazil’s problems may be especially acute, but they are emblematic of the tarnished image of the other BRIC economies – Russia, India and China – too. Great hopes and expectations are still held about India’s prospects – especially in Australia – but they are predicated on some fairly heroic assumptions about the likely trajectory of future development.</p>
<p>Optimists (and economists) regularly point to India’s burgeoning population as a valuable asset and source of future growth. These sorts of analyses tend to gloss over the enormous impact economic development in combination with population expansion have had on the natural environment. Delhi now has the unenviable reputation as the most polluted city in the world, having recently eclipsed Beijing for this unwanted accolade.</p>
<p>That India is increasingly relying on coal power to fuel further economic expansion suggests that the environment will continue to come second to the primary imperative of keeping development going at all costs if the tens of millions of new, would-be entrants to the job market are to accommodated. Given that India has the largest number of illiterate adults in the world – some 287 million or 37% of the adult population – the challenge is likely to prove doubly onerous.</p>
<p>At least India can console itself with the idea that its energy imports have become cheaper over the last few years. So can China, too, but this hasn’t translated into an unequivocal boost to the economy. On the contrary, China’s declining appetite for resource and energy imports has directly contributed to the global economic downturn that is exacerbating the stagnation in the BRICs and some of their most important trade partners.</p>
<p>Russia and Brazil have been especially badly affected by the international collapse in commodity prices. Russia under Putin has adopted one of the time-honoured strategies of despots down the ages and attempted to deflect attention from a rapidly deteriorating domestic situation by embarking on foreign adventures. Kim Jong-un might recognise the logic, but as in North Korea’s case it arguably highlights weakness rather than strength.</p>
<p>China is by far the most consequential of the BRICs and whatever happens there will indeed “shake the world”, as Napoleon famously predicted. It already has. Not only have China’s growing economic difficulties undermined global growth, but its domestic and foreign policies may yet have an even larger impact.</p>
<p>There is increasing alarm both within and outside China about the way Xi Jinping is concentrating power in his own hands and cracking down on political opponents and critical voices. </p>
<p>There is also growing concern about the ability of China’s technocratic elites to manage its mounting domestic economic problems. When we add China’s increasingly belligerent attitude to pursing it territorial claims in the South China Sea it is clear that China has the potential to destabilise further an international system that already looks fragile.</p>
<p>These developments highlight a number of things. </p>
<p>First, the very idea of the BRICs was arbitrary and accidental. The only thing these countries really had in common was the fact that they seemed to be on the rise at the same time, that they were or could be “great powers”, and that they seemed to epitomise a rapidly changing global order. </p>
<p>They still might fulfil these expectations, but recent events remind us how rapidly things can change and just how difficult it is to manage moments of political and economic transition. The second point to note, therefore, is that political competence and effective state capacity may determine how well the BRICs come through this. </p>
<p>Given that corruption and mismanagement are major problems in all four countries, the prospects looked mixed.</p>
<p>Finally, does this mean that the old order dominated by the US and its Western allies will prevail and endure? One might be forgiven for thinking so after reading Australia’s most recent defence white paper. But the possible collapse of the European Union and America’s dysfunctional politics demonstrate that “the West” is also in a state of fragmented decline.</p>
<p>The rise of the BRICs wasn’t without substance, and their possible decline won’t be without consequences either. Even if the BRICs don’t reassume their upward path, the old order has been revealed as unsustainable and unrepresentative. </p>
<p>Policymakers around the world will have to get used to the idea that the international system is more complex, diverse and difficult to manage than ever. For better or worse, we’re all in this together.</p><img src="https://counter.theconversation.com/content/56450/count.gif" alt="The Conversation" width="1" height="1" />
There’s an old joke about Brazil that suggests that it’s the country of the future – and it always will be. For a while this looked to be an anachronistic, possibly racist stereotype that had been decisively…Mark Beeson, Professor of International Politics, The University of Western AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/491912015-10-21T05:19:48Z2015-10-21T05:19:48ZFrom Chinese milk to Indian chocolate, behind the world’s fast-expanding markets<figure><img src="https://images.theconversation.com/files/99032/original/image-20151020-32258-b70hl3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Got milk? China joins the lactose lovers.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/gwendolyn_stansbury/17405540533/in/photolist-7ayepS-7hDWRe-dTf1tw-bTwp2k-mksTaH-rWuR9T-sw4WNr-4zugmn-o2iDUJ-ammeX7-9AkZ13-5AA2Yw-aarWBx-ietpvH-dZaiX4-hLB1BA-aSLHmg-dnKNjq-eCC1YY-i9nFR1-9kFZh4-apjV7y-gtpNHW-zWkVW6-iDvgsy-dxs9sa-6weqvG-bZowLy-vwgTaU-4oTK6W-3B8oi-9Zmrds-7tPYD6-iBtVZh-aJPxkD-5EbXEc-4mA8TW-b6iCaP-iAiHE5-5EgfEC-4Hx9hL-Hg8Wo-ztgcK-aMTW3v-fDSFLi-4dcmqU-wQV3N-6bnGLt-6L4jau-5NQrHY">Gwendolyn Stansbury</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>It’s time to think small when it comes to identifying growth areas in the global economy.</p>
<p>For the past 15 years, since the BRIC acronym was coined for Brazil, Russia, India and China, the world’s biggest emerging economies have been the focus for discussion on growth opportunities outside of western developed markets. But with <a href="http://www.bbc.co.uk/news/business-34550759">a slowdown in China</a> and a <a href="http://www.ft.com/cms/s/0/7f923140-6279-11e5-97e9-7f0bf5e7177b.html">credit downgrade for Brazil</a>, it is getting harder to view the BRICs story as a simple, grand narrative of gilded opportunity for investors and businesses alike. </p>
<p>Those concerns are not confined to China and Brazil. <a href="http://www.reuters.com/article/2015/10/03/russia-economy-gdp-idUSR4N11R01X20151003">Russia’s economy is contracting this year</a> due to low energy prices; India’s economic recovery too has been <a href="http://blogs.wsj.com/indiarealtime/2015/10/07/what-the-imf-said-about-indias-growth-outlook/">slower than expected</a>.</p>
<p>But these nations are not a busted flush; we just have to adjust our thinking. Real growth can be found in fast-expanding markets within those countries. It is a subject we have examined recently in a paper <a href="http://onlinelibrary.wiley.com/doi/10.1002/tie.21738/abstract">published in the Thunderbird International Business Review</a>, seeking to understand these markets which transcend sectors as well as nations, and sometimes even confound conventional wisdom.</p>
<h2>Milking it</h2>
<p>While BRICs was useful shorthand for showing that a few populous countries would reshape the global economy this century, this macroeconomic lure has in fact been a microeconomic disappointment for some big companies. Home Depot had an emblematic experience, entering China in 2006 and <a href="http://www.wsj.com/articles/SB10000872396390444433504577651072911154602">pulling out completely in 2012</a>. It didn’t anticipate that the do-it-yourself culture of the US wouldn’t translate into a country with abundant and relatively cheap labourers.</p>
<p>It is a story that illustrates the difficulty in using a top-down approach when operating in emerging markets. So rather than only taking a bird’s-eye view of such populous countries, it is useful to also take a ground-up look at where highly specific opportunities lie in BRIC countries and beyond.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/99001/original/image-20151020-32258-1dzcr51.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/99001/original/image-20151020-32258-1dzcr51.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/99001/original/image-20151020-32258-1dzcr51.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/99001/original/image-20151020-32258-1dzcr51.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/99001/original/image-20151020-32258-1dzcr51.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/99001/original/image-20151020-32258-1dzcr51.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/99001/original/image-20151020-32258-1dzcr51.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/99001/original/image-20151020-32258-1dzcr51.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The heat is on. Fast expanding markets take flight.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/billnwmsu/4865546739/in/photolist-8pXcwT-SA29P-a5a1pC-4VSHKB-8pXcBK-9RrVfh-am29z6-8CKHNF-fn1NMq-2fZnnf-2Tcfkx-frUPZ5-gVK9K-9MczU8-x8z3RA-82kgpj-x9A28q-2NvbVn-6XAb7z-dnhWPC-2KR2Z1-38tLXy-38tCF1-2TccP4-2Tce54-6icsEc-RhERj-igetHg-4GGUD8-oTgahW-nWEnM-7MX3Pt-e9DFvp-oouvmM-isXw3P-iDtYbZ-a2LNiG-8q1na7-8q1mXS-e9DFka-2fUYRB-faNCVb-p229Ki-2f6voB-8onDhn-6En2kb-8GSdyT-smiR8P-2uypG-8pXb5X">Will Murphy</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>In China, one of these fast-expanding markets is milk production and consumption. More people have been paying close attention to their health and to the role that milk can play in their basic diet. Other factors have included an upgrade to the supply chain, a relaxation of the country’s one-child policy and the continued westernisation of China as companies such as Starbucks grow popular.</p>
<p>From 2000 to 2006 alone, China’s raw milk consumption nearly quadrupled, and the country is now the world’s third-largest producer behind the US and India as agricultural infrastructure has improved.</p>
<h2>Choc-alert</h2>
