About thr emerging economy of Brazil

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Emerging economy of Brazil
Abstract
This essay shows two aspects in the emerging economy of Brazil-The use of abundant resources and investments in the infrastructure and insurance sector and its rapid growth rate in the last decade. It indicates the remarkable and analysis of the increase in the Gross Domestic Product; moreover it also discusses factors that favor or resulted in the making of the country’s economy a world market attractive to foreign investors and insurers.
Keywords: Growth, investment, infrastructure, and insurance.
Introduction
An emerging economy illustrates a country’s economy that is developing to a more advanced, majorly through industrialization and rapid growth. Brazil has become one of the most vibrant world’s economies. In the recent previous years, the country has attracted numerous records in inward investment and international financial press plaudits. Its emerging market status is growing out rapidly thereby making the country be among the developed countries in the world. The country has shown remarkable efforts in rapid growth, fiscal responsibility, and comparative price stability. Brazil’s economy performance has transformed raising the capital flow and attracting a Global total of 4.3% in 2010 (UNCTAD). The favorable current growth conditions in Brazil are believed to have their origin in market reforms and macroeconomics. These reforms comprised of banking reform and the economy being opened to investment and foreign trade
On November 14, 2009, Brazil’s Economist conducted a survey over the BRIC (Brazil, Russia, and India and China countries showing that the implementation of social-economic policies among the investors led to higher ranking in the macroeconomics index (Wythe).

The GDP growth at the beginning of 2010 was 4.5 percent that was preceded by an increase to 7.5 percent in the second half of the year (Kose). The estimates conducted by the International Monetary Fund (IMF) indicates that Brazilian Economy expanded by 7.1% in 2010. The increase in the growth helped in reducing unemployment rates in the country. At the end of the year 2010, the national statistical agency IBGE indicated decrease of formal unemployment rate by 5.7%. This was a historic low rate in the economy of Brazil. The factors that led to the favor of Brazilian rising economy were its’ links with China which made its market more attractive and impressive for the investors as it led an increase of trade to $36 billion in 2010 (Wythe). Besides, the rate of investment could project to 21.5 percent of GDP in the following years according to evaluation of the National Bank of Social and Economic Development (BNDES).
Brazil is a federal republic and has major industries such as aircraft, lumber, iron ore, chemicals, motor vehicles, other machinery, and equipment. Its natural resources such as agricultural, mineral and human resources have led to great improvement in its growth making them be at par with countries such as those of the United States and Canada. One of most growth aspect in the country Brazil was the investment on the infrastructure. Improvement and expansion of infrastructure have been a vital aspect of investment in a country like Brazil, which is emerging. Since the 1990s, Brazil’s transportation network, building and shipment facilities lagged behind hence the need for investment in the area of infrastructure. In the year 2007 the country established Growth Acceleration Programme (PAC) which was meant to initiate a swift change in the country’s GDP.
In the period 2010 to 2013 the investment in the infrastructure rose up to BRL 311 billion as stipulated in the BNDES statistics. The rate of investment increased by 10 billion euros when the country was selected to host the 2014 soccer world cup to facilitate the preparation of the event (Wythe). By 2014, there was a rapid growth in infrastructure than it had invested the former 30 years. The spending on the infrastructure fosters growth and brings s a positive effect on local GDP growth. The areas of infrastructure investments include; the roads, rail, ports, air, water, and sanitation. In the road sector, whereby in 2011 Brazil had the 4th largest road network in the world; this was a great achievement for 18% of the road to be paved in the Brazil according to the World Bank study. Rail transportation is solely the preserve of freight unlike China and India the other emerging market economies. The freight is wholly controlled by the iron ore accounting to 79% of the total rail cargo. In the small network of the commuter lines of Sao Paulo and Rio de Janeiro majorly uses the passenger rail.
