Economic Development of Canada and Brazil: similarities and differences illuminated
This paper looks into the economic development of Canada and Brazil. It will also explicate on what are the similarities and differences of the two countries. Lastly, the reason of this similarities and differences are identified.
Economics of Canada
As a member of G7 group of leading industrial countries, Canada embodies a high standard quality of living, outstanding infrastructure, highly educated and skilled workforce, and reputable and successful trading nation.
Canada takes pride of having a strong economy. Historically, it recorded a consistent performance characterized by growth, low inflation, stable unit Labour costs, improved cost competitiveness, record exports, and a healthy level of business investment since 1994 up to present.
In terms of per capita purchasing power, Canada established its place among the G7 countries with most developed economies worldwide. It continues to maintain one of the world’s lowest inflation rates. Acknowledge as one of the longest and most stable expansions of the post-war era, Canada recorded the eight consecutive year of economic growth in 1999. The Gross Domestic Product (GDP) reached $949.4 billion (or $31, 054 per capita). Its GDP accelerated to 4.2 percent from 3.1 percent in 1998.
The Canadian Dollar, as the country’s currency, continuously recovered from a historic low of US$0.638 in August 27, 1998 due to the global economic and financial crises. Today, it gains its progressive appreciation among other currencies in the world.
In the job market, the openness and free flow of trade and investment contributes to the remarkable increase of job creation. In 1999, job growth documented a significant figure of 3.0 percent and considered the highest rate since 1988. On December of the same year, unemployment dropped to 6.8 percent making the lowest level since April of 1976. Today, the job market is increasingly prosper and has not created the onslaught of inflation.
Specifically, Toronto falls under Ontario who has a diversified economy with potency across a variety of specified sectors. The Ontario economy marked its increased productivity when the slowed economic growth in 2003 (1.3 percent) rebounded to 2.3 percent in 2004. The real GDP is predicted to expand and accelerate from 2.0 percent on 2005 up to 2.8 percent in 2006. Employment in Ontario was 6,316,000 in 2004 with 108,000 jobs produced. Inflation was 1.9 percent in 2004 and forecasted to reach an average of 1.9 percent in 2006 as to compare with 2.1 percent in 2005.
Canada’s superpower economy pushes a steady course as it goes onto most modern perspective of prosperity using new paradigms.
Economics of Brazil
Over the past four decades Brazil has experienced periods of rapid economic growth as measured by GNP. Over the same period there have been problems of considerable poverty, rising unemployment and extreme income inequality.
Brazil occupies nearly half the total area of South America. About one half of Brazil is covered by forests, including the largest rain forest in the world. Brazil is the most populated country in Latin America with more than 170 million people in 2000. More than 75% of the population lives in urban areas where growth has been very rapid. Brazil is the fifth most populated country in the world. The urbanization has aided the country's economic development but along with this has come the growth of huge slums e.g. the faceless of Rio de Janeiro. Most of the slum communities lack sewage systems, electricity and clean water and these settlements often account for more than 60% of the total urban population. In addition the cities in Brazil are unable to create enough jobs to absorb such a large population. Consequently unemployment is high. In Sao Paulo 43% of its urban Labour force are in the informal economy.
Income inequality in Brazil is amongst the highest in the world. At times Brazil has had a booming economy. However, during the boom years Brazilians have benefited very little. While some people make huge profits thanks to the low industrial wages while urban workers are left in poverty. This is evident from data on income distribution, e.g. the poorest 20% of the Brazilian population receives only 2% of the nation's income while the highest 10% receives 48% of the income and the top 20% accounts for fully 64%.
Brazil is a newly industrializing country with industrial development largely located in the south eastern states of Rio de Janeiro, Sao Paulo, Parana and Rio Grande do Sul, but is now expanding to the northeast and the far west. Industry accounts for nearly y32% of Brazil's GNP and 54% of exports. The country has a large and increasingly sophisticated industrial base, ranging from basic industries such as steel chemicals, and petrochemicals to finished consumer goods and extensive military hardware. It is also one of the world's largest producers of hydroelectric power and has begun working with nuclear reactors. The agricultural sector incorporates 42% of Brazil's population, accounting for 8% of its GDP and almost 40% of its exports. In 1953 coffee formed 80% of Brazil's exports while by 1973 this had fallen to 20% with other products such as cocoa, soy, and iron ore becoming dominant. Brazil is still a major player in coffee exports and cocoa and soybeans. It exports sugar, meat, cotton and orange juice concentrate. Brazil has tried to widen its agricultural exports. Brazil is fortunate to have substantial mineral resources.