<p>In India, fast-expanding markets include <a href="http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Cheese%20Demand%20Rising%20-%20New%20Market%20Opportunities_New%20Delhi_India_9-30-2015.pdf">Western-style cheese</a>, which saw sales growth of nearly 200% from 2008-2013; <a href="http://mnre.gov.in/schemes/decentralized-systems/solar-systems/solar-water-heatres-air-heating-systems/">solar water heaters</a>, with the area in square metres of instalments almost doubling between 2009 and 2011; and the <a href="http://www.ktvn.com/story/30151602/india-chocolate-market-projected-to-surpass-us-17-billion-in-2020-says-techsci-research">chocolate industry</a> may treble this year to more than $2 billion, as a rise in sugar prices has made traditional sweets more expensive.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/98892/original/image-20151019-23267-drgqf5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/98892/original/image-20151019-23267-drgqf5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/98892/original/image-20151019-23267-drgqf5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=371&fit=crop&dpr=1 600w, https://images.theconversation.com/files/98892/original/image-20151019-23267-drgqf5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=371&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/98892/original/image-20151019-23267-drgqf5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=371&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/98892/original/image-20151019-23267-drgqf5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=467&fit=crop&dpr=1 754w, https://images.theconversation.com/files/98892/original/image-20151019-23267-drgqf5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=467&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/98892/original/image-20151019-23267-drgqf5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=467&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Object of desire. In Liectenstein at least.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/124018523@N04/14848998042/in/photolist-oC9ZMC-H7C5e-5G5aw-s9aTjd-nUGg36-kTwbMP-5eS1k-4RDmgY-itZych-bF8MR-71UaqX-6VAhbC-7AS3iG-aiwvq5-5NQcCU-3Mctsz-6beqFb-6FDLVS-qvuopQ-8HP8fh-4mmNU3-73BEhh-dGoDb-6mMsx9-e8NbWJ-5W3Pp5-hgzA2X-cCwjVb-5p9G2-4xxhJ7-yD7Jua-iAvcY-6MsVK8-wpXxW-9pBiJX-jd9onD-JndG9-aNErz-ebNwN8-bdKh4-cmNTeb-arbeBi-A3AgU-w9f9Du-aCdTMv-778vmT-tcUefF-3exgsa-byTNZT-vgeeF8">Partha S. Sahana</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Beyond BRICs, fast-expanding markets include mobile money transfers in Kenya and video game production in Turkey, developing games which conform to Islamic values.</p>
<p>And we can even branch out beyond the developing world too. There are opportunities for entrepreneurs, investors and businesses in the Vitamin D testing <a href="http://m360.sim.edu.sg/article/Pages/Finding-Fast-Expanding-Markets-in-Zero-Growth-Countries.aspx">market in Italy</a>, benefitting from an increasing lack of direct sun exposure; in organic food production in Spain, linked to a downturn in the property market; in <a href="http://www.huffingtonpost.com/2012/10/26/food-trucks_n_2017376.html">food trucks in the US</a>, which have grown at a double-digit annual rate in recent years; and ceramic teeth in Liechtenstein, an industry which expanded in the past five years at a compound annual growth rate of 9.5%.</p>
<p>While overall growth is useful to know, an unquestioned loyalty to macroeconomic data misses much of the equation and loses most of the intelligence that can drive astute investment decisions. That’s partly because macroeconomic analysis often takes a linear look at the future, and this can often prove wrong. If you were to look at the <a href="https://www.census.gov/population/www/documentation/twps0029/tab04.html">US population statistics</a> in the early 1900s, one could reach the conclusion that the country would have been 80% Italian and Polish by 1930 if trends had followed a linear progression.</p>
<h2>Pocketing the wealth</h2>
<p>The central idea is that wealth can be found everywhere, even in countries that share gloomy macroeconomic data or prospects, like Bolivia, which is the country that has driven the quinoa revolution into the “ready to eat” industry in the US. With <a href="https://thinkers.in/fast-expanding-markets-a-new-needed-economic-lens-in-the-21st-century/">an annual growth rate of 26.5%</a>, Bolivia has exploded its production of quinoa, to the benefits of the new dietary aspirations of Americans, who have integrated the super grain into the daily use of soups, salads and energy bars. This is a great example of an agricultural fast-expanding market, which stems from what many consider as the poorest economy in Latin America.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/99002/original/image-20151020-32227-1ku833n.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/99002/original/image-20151020-32227-1ku833n.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/99002/original/image-20151020-32227-1ku833n.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/99002/original/image-20151020-32227-1ku833n.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/99002/original/image-20151020-32227-1ku833n.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/99002/original/image-20151020-32227-1ku833n.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/99002/original/image-20151020-32227-1ku833n.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/99002/original/image-20151020-32227-1ku833n.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Making the most of the boom. Bolivian quinoa farmers.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/bioversity/8414334430/in/photolist-dPxEty-6anLWD-muoNsR-f56NGm-6W8qU3-9o6E8P-6anLWr-6arXby-qQWmGv-qQWwmR-qQSth4-qQMfFG-66haf3-r8hmCS-r8fvRA-qQWk3P-qQWs78-r8drxP-ds6qo6-6anLWk-6WZVV6-bzwY4b-vuYKbo-fvGaoj-oHJQPj-4JcRqz-6W8oS9-qbwSLF-qQMqfS-4dGHqZ-baGVKn-qbzeoP-r8hrGQ-r8hsE1-r8eTE7-r8nvR4-6WZXu6-ds6tut-qQTGbi-6X4XDd-9RZBd1-qQU8vz-2bGjKv-9YdFSw-9X6iBV-9XphVg-9Ybos6-6anLWz-6bojKa-y7Uv3M">Bioversity International</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>Sometimes, fast-emerging markets develop in unlikely settings. Italy has long had a reputation for high-quality food products and delicious wines, but in the midst of that, <a href="http://www.telegraph.co.uk/foodanddrink/beer/11676185/The-best-Italian-beers-to-try-this-summer.html">microbreweries are gaining a foothold</a>. This is partly because the lack of a traditional beer culture in Italy means microbreweries can more readily experiment with flavours and ingredients. Another surprising expanding market in Italy: American-style bakery products such as chocolate chip cookies, cupcakes and donuts.</p>
<p>Some may scoff that craft beer in Italy or quinoa in Bolivia are pretty insignificant compared to major global industries such as automobiles or machine tools. But such a reaction risks blinding us to fresh insights that can lead to new pockets of excellence that, taken together, make a real difference to the world economy.</p><img src="https://counter.theconversation.com/content/49191/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Ignore the gloom around prospects for emerging markets. There are diamonds in the rough.Khaled Soufani, Senior Faculty in Management Practice (Finance), University of CambridgeMark Esposito, Professor of Business & Economics at Grenoble Ecole de Management and Harvard Extension School, Harvard UniversityTerence Tse, Associate Professor of Finance / Head of Competitiveness Studies at i7 Institute for Innovation and Competitiveness, ESCP Business SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/465502015-08-28T09:32:24Z2015-08-28T09:32:24ZDoes the global stock market sell-off signal the BRIC age is already over?<figure><img src="https://images.theconversation.com/files/93239/original/image-20150827-375-wbldkl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Time to reorder the flags? </span> <span class="attribution"><span class="source">BRIC flags via www.shutterstock.com</span></span></figcaption></figure><p>Back in 2001, former Goldman Sachs chief economist Jim O’Neill <a href="http://www.goldmansachs.com/our-thinking/archive/archive-pdfs/build-better-brics.pdf">coined</a> the acronym BRIC to highlight the immense economic potential of the emerging markets of Brazil, Russia, India and China in the decades to come. They would be the economic engines of tomorrow, he wrote.</p>
<p>The BRICs, which cover a quarter of the world’s landmass and contain 40% of its population, had a combined GDP of US$20 trillion back in 2001. Today these increasingly market-oriented economies boast a GDP of <a href="http://globaledge.msu.edu/">$30 trillion</a> (or 20% of global GDP), a figure <a href="http://www.pwc.com/gx/en/issues/the-economy/assets/world-in-2050-february-2015.pdf">forecast</a> to reach $120 trillion by 2050. Together, they <a href="http://www.g20civil.com/articles/1224/">control</a> more than 43% of the world’s currency reserves and 20% of its trade.</p>
<p>But times have changed. Every BRIC country is struggling, and the group’s growing footprint means their problems are bad news for the global economy. That’s especially true for the troubles of China, where recent economic gloom <a href="https://theconversation.com/how-a-chinese-slowdown-will-hit-global-growth-46655">triggered</a> a rout in stock markets around the world. All but India’s is now in <a href="http://www.bloomberg.com/news/articles/2015-08-24/bear-grip-tightens-on-emerging-stocks-as-half-of-30-markets-wilt">bear market territory</a> – a decline of at least 20% from its peak. </p>
<p>Does this suggest the nascent age of the BRICs is already over – even before it really began – and if so, what does this mean for the rest of us? And what does it mean for companies in the US, Europe and elsewhere that have been increasingly targeting the BRICs for future growth? </p>
<p>These are the kinds of questions we ponder at Michigan State University’s International Business Center, which I’ve directed for the past 17 years. To help shine some light on them, I’m focusing on one issue that each of the BRIC nations is facing. How each country’s leaders choose to tackle them may well determine where they go from here. And in this analysis, I’m sticking to the original BRIC members: that is, excluding South Africa, which <a href="http://www.economist.com/blogs/economist-explains/2013/03/economist-explains-why-south-africa-brics">joined</a> the group in 2010. </p>