Since the economy of Brazil is highly dependent on natural resource products exports, its port infrastructure though suffering from capacity limitation has greatly being improved by the investment on the port in this country was around 67billion BRL as planned by the BNDES in a period of 3 years that is from 2011-2013. Brazil has greatly and heavily invested large projects in the dam of Rio Madeira and Belo Monte for the production of hydroelectric purposes. Its population totaling to 80% has access to improved water and sanitation facilities (Waring). Domestic sources of savings have been developed on a larger scale as the corporate investment profits in Brazil. These has led to incremental in aspects such as the welfare savings, issuing of paper having no longer terms and capital market development, these measures are aimed at overcoming the obstacles in the growth opportunities for every investor who has been attracted by the impressive interest rates of Brazil and its stock market of BM and FBovespa which is maturing. The country has some of the world largest companies in the world and its stock market which is the largest in the world.
Another aspect of emerging economy is in the insurance industry. When the country was hosting the 2014 world cup games in which 12 cities where involved. The scenario created large room for the insurance industry market. Huge energy projects are brought to a conclusion so as to target a higher number of tourists who had visited the country in anticipation to catch a glimpse of the games. Investment in the airport in order to facilitate the transportation industry was BRL 5.5 billion which was targeted for 13 airports in the twelve cities. Their main investments were mainly in logistics and football stadiums. There has been unprecedented growth as a result of
Foreign investments in the insurance industry have been attracted by the country’s growth scenario. In 2009, the superintendence of private insurers(SUSEP) whose role is to regulate the sector reported to have registered operation of capital injection exceeding fifty in number. The company’s net proceeds grew by 14% as recorded in a research study conducted by the Siscorp consultancy (Baer). The insurance sector that represents a vibrant market and is undoubtedly important part of this healthy industry has strongly expanded and established a remarkable level of maturity in the Brazilian economy. Brazil’s functional and solid, principled fundaments in the sector led to optimum gains in profits; product offers were greatly diversified, and an attractive technological base was put in place and an established structure of risk management. The excellence in the insurance industry in Brazil contributed to the present as the market was attractive to all international agents. In the year 2010 the country had 20 percent increase as it allowed entry of about 100-reinsurance to benefit from the growing market that has been growing at two- figure rates in the last decade. The large infrastructure project in the land of Brazil is a strong target by the commercial insurance. The opening of the market to foreign insurer as well as the privatization program has made a great impact on the insurance market. 72% of the companies regulated by the SUSEP are mainly the insurers. This lead to an increase in the gross domestic product(GDP) in Latin America at approximately about $ 1.5 trillion and its economy is expected to increase its growth rate to 4% per year (Waring). In the year 2008 the reinsurance market was easily accessed by the foreign investors in order to end monopoly in the market.
In conclusion, an increase in investments in the infrastructure and the insurance sectors create a great impact on the economy of Brazil. More and more projects are still in progress as an indication of a rapidly growing economy in the world. The economy of the Brazil has greatly shown remarkable achievements in many spheres of its economic activities. These have been triggered by the abundant resources and the optimistic feature which have resulted in sustainable growth. The Brazil being referred to as the engine of Latin America as one of the most dynamic economies emerging in the world has attracted many investors and insurers. The poverty level in the country has declined greatly as a result of increase in growth opportunities in the market. This has led to high rate of decline of the unemployment thus the Gross Domestic Product is relatively increasing.
Work cited
BIBLIOGRAPHY Waring, David. “Brazilian Economy: Here’s What You Need to Know.” 14 March 2013. Forex News. 29 11 2015 <http://www.forexnews.com/blog/2013/03/14/brazilian-economy/>.
Baer, Werner. The Brazilian Economy Growth and Development. 5th ed. Westport, Conn.:
Praeger, 2001.Print.
Kose, M. Ayhan, and Eswar Prasad. Emerging Markets: Resilience and Growth amid Global
Turmoil. Washington, D.C.: Brookings Institution, 2010. Print.
Wythe, George. Brazil, an Expanding Economy,. New York: Twentieth Century Fund, 2010.
Print.