Economic Problems in Brazil
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This research examines the impacts of serious problems in the country's economic sector, on other areas of Brazilian society. Brazil has experienced and continues to experience serious economic and social problems. Some people in the first world tend to view Brazil as a country out of control. Such judgements, however, are made by people residing comfortably in developed economies, with little understanding or appreciation of what is required to move the world's sixth largest country (population) and tenth largest economy (regarding gross national product) from the status of a developing country to that of an economic power. BRAZIL'S ECONOMIC PROBLEMS Most of the world's developing countries have a net external debt in 1989. Some of these countries, however, have a much larger external debt than do others. Brazil and Mexico are the two largest debtors in the Third World. Each country has an external debt which exceeds US$100 billion, with that of Brazil the largest at approximately US$108 billion (The World Bank, 1988, p. 233). External debt has a major impact on the ability of a developing country to deal with social problems, including those associated with urbanization. In order to assess the implications for social and urban development of the external debt of LDCs, it is necessary to relate the external debt of a country to other macroeconomic measures. Brazil's external debt equals 46.7 percent of its gross nati
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ision was designed to avoid an arbitrary redistribution of costs between debtors and creditors.
4. The Brazilian currency was devalued, and, as a part of the plan, a new Brazilian currency was introduced. The currency devaluation provision was intended to dampen demand for both imports and domestically produced goods and services. In return, the decreased demand would, it was hoped, lead to reductions in the growth of the country's external debt, and to lower levels of inflation.
The initial results of the Cruzado Plan in Brazil were spectacular. Inflation, which in Brazil rose at the rate of 227 percent in 1985, dropped to near zero in the first three months of the Plan, and remained at just 6.0 percent for all of 1986 (Cardoso & Dornbusch, 1987, p. 291). The Cruzado Plan encountered difficulties in 1987; however, and inflation began to soar. As a consequence, Cruzado Two was brought in, which unfroze some prices, raised the price of gasoline, and provided for some additional currency devaluation ("Please", 1987, p. 10). The plan successfully brought inflation back under control. The annualized inflation rate in December 1987 was 15 percent.
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Approximate Word count = 2595
Approximate Pages = 10 (250 words per page)
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