Without a sound infrastructure a nation cannot hope to be a significant player in the world trade market. One of the biggest barriers to Brazil becoming a major player in world trade is an underdeveloped infrastructure. However, the government has undertaken major economic reforms in the 1990s to address the inadequacy of its infrastructure basics. This is why Brazil has undertaken major efforts to strengthen its energy, telecommunications, transportation and environment this decade, “With a population of over 160 million, a land area larger than the continental United States, and an economic output of nearly $800 billion, Brazil is a key player in the world economy and offers a rich location for American exporters to explore for business” (Frey 17).
Despite the economic reforms instituted by the government, a major move towards privatization, and a high level of foreign investment, Brazil has been deeply impacted by the economic crisis in Asia and the former Soviet Union. The real, Brazil’s currency, has dropped off 50 percent compared to the U.S. dollar, and the national economy is expected to contract by 6 to 8 percent this year (Castillo 37). In an effort control spiraling inflation, the government instituted interests rates at 39%, which has been effective in controlling inflation but has made potential investors nervous (Castillo 37). Nevertheless, Brazil’s economy is stable and growing at a rate of 4 percent real GDP annually, coupled with the confidence of many investors that despite Brazil’s short-term obstacles, it remains a lucrative global market in the long-term (Frey 17).
In line with Brazil’s determination to improve its basic infrastructure in the areas of energy, telecommunications, transportation and environment, the Brazilian Development Bank (BNDES) budgeted $38.4 billion U.S. dollars for 1998, with the majority of it targeted in these areas, “Nearly $8.8 bi
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