<h2>Past promise</h2>
<p>When I first wrote about the <a href="http://globaledge.msu.edu/content/gbr/gbr3-4.pdf">BRICs in 2009</a>, the political leadership in Brazil, Russia, India and China were beginning to demonstrate their collective economic and political potential by joining in a loosely defined partnership.</p>
<p>To them, the 2008 financial crisis exposed the weakness of the so-called advanced economies, and these four emerging markets saw themselves at the center of a new world order that would supplant the one led by the US, Europe and Japan. It was in their political and economic interest to <a href="http://archive.mid.ru//Brp_4.nsf/arh/7824EB49B74B090FC325744B002A4C88">join forces</a>.</p>
<p>It was never about forming a union akin to Europe’s or even North America’s. The BRIC partnership was formed to coordinate the four countries’ efforts globally, formulate common views of global economic problems, reform the world financial system and become a major factor of multilateral diplomacy.</p>
<p>While O'Neill probably chose the order of the acronym – B, R, I, C – for the way it sounded rather than relative significance, the true ranking today is pretty clear: it’s not BRIC, it’s really ICRB. </p>
<p>India is doing the best economically; China follows (even with its recent troubles). The laggards are Russia, with its petroleum-dependent economy, and Brazil, which is suffering a crisis of confidence as a result of significant financial, economic and political turmoil. </p>
<h2>India plays lead in ‘Chindia’ as Fed rate hike looms</h2>
<p>At the outset, India leads the BRIC pack, a sentiment <a href="http://blogs.wsj.com/indiarealtime/2015/08/26/this-chart-shows-how-indias-market-has-fared-in-the-global-selloff/">displayed</a> by its stock market, which hasn’t tanked nearly as much as its peers during the recent China-led sell-off. </p>
<p>Some <a href="http://nationalinterest.org/feature/india-vs-china-21st-century-economic-battle-royal-12805">argue</a> India is in the best shape to handle China’s economic slowdown because of its political system and the economic freedoms that go along with it. While China maintains a top-down economy plagued by political interference and corruption, India has a vibrant private sector and more competitive freedom. </p>
<p>But an imminent hike in US interest rates is the biggest risk on the horizon and could <a href="http://www.hindustantimes.com/business-news/interest-rate-hikes-coming-in-the-us-here-s-why-india-should-brace-itself/article1-1328040.aspx">hammer</a> India. The country has attracted a flood of US cash in recent years thanks to the greater yields on offer, but higher rates in the US could reverse the tide. That in turn would cause India’s stock market to slump and currency to slide. Taken together with <a href="http://www.economist.com/news/leaders/21653611-privatising-indias-public-sector-banks-only-way-fix-them-rump-stake">deep problems</a> at its public sector banks, a sudden drop in the rupee would be potentially disastrous and could shatter consumer confidence. </p>
<p>Increased exports could offset some of the pain, but what India really needs to do is <a href="http://www.wsj.com/articles/SB10001424052702303851804579559791603445108">privatize</a> its banking system to make it robust and better able to handle fluctuations in the global financial system such as a rise in US rates. That would help ensure India is able to keep its top spot on Asia’s <a href="http://www.cnbc.com/2014/07/27/is-chindia-asias-new-dream-team.html">dream team</a>. </p>
<h2>China’s hubris</h2>
<p>China, meanwhile, is learning its ability to control has its limits.</p>
<p>The People’s Bank of China, the country’s central bank, earlier this month decided to <a href="https://theconversation.com/us-shouldnt-fret-over-cheaper-yuan-chinas-growing-middle-class-will-keep-buying-made-in-america-46065">change</a> its formula for calculating the reference rate of the yuan, prompting its currency to <a href="http://www.theguardian.com/business/2015/aug/12/china-yuan-slips-again-after-devaluation">fall</a> to a four-year low. Just a few days later, China reversed course to keep it from falling any further. In a rare public move, the central bank’s chief economist said that China is “<a href="http://www.bloomberg.com/news/articles/2015-08-12/china-can-stabilize-yuan-s-market-value-central-bank-s-ma-says">fully capable</a>” of intervening in the global currency market as it see fit.</p>
<p>Hubris comes to mind. China can certainly affect things, but <a href="http://www.bbc.com/news/world-asia-china-34071368">not as much</a> as it thinks – and this note can be applied to its handling of the economy and stock market as well, which it has been <a href="http://www.bloomberg.com/news/articles/2015-08-26/china-s-journey-from-new-normal-to-stock-market-crisis-epicenter">actively working</a> to jack up. </p>
<p>With the stock market down more than <a href="http://www.vox.com/2015/8/23/9195891/china-stock-market-crash">40%</a> from its peak and economic growth slowing, China’s leaders must learn a tough lesson: they can’t control the market, economy and currency like play toys. If China truly wants to be the major player in the global marketplace that it thinks it already is, then the country has to give up some control and let market forces, internally and externally, play the dynamic role that they do in developed nations. </p>
<h2>Russia’s commodity curse</h2>
<p>Russia, with its diverse population spanning 11 time zones, might make you think the country’s economy would be just as diverse. But despite paying some lip service to reform, the country <a href="http://www.wsj.com/articles/russias-economy-shows-no-sign-of-recovery-1439996957">remains</a> highly dependent on oil to keep it going. And that’s very bad news because the price of oil is hovering near <a href="http://www.businessinsider.com/oil-prices-at-a-6-year-low-2015-8">six-year</a> lows.</p>
<p>Very few companies, let alone countries, can achieve sustainable success by focusing on commodities. With little upward movement in oil prices expected and the ongoing sanctions taking a toll, there is little hope that Russia will come out of its full-blown recession any time soon. The massive devaluation of the ruble vis-à-vis <a href="http://www.thefiscaltimes.com/2015/08/18/Putin-s-Economy-May-Be-Even-Worse-Shape-It-Looks">international benchmark currencies</a> has helped exports, but not anywhere near enough.</p>
<p>What does Russia need to do? President Vladimir Putin has been promising reforms since taking the presidency at the end of 1999. Apart from an unlikely rebound in the oil market, Russia will have to follow through on those long-promised reforms or something better. The key is to move the economy away from commodities in order for the country to achieve the potential prophesied in 2001.</p>
<h2>Brazil’s lack of confidence</h2>
<p>Of the BRICs, Brazil seems the furthest from reclaiming its role as a future powerhouse. Record-low <a href="http://www.tradingeconomics.com/brazil/consumer-confidence">consumer confidence</a> has curbed consumption, industrial production is contracting, and the economy <a href="http://www.wsj.com/articles/brazils-economy-shows-more-signs-of-weakness-1440529153">appears</a> to be in a recession. At the same time, the president’s approval rating is in the single digits thanks to an ongoing corruption scandal. </p>
<p>So it’s pretty clear that Brazilians are in a sour mood, and their economy continues to disappoint. Can the 2016 Olympics turn that around? If it’s anything like the 2014 World Cup, it doesn’t seem likely. </p>
<p>But nonetheless, the Olympic Games present an opportunity to showcase Brazil around the world and offset the problem of its currency and the accompanying dearth of tourists. Big stadiums, fancy parties and lavish spending on everything but the Brazilians themselves won’t cut it. </p>
<p>Leveraging the Olympics better than the World Cup, in a way that really gets the economy moving again and benefits citizens by <a href="http://www.orange-business.com/en/magazine/building-brazil-the-world-cup-the-olympics-and-beyond">spending</a> on infrastructure like transportation, is a must for the country (though perhaps a lot of medals in the Olympics will be necessary to erase the memory of Brazil’s losses during the World Cup). </p>
<h2>End of an age? Not just yet</h2>
<p>The BRIC economies may be stumbling, but it’s far too soon to declare their era over, the current market rout not withstanding. Stumbling doesn’t signify crumbling, and each of the BRICs could easily rebound tomorrow (well, in a few years), depending on whether their leaders follow smart policies that begin to fix the disparate problems that plague their economies. </p>
<p>The year 2050 remains a long way off, leaving plenty of time for the current $120 trillion prediction to come true. The problem for the BRICs, though, is that the economic prediction for 2050 (and beyond) is a moving target. The fluidity of moving targets require savvy political and business leaders, sound decision-making, market forces, strategic thinking and building on <a href="http://www.mhprofessional.com/product.php?isbn=0071827420">industry globalization drivers</a>.</p>
<p>To concretely realize the 2050 forecast, Russia has to become less oil-dependent and commodity-based; China has to build stronger trust in the global money and banking community; Brazil has to succeed economically in the 2016 Olympics and, most importantly, elevate consumer confidence; and India has to privatize some of its banks to offset the impending US rate hike.</p>
<p>Despite these troubles, the BRICs remain sound investment areas for companies and cannot be ignored. The <a href="http://fortune.com/2015/08/13/cheaper-yuan-middle-class/">size</a> of the countries’ populations alone is enough to warrant strong attention (India and China have more than a third of the world’s population). </p>
<p>Just keep that less catchy acronym in mind: ICRB.</p><img src="https://counter.theconversation.com/content/46550/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tomas Hult receives funding from U.S. Department of Education, National Science Foundation, and Michigan Economic Development Corporation. He is also executive director of the Academy of International Business and president of the Sheth Foundation, and serves on the US District Export Council.
