How did Brazil get to where it is today?

In the mid 1800s Brazil was the world’s largest producers and exporter of coffee, a commodity whose popularity had begun surging worldwide. The United States was Brazil’s largest trading partner exporting millions of tons of coffee beans per year. Demand continued to increase exponentially, forcing the Brazilian government to seek ways to maintain their global dominance in coffee exports. New land was cultivated and railroads were developed in remote areas rich in coffee beans, making transportation to ports more accessible.

Soon immigrants began flocking to Brazil seeking opportunities in the coffee trade. By the late 1800s Brazil became extremely wealthy due to coffee sales. The nation continued to increase their wealth after discovering how resource rich the land was. Brazilians began mining and exporting sugar, cotton, tobacco, cocoa, and rubber. All of these industries benefited from the newly established railroads that connected a large part of the country to sea ports. Today, due to the aggressive expansion of the mining industry in the 1800s, Brazil has the world’s tenth largest railway system and the forth largest roadway system.

Economic expansion continued throughout the decades and like all other nations Brazil suffered economically during World War 1 and the global depression in the 1930s. The already democratic government system was modified in the 1950s to offer even more freedom and favorable exporting policies helping businesses even further. Brazil’s GDP grew 7 percent annually between 1950 and 1961. The economy grew even faster from 1968 to 1973 as GDP rose over 11 percent annually led by steel, cement, transportation equipment and electricity generation exports.

An oil crisis in the 1970s slowed Brazil’s economy as the heavily dependent industries were faced with the price of oil doubling. In addition the government borrowed heavily throughout the 1970s and 1980s, which lead to a debt crisis. Inflation, public and private debt all increased to dangerous levels and the “high growth” formula of the 1970s, that was added to the economic woes as inflation, suddenly escalated to almost 250 percent annually. Several government plans reduced inflation however the economy was still lagging. It wasn’t until 1994 that a concrete plan was set into motion to kick start the economy. The “Real Plan” called for new monetary and fiscal policies, that has resulted in stable and consistent growth to this day. In 2010 Brazil had one of the world’s best preforming economies with a growth rate of 7.5 percent annually.

Where is Brazil today?

Brazil has become one of the world’s largest economies, as well as one of the most resource rich nations. Nickel, tin, uranium, copper, gold and other minerals are mined and exported to dozens of countries worldwide. In 2011 36 Brazilian companies were listed in the Forbes Global 2000 (an annual ranking of the top 2000 public companies in the world) including the world’s fourth largest company, oil giant Petrobas.

Brazil is a global leader in the aerospace industry due to the nation’s extremely large surface area, it’s underpopulated land boarders and it’s huge coastline, all of which demand an advanced aerospace plan for efficient transfer of goods and individuals. Embraer (NYSE: ERJ[FREE Stock Trend Analysis]), a well known jet manufacture is based in Sao Jose dos Campos, is the world’s third largest aircraft company and Brazil’s largest exporter by total dollar amount. Embraer has a vast line of products including commercial aircrafts used by major airlines worldwide, a fleet of luxurious and modern private jets intended for corporate clients and a fleet of fighter jets and other military aircrafts used by several Air Forces worldwide.

Currently, Brazil is the world’s 11th largest oil producer .In the coming years this ranking is predicted to improve drastically due to an oil field that was discovered in 2006 near Petrobas (NYSE: PBR) containing anywhere from 50 billion to 150 billion barrels of oil. It easily could turn out to be the third largest oil field in the world, yielding a value of $5 trillion. With the discovery Petrobas immediately skyrocketed. The Brazilian government owns 64 percent of Petrobas and can use the offshore oil to completely eliminate dependence on foreign oil and avoid the type of crisis that damaged the economy in the 1970s. Revenues from exporting oil can be used to further fund government activities and re-invest in other key industries so that Brazil can continue growing in the global stage.

The mining industry is also vital to the Brazilian economy as it employs over 600,000 people. A few key companies in the sector contribute over 2 percent to Brazil’s US$2 trillion GDP. Brazil is a major producer and exporter of key commodities such as gold, coal, phosphates and iron ore, which is the largest exported mineral, combining for over 6 percent of the country’s total export revenues.