Brazil facts

August 7, 2012

I've been traveling in Brazil for the past week-and-a-half, and so have read a number of books and papers on the past, present and future of the Brazilian economy. These facts are culled from Ruchir Sharma's 'Breakout Nations,' Larry Rohter's 'Brazil on the Rise,' the OECD's 2011 Economic Survey of Brazil, and Ricard Hausmann's 'In Search of the Chains That Hold Brazil Back," and Leonardo Monsterio's (sadly defunct) blog. They shouldn't be construed as making any particular point: They're just numbers that I found interesting, and am thinking about.

- Over the 20th century, Brazil had a cumulative inflation rate of more than a quadrillion percent.

- Over the last decade, the current Brazilian currency -- the real -- has doubled in value against the dollar.

- Since 1990, life expectancy in Brazil has increased by 5 years, and the mean years of schooling for the labor force have increased by 4 years.

- That said, the average student in Brazil remains in school for only seven years, the lowest of any middle-income country. In China, where average income levels are much lower, the average is eight years.

- Since 1993, the poverty rate has declined by half.

- Income inequality in Brazil has been dropping -- a rarity for an emerging economy, and an extreme rarity for an emerging economy in the midst of a commodity boom. But it's dropping from an incredibly high level. As you can see in this graph, Brazil's poorest residents are as poor as China and India's poorest residents, and its richest residents are as rich as America's richest residents.

- Brazil's tax burden is equal to 38 percent of GDP, among the highest in the developing world. That's because government spending, at 40 percent of GDP, is also among the highest in the developing world.

- The World Bank’s Investment Climate Assessment Survey found that firms in Brazil complained more about high taxes than did firms in any of the other 67 countries surveyed, with the exception of Benin.

- The share of government spending going to new infrastructure is about 2 percent of GDP in Brazil. The emerging market average is 5 percent. China is at 10 percent. Brazil would need to spend about 4 percent of GDP per year for 20 years to catch up to the infrastructure levels of...Chile.

- Anecdotally, in conversations with Brazilians, they've not been angry about the level of taxes they pay so much as the poor quality of services they feel they receive in return.

- Only 47 percent of the population has sewage collection.

- The share of the elderly population is expected to double in less than 20 years. That's much faster than the aging of the American population, for instance.

- Despite the commodities boom, Brazil remains an unusually closed economy: exports and imports account for only 15 percent of GDP.

- Brazil's minimum wage is so high that it applies to one in three workers.

- According to the Economist Intelligence Unit, Brazil had the highest real lending rates of the 141 countries surveyed between 2005 and 2007. According to the OECD, those rates remained high in 2011: Corporate borrowers paid an average annual nominal interest rate of 31 percent in March 2011, while personal loans were charged an average rate of 45 percent. Hausmann thinks bringing these numbers down is the key to unleashing Brazil's growth potential.

- Between 1980 and 2008, Brazil's productivity grew at an annual rate of about 0.2 percent. China, by contrast, grew at an annual rate of 4 percent.

 

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Sarah Kliff | August 7, 2012