Brazil faces major economic problems, e.g.
Þ Poverty: see figures for those living on less than $1 a day. Two thirds of the very poor live din rural areas where the richest 1% of the landowners own 44% of the arable land and more than 50% of the farmers must toil on less than 3% of the land. This huge inequality has recently led to sometimes violent reactions by the 'landless movements'
Þ Inflation: This has been a persistent problem in Brazil
Þ Declining real incomes: during the 1980s the Brazilian economy stagnated with no real growth while wages fell by 30%. A recovery in the 1990s was cut short by a financial crisis in 1998 followed by the global slowdown from 2000.
Þ Foreign debt: in 1999 Brazil's foreign debt stood at $245 billion, the highest of all developing nations. The stock market collapse in 1998 combined with renewed capital flight caused the debt to increase from its already high levels.
Þ Trade balance: In 1984 Brazil had a record trade surplus (exports minus imports) of $13 billion, which was down to $9 billion in 1994. This surplus turned into a $3.5 billion deficit in 2000.
Þ Large State-Owned Sector: The state continues to playa dominant role in the economy. State=owned companies accounted for 8% of Brazil's GNP and more than half of the government's budget deficit of $150 billion in 1997. The state also runs private businesses with extensive regulation such as price controls and wage policies. These have declined in recent years.
Þ Stringent Import Barriers: until recently no product could be imported if it was also produced domestically even if the domestic price was higher. A refusal to recognize patents has until recently discouraged foreign investors. Tariffs on imports are still relatively high although they have come own in recent years.
Þ Environmental Damage: the tragic reduction of the rain forest is a serious world wide crisis.
Similarities and Differences
Difficulties with Alternatives
But we mustn’t think that any alternative to capitalist economic relationships will automatically be better. For example, the apartheid government established many economic arrangements which were not capitalist but which led to widespread poverty and racially-based oppression. Our alternative must develop a system which benefits the people, and does not simply develop a system which is non-capitalist.
Think of gender relationships and household Labour. Production in the household meets many basic needs (e.g. childcare, health care, care for the sick and elderly). Household production does not directly generate profits and often it does not involve a market exchange. Therefore, in many respects, household production is an alternative to a capitalist system. But this production relies on the unpaid labour of women. And it places women and children at high risk for poverty, so it is not a socially desirable alternative.
State Ownership and Control
State ownership and control -- in which the government becomes the dominant player in the economy – has been a key issue in ideas about alternatives to capitalism. The state can intervene to ensure access to basic goods and services, to create a more equal distribution of income, and to lower the rate of unemployment.
But if the state controls all this, it won’t necessarily produce these outcomes. For example, the state could act in its own interest and discount the interests of the public. The state could also exploit workers just as a capitalist exploits workers.
So when we look at alternatives the key test is -- do these economic relationships have desirable social and economic outcomes? Governments can play a major role in such an alternative system, but they might form one part of a more complex, and more socialist, economy.
Reflection
To build economic alternatives to a capitalist system, we need to transform some or all of these characteristics. For example, establishing co-operatives or community-owned firms is an alternative to the capitalist pattern of ownership. If we create a system which produces for people's needs and not for profits we are also challenging capitalist relationships. Or making sure that everyone receives a basic income instead of depending on wages alone, will also change the nature of a capitalist economy.
We already have some alternatives to a completely capitalist economy in Canada and Brazil. Government provides education -- production is not for profit and the service is not sold on a market.
So if we can recognize and protect the alternatives we already have in some industrialized nations, then we are making an important step in developing a socialist economic strategy.
If we want to develop an alternative economic strategy we must analyse very carefully:
· what alternatives already exist which can lay the foundation for a future socialist society
· whether the alternative that we propose will provide what people want, if it will benefit the people. If it sounds socialist but it is not satisfying people’s needs then it is not a desirable alternative.
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