</span></em></p>Back in 2001, a Goldman Sachs economist said Brazil, Russia, India and China would become the powerhouses of the global economy in the coming decades. Is that still in the cards?Tomas Hult, Byington Endowed Chair and Professor of International Business, Michigan State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/258442014-04-25T05:17:48Z2014-04-25T05:17:48ZThe global land grab as modern day corporate colonialism<figure><img src="https://images.theconversation.com/files/47015/original/d9x7vk2t-1398343401.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Ok, let's find some land.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/biblicone/4437598500/in/photolist-7L8RqY-8qP7Af-8v5YU3-hBRPmG-bxEVoG-39MZrh-5YE126-dJcsUT-7wQEWw-fqLXBB-8xhbBS-8wr8Fp-bhNLZp-65Wj1r-5F6zHR-7ByySh-amgzYy-amgBrW-amgyud-amdDzk-amdF7e-amdGKc">mob mob</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>The idea that there is a “land grab” taking place in developing nations began with the publication of a report, <a href="http://www.grain.org/article/entries/93-seized-the-2008-landgrab-for-food-and-financial-security">Seized!</a>, by the NGO Grain. This rang an alarm bell about large-scale land acquisitions – particularly by a number of Asian countries and Gulf States, which are <a href="http://www.ifpri.org/sites/default/files/publications/bp013all.pdf">acquiring millions of hectares</a> of fertile agricultural land, predominantly in Africa.</p>
<p>Corporations and states including the US, European nations, and the rising “BRIC” economies of Brazil, Russia, India and China are all involved in this <a href="http://www.tandfonline.com/doi/pdf/10.1080/03066151003595325">voracious purchasing of land</a>. And despite the huge differences in the countries and localities where the land is purchased, the outcome is surprisingly similar: millions of hectares of farmland, as well as forests and peatlands, have been rapidly converted into huge mono-cropped plantations of soy, oil palm, and other cash crops.</p>
<p>This process particularly hits pastoralists, smallholders and vulnerable landless groups. What is striking is that in most cases land grabbing takes place with full support of governments which are happy to swap land for foreign direct investment.</p>
<p>As a rule, insufficient consideration is given to the livelihoods, rights and needs of local people. Land sold to investors is often taken away from locals who are not even informed, and are often <a href="http://intercontinentalcry.org/ethiopias-land-grabs-stories-displaced-20830/">forcefully removed</a>. To the extent that investments generate benefits such as employment, those from the land are usually bypassed in favour of workers from elsewhere. </p>
<p>The global land grab is a phenomenon against which those whose land is being grabbed seem defenceless. It is an area in which multilateral organisations, such as the <a href="http://www.worldbank.org/en/region/afr/publication/securing-africas-land-for-shared-prosperity">World Bank</a>, as well as civil-society organisations and NGOs have become increasingly vocal, and which has attracted greater academic interest.</p>
<p>Most early research focused on explaining the land grab narrative in terms of hectares and numbers of people affected, in an effort to uncover global trends and examine case studies. In <a href="http://www.zedbooks.co.uk/paperback/the-global-land-grab">our research</a>, we have adopted instead an in-depth and comparative approach. </p>
<p>By examining Africa, Latin America and Asia country by country, a number of interesting themes emerge: urban land grabbing in Kenya, Ethiopia’s new agricultural investment policy, genetically modified soy cultivation in Argentina, <a href="http://dspace.library.uu.nl/handle/1874/257921">residential tourism</a> in Costa Rica, water grabbing in Peru and Ecuador, new land conversions in Vietnam, and the Gulf States’ investments in Indonesia and the Philippines. There are differences and similarities, local variations and more general trends. But it is clear that this global land grab really exists, and that it’s impact cannot be expressed in hectares and statistics alone.</p>
<h2>An all too-easy purchase</h2>
<p>What is striking is that it has not been merely the demand for <a href="http://www.bbc.co.uk/news/world-africa-15013396">food</a> or <a href="http://www.iied.org/land-grabbing-africa-biofuels-are-not-hook">biofuels</a> that has led to this land rush. In fact, a whole set of earlier policies has paved the way. Large-scale land acquisition started to take place as a number of conditions simultaneously fell into place.</p>
<p>Huge tracts of land, under-exploited due to poor agricultural policy or decades of neglect, was made available. Foreign state aid donors emphasised the need to attract foreign investment. Land laws were modernised to make buying, selling and leasing land easier in many countries. And in many cases, institutional weaknesses or outright corruption eased through deals.</p>
<p>National governments were supposed to decentralise, stepping back in favour of local governments and opening up to market forces. However, local governments have often not been strong enough to deal with foreign investors, while in other cases they are merely extensions or appointees of the same political elites that run national governments, rather than genuinely representing local interests. The global land grab is not the consequence of ad hoc crises; it is the <a href="http://www.whp-journals.co.uk/GE/10_Zoomers.pdf">logical outcome</a> from the policies and political environment laid down before it.</p>
<p>So while what is happening today is to a large extent a historical continuation, it is also very different from the events of the past. In countries such as Argentina or Costa Rica, land acquisition and “foreignisation” has taken place for decades, if not centuries. For example, the major <a href="http://business.illinois.edu/working_papers/papers/06-0115.pdf">US fruit growers’</a> acquisition of land throughout Central America during the early and mid-20th century. In Kenya, the current land grab echoes its clear precedent under <a href="http://www.kenyarep-jp.com/kenya/history_e.html">colonisation</a> by the British. Processes are rarely transparent – not in developing countries praised for “good governance”, and not even in cases of Western companies that boast of their “corporate social responsibility”.</p>
<h2>Restoring the balance</h2>
<p>The global land grab has implications for transnational connections and power relations: it reshapes the geopolitical order, yet is equally a manifestation of a world order that has changed as economic power swings toward China, India, and developing economies. Much attention is paid to improving rules or regulations through land titling programmes, implementing the <a href="http://www.fao.org/nr/tenure/voluntary-guidelines/en/">FAO voluntary guidelines</a>, codes of conduct and other institutional solutions. However, the problem is often not so much regulations as the failure to implement them or a lack of practical control.</p>
<p>As <a href="http://www.zedbooks.co.uk/paperback/the-global-land-grab">we have argued</a>, a framework of accountability for large-scale land acquisitions must not only be limited to private companies, nor to governments or public bodies. To be effective it must be constructed as an integrated system of checks and balances that stretches from international trading regulations through national laws to local enactments, to ensure that all the main players of the game are playing under the same rules. </p><img src="https://counter.theconversation.com/content/25844/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Annelies Zoomers receives funding from NWO (Netherlands).</span></em></p><p class="fine-print"><em><span>Mayke Kaag does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The idea that there is a “land grab” taking place in developing nations began with the publication of a report, Seized!, by the NGO Grain. This rang an alarm bell about large-scale land acquisitions…Annelies Zoomers, Professor of Human Geography and Planning, Utrecht UniversityMayke Kaag, Senior Researcher, African Studies Centre, Leiden UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/244062014-03-23T19:28:27Z2014-03-23T19:28:27ZBrazil: the awoken giant stumbles<figure><img src="https://images.theconversation.com/files/44286/original/w952nbmh-1395205013.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Hopes are high for Brazil as it prepares to host the World Cup and hold an election, but real economic change is unlikely to flow.</span> <span class="attribution"><a class="source" href="http://www.flickr.com/photos/bostoncatholic/9345615539/sizes/l/">BostonCatholic/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>This year’s FIFA World Cup and the 2016 Olympics seem to be a coronation of Brazil’s undeniable and startling success. But with the Brazilian presidential elections looming later this year, a surge in street protests and growing economic unrest, will Latin America’s largest nation cope under the international spotlight? </p>
<p>Brazil’s economic and social advancements in the last 20 years are indisputable. Since its last external debt default in 1987 and hyperinflation in 1993, the Latin American giant has successfully implemented a macroeconomic plan (the 1994 Plano Real) that set the country in a new direction: steady poverty reduction and a rising middle class; single-digit annual inflation rates; net external creditor position since 2007; over US$350 billion in foreign reserves; declining bottom-line public debt; investment grade credit rating status; and the list goes on. </p>
<p>The establishment of the macroeconomic stability tripod, namely flexible exchange rates, independent central bank inflation targeting and restrained fiscal balances, <a href="http://www.lowyinstitute.org/publications/great-southern-lands-building-ties-between-australia-and-brazil">delivered success</a> for Brazil in the decade to 2006.</p>
<p>Since then, the reality has become more complicated. Sometimes good news ends up shadowing the system’s weaknesses: high crime rates; weak infrastructure, an oversized, convoluted tax system; poor educational levels; outdated labour laws; numbing red tape; and endemic corruption. </p>
