LOADING

Type to search

Motley Fool, USA, November 23, 2007

Share

Profit From the Next Economic Superpower

Tim Hanson
November 23, 2007

Let's play God for a moment. Let's design a country with enormous economic potential -- what characteristics shall we grace it with? How about:

  • Vast natural resources.
  • Large population.
  • Temperate climate.
  • Arable land.
  • Long coastline.

Which potential business utopia has these traits in spades? Not the U.S., not China, not Russia, not India. Winner is: Brazil.

Alas, here's where playing God ends and mortal work begins. And the mortals in Brazil have done a poor job over the past 40 years of turning the country's blessings into sustained economic growth.

Pity the past
A September 2006 World Bank report compared the investment climates in Brazil, India, and South Africa, and described how bad it's been: "Over the past 25 years, economic growth in Brazil has demonstrated substantial volatility around a relatively low mean."

That's right. Slow and wildly unpredictable growth. Could there be a worse investment?

The culprits -- as identified by Brazilian business managers and reported by the Bank's Investment Climate Assessments -- are clearly human inventions:

  • High tax rates
  • Macroeconomic instability
  • Political uncertainty
  • Cost of finance
  • Corrupt tax administration.

And while the government is undertaking some reforms, the Doing Business 2008 report ranked Brazil 122nd in the world for "Ease of Doing Business" -- down a spot from 2007. It's gotten so bad, in fact, that "tax complexity bedevils small business to such a degree that it drives most under the table," according to the Latin Business Chronicle.

Original link: http://www.fool.com/investing/international/2007/11/23/profit-from-the-next-economic-superpower.aspx

To read this post, you must purchase a Latin Trade Business Intelligence Subscription.
Scroll to top of page