Brazil: The Country of the Future

Abstract

With more than a hint of fatalistic resignation, Brazilians have long observed that theirs is the country of the future … and always will be. Geographically immense, with an economy and a population almost twice as large as any other in Latin America, Brazil is also endowed with enviable natural resources. But time and again throughout the country’s tumultuous history, one or the other economic or political crisis has undermined the predictions of hopeful optimists and provided rich fodder for cynics. As former president Fernando Henrique Cardoso explained about his country, “this special kind of failure that results when tantalizing potential falls tragically short of expectations. That is the kind of failure that Brazil has always specialized in.”¹ The country profile has been marked by endless boom-and-bust cycles of rampant inflation, anemic economic growth, a huge external debt burden, income inequality, systemic corruption, notoriously unreliable legal enforcement, low labor productivity, and abysmal physical infrastructure. As one of the country’s leading economists explained in early 2014, even taking into account the relatively strong economic performance of 2008 to 2010, “the government has failed to undertake many fundamental reforms in the past decade.”

In the old days a Brazilian business owner would be ridiculed if he actively sought outside investors. Now it’s the opposite, and is regarded as a sign of great prestige and status. Once we had a private equity partner, our credibility was enhanced enormously with clients and banks. They took us more seriously.

—Founder and CEO of a São Paulo software company