<p>Above all, worse than these ever-present challenges has been the unfortunate change in the nation’s economic direction in 2006. Shortly before the global financial crisis, a political scandal – with a combustive mixture of sex, money and abuse of power – resulted in the ousting of President Lula’s first treasurer Antonio Palocci.</p>
<h2>The Malocci era</h2>
<p>During his term as treasurer between 2003 and 2006, Palocci, a physician-turned-politician-turned-treasurer, closely followed the economic program initiated by his predecessor (and political opponent), Pedro Malan. </p>
<p>In the “Malocci era” a coherent plan of regulatory-driven reform was implemented, paving the way for the economic and social advancements highlighted above. </p>
<p>Despite the thriving economy, the ousting of Palocci forced a change in economic management direction under the current treasurer Guido Mantega. </p>
<p>Mantega and Palocci represented opposing forces inside President Lula’s administration. Whereas Palocci had advocated that well-regulated market forces are the main driver for economic success, Mantega encompasses the belief that central economic fiddling is the best way to manage the economy.</p>
<h2>The king is dead, long live the king!</h2>
<p>Under the leadership of Mantega, economic dirigisme gained prominence and was energised under the government of current President Dilma Roussef (Lula’s hand-picked successor). Accordingly, Brazil has lamentably trailed back to economic micro-(mis)management and cronyism. </p>
<p>Now back on the policy menu: the curbing of Brazil’s central bank independence; energy price freezes; stifling local content requirements for the oil industry; discretionary picking-winner strategies; centralisation of subsidised public credit loans; and import tariff hikes. In addition, no significant structural reforms have been approved since then.</p>
<p>Despite the poor economic management, Brazil’s presidential elections due later this year are expected to confirm the same pool of policies that are undermining the country’s prospects, even though signs of the economy’s distress are imminent. This is another tragic example of short term populist policies that are disastrous in the medium and long run.</p>
<h2>[R]evolution around the corner?</h2>
<p>Since July last year a wave of street upheavals protesting various inequalities have spread throughout Brazil. Unfortunately, the phenomenon is <a href="http://www.lowyinterpreter.org/post/2013/07/03/(R)evolution-in-Brazil.aspx?COLLCC=1271460211&COLLCC=3955656945&/">divided</a> by too many voices and conflicting requests. </p>
<p>Like the 2011 Occupy protests in several Western cities, vague leadership and the lack of clear demands compromise the effectiveness of the protests. Worse: the very same public, which rightly protests against Brazil’s combination of Scandinavian tax burden levels and sub-Saharan public service delivery, does not support a clear agenda of progressive reforms. In the end, neither revolution, nor evolution, is expected to materialise out of the protests.</p>
<p>So, what can we expect from the FIFA World Cup this year and the Olympics in two years? Lots of Carnival-like parties, sparse protest incidents and incredible sport performances. Not much else, regrettably.</p><img src="https://counter.theconversation.com/content/24406/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Patrick Carvalho does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>This year’s FIFA World Cup and the 2016 Olympics seem to be a coronation of Brazil’s undeniable and startling success. But with the Brazilian presidential elections looming later this year, a surge in…Patrick Carvalho, Associate Lecturer of Economics, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/226602014-02-03T14:34:11Z2014-02-03T14:34:11ZMINTs are fresher than BRICS, but don’t expect massive growth<figure><img src="https://images.theconversation.com/files/40489/original/kk2jytpg-1391435259.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Could Jakarta be the new Shanghai?</span> <span class="attribution"><span class="source">owiboy</span></span></figcaption></figure><p>The global financial crisis has morphed into its latest form: an <a href="http://qz.com/170776/a-global-tour-of-the-emerging-markets-currency-crunch/">emerging markets currency crisis</a>. Investors are fleeing developing and middle-income countries – even those with strong long-term growth prospects – for <a href="http://www.theguardian.com/business/2014/jan/29/emerging-markets-crisis-rush-for-save-havens">the safety of developed economies</a>. What capital remains must search harder than ever for excellent returns.</p>
<p>Over the past decade the BRICS countries (Brazil, Russia, India, China and South Africa) have dominated emerging market investments, but their <a href="http://blogs.ft.com/beyond-brics/2013/10/08/imf-crunching-the-brics-slowdown/">growth is slowing</a>. Investors have now turned their eyes to another group, the MINTs (Mexico, Indonesia, Nigeria and Turkey). The BRICS have achieved double-digit growth rates in recent years, and investors are wondering if this will be possible in the MINTs too. The opportunities presented by the MINTs are clear, but so are the challenges. </p>
<p>So, what unites the MINTs? The key thing they all share is favourable demographics. Their populations are large and youthful, with a strong ratio of people eligible to work relative to those not working. This last point is something two ageing BRICs, China and Russia, can envy. </p>
<p>The MINTs should also benefit from their geographical positions. Mexico borders the US and links it to the rest of Latin America, Indonesia is in the heart of South-East Asia, Nigeria is close to some thriving African countries, while Turkey spans Europe, Central Asia and the Middle East. As global trade patterns develop, the MINTs are well placed to take advantage.</p>
<p>At this stage of their economic development the MINTs are generally harnessing their large populations to pursue export-led growth, following in the footsteps of the Asian tiger economies of the 1970s and 80s. As Chinese exports become more expensive due to rising wages, an appreciating currency and an economy increasingly geared towards domestic consumption, we’ll increasingly find our goods manufactured in a MINT.</p>
<p>But increasing the labour force is not enough to automatically achieve high rates of economic growth. The countries need steady flows of capital, both domestic and foreign. </p>
<p>However, capital – that is, investors’ money and expertise – is especially sensitive to political factors such as strong institutions and the rule of law. No one wants to see their investment seized in a coup, or lose its value due to sudden legal changes. In fact, following the global financial crisis, countries who had good legal institutions <a href="http://ideas.repec.org/p/ecb/ecbwps/20111364.html">retained more of their foreign investment</a>.</p>
<p>Given this sensitivity, the serious issues with corruption and the rule of law in the MINTs represent a particular challenge. The four countries are characterised by low scores in the <a href="http://cpi.transparency.org/cpi2013/">Corruption Perceptions Index</a> published annually by Transparency International on how corrupt each country’s public sector is. Out of 177 countries, Nigeria ranks 144th, Indonesia 114th, Mexico 106th and Turkey 53rd. Doing business in those countries, especially in Mexico and Nigeria, is a challenge. </p>
<p>The MINTs face other barriers: poor levels of education, especially in Indonesia and Nigeria; poor infrastructure – again more so in the case of Nigeria, where energy supply is clearly affecting productivity and growth; and a general resistance to reform, especially in the labour market.</p>
<p>One of the big questions facing the MINTs right now is over their ability to withstand to financial crises. The recent slide in emerging market currencies has raised fears that we might see a repeat of the Asian financial crisis on 1997, when many of the “Asian tigers” ran into massive problems.</p>
<p>The MINTs are more vulnerable to currency crises as they do not at the moment share the depth of the financial system of the BRICS economies, or the experience of their monetary authorities to help them manage their economies out of a currency crisis. </p>
<p>Take China. The financial system there faces mounting difficulties but the government has the capacity to bail it out and restore international confidence. Similarly India has its problems, but its central bank is giving the impression that it has control of the economic situation. </p>
<p>Turkey, on the other hand is currently experiencing 7% inflation, a huge current account deficit, a sliding currency and shrinking savings, investment and exports. The monetary authorities cannot do anything about it. </p>
<p>The Turkish experience is typical across the MINT economies, who have yet to truly develop major financial systems. Worries over financial resilience will definitely be on the minds of investors when balancing the growth prospects of these countries against their vulnerabilities.</p>
<p>Yet despite the gloom there is no doubt that the MINT economies are fresher than the BRICS. There is an enthusiasm and dynamism, which I certainly felt myself on a recent visit to Turkey.</p>
<p>But stable double digit economic growth? Don’t count on it just yet. </p><img src="https://counter.theconversation.com/content/22660/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kate Phylaktis received funding from the Economic and Social Research Council (ESRC) to fund a series of networking events on Emerging Markets Finance. The grant ended last year.</span></em></p>The global financial crisis has morphed into its latest form: an emerging markets currency crisis. Investors are fleeing developing and middle-income countries – even those with strong long-term growth…Kate Phylaktis, Director, Emerging Markets Group, Cass Business School, City, University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/208022013-12-09T06:19:10Z2013-12-09T06:19:10ZWest fears the rise of some countries more than others<figure><img src="https://images.theconversation.com/files/36699/original/x32zc8cf-1386002574.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">At ease: Indian soldiers deployed at the 2010 Commonwealth Games.</span> <span class="attribution"><span class="source">John Giles/PA</span></span></figcaption></figure><p>When a highly populous, rapidly developing, nuclear armed, space-voyaging and increasingly assertive Asian nation announces the purchase of its third aircraft carrier, a few months after launching its first domestically-produced nuclear submarine, a nervous reaction in the West may appear natural.</p>
<p>After all, China’s economy has been growing rapidly for more than 30 years, allowing Beijing to enhance its military capabilities at a corresponding rate. Inevitably, this has drawn Western attention and China’s “rise” is now among the most hotly debated issues in global affairs – particularly at moments such as the latest <a href="http://www.bbc.co.uk/news/world-asia-25062525">Senkaku/Diaoyu islands incident</a>. </p>
<p>Is China a threat or an opportunity? Will it wield its new powers responsibly or for selfish gain? Questions like these circulate widely as Americans, Australians, Europeans and others watch China with cautious – and sometimes nervous – eyes. </p>
<p>Consider this, though: the country which in November purchased its <a href="http://rt.com/news/russia-india-aircraft-carrier-834/">third aircraft carrier</a>, and which earlier this year launched its first <a href="http://www.thehindu.com/news/national/in-a-first-for-india-nuclear-subs-reactor-activated/article5009164.ece">domestically built nuclear submarine</a> was not China, but India.</p>
<p>India is often regarded as today’s second “rising” power. It shares many attributes with China – notably a large, growing, modern and well-equipped military – and yet it rarely provokes anxiety in the West. The reasons for this warrant careful consideration.</p>
<h2>One of the club</h2>
<p>Broadly speaking, India is met with less suspicion because it is seen as more like “us”. English, in conjunction with Hindi, is the Indian language of government. India is democratic and capitalist and due to its regrettable colonial past it shares cultural and historical links to the United Kingdom and is a member of the Commonwealth. To a significant extent, it is “one of the club”. </p>
<p>This affinity is evident in the West’s relations with India. In a <a href="http://www.whitehouse.gov/the-press-office/2010/11/08/remarks-president-joint-session-indian-parliament-new-delhi-india">speech</a> to the Indian parliament in 2010 for example, US president Barack Obama emphasised “our shared interests and our shared values” (and variations of the word “democracy” appeared no fewer than 21 times). US politicians are more lukewarm when addressing China’s leaders, talking instead of <a href="http://www.state.gov/secretary/remarks/2013/11/217937.htm">“building trust” and “seeking common ground”</a>. Similarly, in 2012, the then Australian prime minister, Julia Gillard, and India’s prime minister, Manmohan Singh, <a href="http://www.aii.unimelb.edu.au/news/read-gillard-and-singh%E2%80%99s-joint-statement">spoke</a> of their nations’ common values as liberal democracies. </p>
<p>The world’s democratic systems are of course not identical, but they are bound by the powerful myth that democracy is necessarily good. Correspondingly, any non-democratic system is implicitly identified as “bad”. History does not help the communist cause. Most infamously, the Soviet experiment descended into dictatorial violence and brutality. Yet communism, in its intended form, is not inherently evil. Moreover, a truly communist country has never actually existed and so technically, at least, it has no track record for us to assess. The communism we imagine is the key factor. </p>
<p>Certainly, China has a dubious record of upholding human rights. At times it is <a href="http://www.forbes.com/sites/gordonchang/2013/06/02/china-and-the-biggest-territory-grab-since-world-war-ii/">highly assertive</a> towards its neighbours; it engages in international “<a href="http://www.nytimes.com/2013/05/08/opinion/china-and-cyberwar.html?_r=0">cyber warfare</a>”; and it seems to have only <a href="http://e360.yale.edu/feature/china_at_crossroads_balancing_the_economy_and_environment/2710/">recently</a> begun caring to any meaningful extent about the environment within and beyond its borders, among other things. But China is far from alone. Other nations guilty of these crimes (at one time or another) include the United States, Australia, the UK – and India. </p>
<h2>Self-fulfilling prophecy</h2>
<p>Broadly speaking, China is doing little to demonstrate that it represents a major imminent security threat to the West, or even to its Asian neighbours. In the recent round of disputes over the Senkaku/Diaoyu islands China has acted aggressively and perhaps unreasonably, but the situation has a long and complex history. Moreover, the other key actor, Japan, has long enforced its own regional “Air Defence Identification Zone”, attracting claims of <a href="http://articles.timesofindia.indiatimes.com/2013-11-25/rest-of-world/44448780_1_japan-pm-south-china-sea-shinzo-abe">hypocrisy</a> from China that went largely unreported in the West. </p>
<p>Meanwhile, India consistently devotes a <a href="http://data.worldbank.org/indicator/MS.MIL.XPND.GD.ZS">larger proportion of its GDP </a>to its military than does China; for the past five years it has been the world’s largest importer of weapons, and it is expected to be the <a href="http://www.economist.com/news/briefing/21574458-india-poised-become-one-four-largest-military-powers-world-end">fourth largest</a> military spender by 2020. Yet a new Indian aircraft carrier is immediately considered a <a href="http://articles.economictimes.indiatimes.com/2013-11-21/news/44327041_1_defence-policy-defence-cooperation-defence-ashton-carter">welcome development</a>, while in the case of China we are grimly told: <a href="http://www.foreignpolicy.com/articles/2010/02/22/think_again_chinas_military">“It’s not time to panic. Yet.”</a></p>
<p>Importantly, the more we assume that China is a probable instigator of hostility and even war, the more we ready ourselves for that eventuality. Indeed, the “China factor” is used to justify efforts by India, as well as Japan, the Philippines, Taiwan and others, to bolster their defence capabilities, leading to increasing tensions across a highly sensitive region. The “China factor” has also been used to rationalise the United States’ recent “<a href="http://www.foreignpolicy.com/articles/2011/10/11/americas_pacific_century">pivot</a>” (or “rebalancing”) towards the Asia Pacific. China is becoming a bigger threat, the logic goes, so others should prepare. </p>
<p>Yet we should also recognise the potential effects of an “India factor” in China and that the actions of others will not go unnoticed in Beijing. In consequence we risk trapping ourselves in a self-fulfilling prophecy of Chinese aggression. We may, in other words, end up literally imagining a threatening China into existence and through our ideas and actions become faced by the fictional demon we feared all along.</p>
<p>In short, ideas matter, and not just in policy-making circles. China might declare war on others in the future. It might show intent of becoming that all-conquering superpower which successfully pushes Chinese culture and values upon the world and dictates global affairs. But it might not, and most experts agree that for various reasons this appears highly <a href="http://asiasociety.org/new-york/david-shambaugh-assesses-china-partial-power">unlikely</a>. </p>
<p>The biggest danger is in expecting it to happen, as we welcome moves by other major powers to equip and arm themselves for an imagined worst case scenario. Put simply, we should not allow ourselves to be led by the fear of what might be. The disastrous and ill-conceived “War on Terror” showed us that hysteria over a fictitious enemy can reap terrible, destructive and long-lasting consequences. For now, China’s future (just like India’s) is unclear. In the West we should think twice before assuming we know otherwise.</p><img src="https://counter.theconversation.com/content/20802/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Oliver Turner does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>When a highly populous, rapidly developing, nuclear armed, space-voyaging and increasingly assertive Asian nation announces the purchase of its third aircraft carrier, a few months after launching its…Oliver Turner, Hallsworth Research Fellow in Political Economy , University of ManchesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/153742013-06-24T20:37:10Z2013-06-24T20:37:10ZAll business roads lead to Rio<figure><img src="https://images.theconversation.com/files/25962/original/szrnt483-1371787606.jpg?ixlib=rb-1.1.0&rect=1%2C1%2C998%2C666&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">When the sporting gods smile at Australia, we go to Rio, but Brazil has long been on the international business map.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>We have recently witnessed Brazil being hit by mass protests not seen since the days of the military dictatorship, but apart from the Socceroos going to the 2014 World Cup and the Rio Olympics in 2016, does Brazil really matter to Australia?</p>
<p>Well, just like 10 years ago, if a country didn’t have a China strategy, it didn’t have an international strategy. The same has been said about having a “BRIC” (Brazil, Russia, India and China) strategy. </p>
<p>With Australia and Brazil historically not in each other’s sphere of influence, our country has typically ignored Brazil. But the times they are a-changin’ as Australian companies look seriously at a number of Brazil’s industries.</p>
<p>First, at rocks and crops. Australian resources and agribusiness players are forging ahead in Brazil, where both countries have a comparative advantage. BHP Billiton and Rio Tinto are there (just like Vale is in Australia), and Australia’s CSIRO benchmarks itself against Brazil’s respected Embrapa in agricultural research.</p>
<p>Second, at alternative energy. Pacific Hydro has made headway with wind and solar power after some success in Chile. Their CEO Rob Grant says, “Australia and Brazil share several similarities, including geographical conditions and water supply, and the development of clean energy will be needed as Brazil’s middle class increases along with their expectations of having access to resources, food and water.”</p>
<p>Third, at the service, retail and education sectors. Westfield has made a strong investment in Brazil, and there are over 16,000 Brazilian students in Australia, with strengthening ties in architecture, urban planning, creative industries, sports, recreation and culture.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/25959/original/7x6pwbqm-1371780365.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/25959/original/7x6pwbqm-1371780365.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/25959/original/7x6pwbqm-1371780365.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/25959/original/7x6pwbqm-1371780365.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/25959/original/7x6pwbqm-1371780365.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/25959/original/7x6pwbqm-1371780365.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/25959/original/7x6pwbqm-1371780365.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The recent protests in Brazil highlight the country’s ongoing struggle with social issues such as inequality.</span>
<span class="attribution"><span class="source">AAP</span></span>
</figcaption>
</figure>
<p>And finally, as the 2014 FIFA World Cup and the 2016 Rio Olympic Games approach, Australia has put its event-management skills into action. We are helping Brazil learn from the successful 2000 Sydney Olympics and other global events managed by Australians at home and abroad.</p>
<p>This is being spearheaded by the Australian Government through the Australian Trade Commission (Austrade) and its highly respected Business Club Australia programme. With the global spotlight on Brazil over the 2014-2016 period, the Australian government sees it as a vital time to show exporters and investors the opportunities at hand in the vast Brazilian market.</p>
<p>But we are not alone. Australia has only just realised that Brazil is already a major global economy. And as an agricultural, mining and aviation exporter, it is also a food, aerospace, resources and energy superpower, with Petrobras, Vale, Embaer, JBS Beef and Ambev some of the world’s most influential multinationals and investors.</p>
<p>We are not getting first-mover advantage either. Brazil has been attracting attention from many of the world’s most important international business diplomatic delegations from the US, Canada, Germany, Japan, China and increasingly the emerging powers of Asia, the Middle East and Africa too.</p>
<p>But Australian businesses have also found frustrations in Brazil in terms of bureaucracy, tax laws and infrastructure; they notice the social issues, too. And while Brazil has reduced inequality under presidents Luiz Inacio Lula da Silva and Dilma Rousseff, there is still a long way to go - as the protests highlight.</p>
<p>However, as the world’s sixth-largest economy and with the spotlight on it from 2014 to 2016, Brazil is now just too big to ignore.</p><img src="https://counter.theconversation.com/content/15374/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tim Harcourt has received a grant from the Council of Australia Latin American relations (part of the Department of Foreign Affairs and Trade) to write a book on Australia and Latin America.</span></em></p>We have recently witnessed Brazil being hit by mass protests not seen since the days of the military dictatorship, but apart from the Socceroos going to the 2014 World Cup and the Rio Olympics in 2016…Tim Harcourt, J.W. Nevile Fellow in Economics, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/57082012-03-09T03:03:11Z2012-03-09T03:03:11ZWhy Australia should engage with Brazilian mining giant Vale<figure><img src="https://images.theconversation.com/files/8358/original/36dww6y5-1330996711.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">There are plenty of opportunities to be seized if Brazilian mining company Vale decides to expand its operations to Australia.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>Rumour has it that Brazilian <a href="http://www.businessspectator.com.au/bs.nsf/Article/Vale-looks-to-Australia-for-iron-ore-report-pd20120222-RQP3V?OpenDocument&src=hp8">mining giant Vale is eyeing up the Yilgarn region</a> of West Australia for a new venture. Forget notions of Vale trying to invade the backyard of its prime competitors BHP Billiton and Rio Tinto. The decision is all business and exactly the sort of strategic move that any major multinational would take. What remains to be seen is if Australia will have the wit to seize the new opportunities it could bring to engage a major emerging market.</p>
<p>Major foreign acquisitions are nothing new for Vale. In 2006, Brazil suddenly became the sixth largest foreign investor in Canada when Vale bought nickel mining giant Inco for a cool $17 billion cash. Five years of booming resource prices have only deepened Vale’s pockets. Even during the slowdown of 2011, the company continued to make money hand over fist. Operating revenues rose 29.9% from US$46.81 billion to US$ 60.389 billion, resulting in net revenue of US$22.885 billion.</p>
<p>Vale shareholders are unsurprisingly happy and demanding more impressive results, leaving the company with two unique problems. First, what should it do with this mountain of cash? Second, how can it ensure that it continues to post such spectacular results?</p>
<p>Vale’s answer to the first question was simple: a $3 billion share buy-back program and the issue of a special dividend to share holders. The second question is more complicated, because it involves cutting costs in an industry with a fairly stable cost-base and dealing with the country’s reliance on Brazilian iron ore mines.</p>
<p>Vale faces a simple challenge. The cost of shipping high quality iron ore from Brazil to China is two and half times more than from Australia. For corporate strategists in Rio de Janeiro, the answer was a turn to economies of scale. A fleet of super-sized ore carriers capable of carrying up to 400,000 tonnes of ore was commissioned. These giants are 10% larger than anything else on the high seas and forecast to reduce shipping costs by 20%-25%, which could erase much of Australia’s shipping cost advantage.</p>
<p>Unfortunately, Chinese authorities are uncomfortable with the 400,000 tonne capacity of the Valemax fleet, citing both labour and safety concerns should the ships dock at their deep-water ports. Some substance was given to these fears when the Vale Beijing nearly sank while being loaded at the Brazilian port of Ponta da Madeira shortly after it entered service.</p>
<p>In response, Vale has turned to a regional distribution system for south-east Asia that will see the Valemax fleet throwing away their intrinsic efficiency by delivering shipments to regional distribution centres at Subic Bay in the Philippines and Lumut, Malaysia. China has complained about this strategy, too, questioning if the company is actually capable of managing its logistics operations. To mollify this criticism and gain entry to Chinese ports, Vale is now looking at leasing its Valemax fleet to Chinese operators.</p>
<p>While the shipping debacle may be approaching some sort of a conclusion, it still leaves Vale with the challenge of getting ore on the ship. Recent floods in Brazil damaged critical transportation infrastructure at key mining sites. The parlous state of infrastructure in Brazil means that similar disruptions could reoccur. When this is combined with the shipping challenge and the need to bring new operations online to ensure continued rising profits the only viable answer is one of geographically diversifying sources of iron ore supply, preferably with sources closer to China.</p>
<p>The rumours about Vale investment in the Yilgarn region point to Australia being a major part of the answer. If we look to the Canadian example, it also suggests great opportunity for Australia.</p>
<p>Vale’s purchase of Inco prompted the Canadian government to give serious attention to bilateral relations. Mutual political consultations surged with both governments sending teams of deputy ministers to each other’s capitals for regular talks. This was paralleled by enhanced political and business engagement, resulting in over six billion dollars of annual trade and FDI stocks of over twenty-three billion dollars. Where it was easy to get a seat on a flight from Canada to Brazil before the Inco buyout, it is now a serious challenge that requires careful advance planning.</p>
<p>West Australian Premier Colin Barnett has so far made all the right noises about welcoming Vale as an investor in his state. But he has focused on the implications of Vale’s entry for the mix of resource extraction companies that negotiate with his government. The wider question is whether he and his political colleagues in other states and Canberra can see other possibilities and build on a big Vale investment to create synergies in other areas.</p>
<p>There is nothing intrinsically special about Australia for Vale or the Brazilian government, which holds a major stake in the company. Without serious effort from political leadership, Australia will remain little more than just another resource-producing country in the eye of Brazilian power brokers. Just because a major Brazilian company may have stumbled on Australia as possible answer to its own strategic challenges does not mean that others in Brazil will automatically see a reason to follow.</p><img src="https://counter.theconversation.com/content/5708/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sean Burges owns shares in Vale.</span></em></p>Rumour has it that Brazilian mining giant Vale is eyeing up the Yilgarn region of West Australia for a new venture. Forget notions of Vale trying to invade the backyard of its prime competitors BHP Billiton…Sean Burges, Lecturer in International Relations, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/51912012-02-16T19:39:40Z2012-02-16T19:39:40ZBrazil and Australia: the rise of the southern hemisphere powers<figure><img src="https://images.theconversation.com/files/7648/original/jhskrh5k-1329194467.jpg?ixlib=rb-1.1.0&rect=27%2C12%2C959%2C644&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Celebrating: after being seen as a basket case for so long, Brazil's economy is now powering.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>Few countries have been left unscathed by the global financial crisis and it seems that they are all situated in the southern hemisphere. Brazil and Australia are some of them. Recently, their economies have started engaging with each other - at times competing for the same markets, at times collaborating and exchanging technology and know-how. </p>
<p>For a long time Brazil was perceived as more of a basketcase than an emerging power. Although epithets such as “the country of the future” and “the sleeping giant” had often been associated with it since the 1970s, until not long ago many Brazilians used to say that Brazil was to be eternally the country of the future. The so-called “economic miracle” of the 1970s, which entailed a rapid and unequal industrialisation, was wiped out by mounting debts inherited from previous decades and the oil crises of 1970s. </p>
<p>This was followed by two decades of profound economic crisis, exacerbated by loans and assistance packages given by the International Monetary Fund and the World Bank that encouraged developing countries to comply with harsh neo-liberal economic reforms. These included currency devaluations, a freeze in wages, cuts in public spending, privatisation of assets and tax breaks for the productive sectors. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/7650/original/y9zgpsdd-1329195038.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/7650/original/y9zgpsdd-1329195038.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=394&fit=crop&dpr=1 600w, https://images.theconversation.com/files/7650/original/y9zgpsdd-1329195038.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=394&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/7650/original/y9zgpsdd-1329195038.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=394&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/7650/original/y9zgpsdd-1329195038.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=495&fit=crop&dpr=1 754w, https://images.theconversation.com/files/7650/original/y9zgpsdd-1329195038.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=495&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/7650/original/y9zgpsdd-1329195038.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=495&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Poverty in Brazil escalated between 1990 and 1995.</span>
<span class="attribution"><span class="source">AAP</span></span>
</figcaption>
</figure>
<p>Between 1990 and 1995, inflation averaged 764% a year and in 1993 it hit 2,489%. Inflation and subsequent stagflation, escalating prices, unemployment, endemic corruption, nepotism, and the information revolution all helped to widen the gap between the very rich and the very poor. </p>
<p>Brazilians became disillusioned. Many migrated, first to the US, Europe and Japan (Brazil is home of the largest Japanese migrant community outside Japan, so these were mainly Japanese-Brazilians), and then to other parts of the global north. </p>
<p>What started with a trickle in the mid-1980s became a diaspora of 3-4 million people in 2008, according to the <a href="http://www.brasileirosnomundo.itamaraty.gov.br/file/Brasileiros%20no%20Mundo%202009%20-%20Estimativas%20-%20FINAL.pdf">Brazilian Ministry of Foreign Affairs</a>, known in Brazil as the MRE. </p>
<p>In the late 1990s, tertiary educated, middle-class Brazilians started arriving in Australia in search of better quality of life. Many come as students. Brazil is among the five largest source countries of students in<a href="http://www.smh.com.au/national/education/student-visa-applications-still-plummeting-20110211-1aqki.html"> Australia</a>, after China, India, South Korea, and Thailand.</p>
<p>Yet to everyone’s surprise, the future seems to have arrived in the first decade of the 21st century. In 2001, Jim O’Neill, an economist at Goldman Sachs, coined the acronym BRIC (Brazil, Russia, India, China) to denominate “emerging economic giants”. His assessment seems to be accurate. </p>
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<img alt="" src="https://images.theconversation.com/files/7649/original/xnpvgrqx-1329194889.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/7649/original/xnpvgrqx-1329194889.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=902&fit=crop&dpr=1 600w, https://images.theconversation.com/files/7649/original/xnpvgrqx-1329194889.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=902&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/7649/original/xnpvgrqx-1329194889.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=902&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/7649/original/xnpvgrqx-1329194889.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1133&fit=crop&dpr=1 754w, https://images.theconversation.com/files/7649/original/xnpvgrqx-1329194889.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1133&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/7649/original/xnpvgrqx-1329194889.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1133&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Brazil’s President Dilma Rousseff met China’s Chinese Vice Prime Minister Wang Qishan this week.</span>
<span class="attribution"><span class="source">AAP</span></span>
</figcaption>
</figure>
<p>In the past decade, Brazil’s economy has grown around 5% a year, and in 2010 it grew 7.5%. In late 2011 Brazil overtook the UK to become the sixth-largest economy in the world. By 2025 Brazil is set to become the world’s fifth-largest economy, behind only the United States, China, India and Japan, according to <a href="http://www.economist.com/node/16964114">The Economist</a>.</p>
<p>Currently, it detains 40% of Latin America’s GDP. Indeed, it is the world’s biggest exporter of coffee, sugar, orange juice, tobacco, ethanol, beef and chicken, and soya products, according to <a href="http://www.economist.com/node/16964094">The Economist</a>.</p>
<p>Australia competes with Brazil for markets for some of these commodities such as sugar and beef. In 2007, massive oil fields were discovered 7km below the surface of the Atlantic. Brazil’s current position as the world’s 16th largest oil producer will improve as soon as the country starts drawing on these reserves. </p>
<p>The rise of this economic powerhouse is not only due to natural and mineral riches. Brazil’s technological innovation is also helping the economy. <a href="http://www.embraer.com/en-US/Pages/Home.aspx">Embraer</a> is the world’s third largest producer of commercial jet aircraft and the market leader in jets with five to 20 seats. </p>
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<img alt="" src="https://images.theconversation.com/files/7651/original/33hztf8b-1329195144.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/7651/original/33hztf8b-1329195144.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=420&fit=crop&dpr=1 600w, https://images.theconversation.com/files/7651/original/33hztf8b-1329195144.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=420&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/7651/original/33hztf8b-1329195144.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=420&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/7651/original/33hztf8b-1329195144.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=528&fit=crop&dpr=1 754w, https://images.theconversation.com/files/7651/original/33hztf8b-1329195144.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=528&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/7651/original/33hztf8b-1329195144.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=528&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The newly appointed head of the state-run oil giant Petrobas, Maria das Gracas Silva Foster.</span>
<span class="attribution"><span class="source">AAP</span></span>
</figcaption>
</figure>
<p>Brazil has also been working with clean energy since the first oil crisis hit, when it developed technology to produce ethanol from sugar cane to run its car fleet. At present around 30% of its energy comes from hydropower and another 15% from biomass. In recent years Brazil has been assisting Australia in its development of biofuel technologies. </p>
<p>Furthermore, like Australia, Brazil has diversified its trade partners. China corresponds to 38% of Brazil’s trade surplus and is set to become Brazil’s top foreign investor, supplanting the US. To this end, Brazil is building the world’s largest industrial port complex nicknamed “<a href="http://www.guardian.co.uk/world/2010/sep/15/brazil-port-china-drive">Highway to China</a>” in conjunction with Chinese investment. Iron ore, grain, soy and oil will be shipped through this port after it opens in 2012 on the Rio coastline. </p>
<p>These are areas in which Brazil competes with Australia, but which they also work together to increase commodity prices.</p>
<p>Notwithstanding all the hype, there is a long road before Brazil becomes a developed country like Australia. Massive social inequalities persist and with it high rates of crime and violence. </p>
<p>According to the Brazilian Institute of Statistics (IBGE), while the top 10% of the Brazilian population accounted for 43.2% of all individual income, the bottom 10% accounted for only 1.1% in 2007, according to analysts (Lage & Machado 2008). </p>
<p>Indeed, Brazil has the 10th most unequal wealth distribution in the world with a Gini coefficient of 0.53. By contrast, <a href="http://www.abs.gov.au/ausstats/abs@.nsf/2f762f95845417aeca25706c00834efa/27ced12db6ca9111ca25779e001c4843!OpenDocument">Australia is a much more equal country</a> with a Gini coefficient of 0.331 in 2007-08. </p><img src="https://counter.theconversation.com/content/5191/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Cristina Rocha received funding from the ARC.</span></em></p>Few countries have been left unscathed by the global financial crisis and it seems that they are all situated in the southern hemisphere. Brazil and Australia are some of them. Recently, their economies…Cristina Rocha, Senior Lecturer, School of Humanities and Communications Arts, Western Sydney UniversityLicensed as Creative Commons – attribution, no derivatives.