When President Clinton visits Brazil next month, he'll
encounter a people brimming with optimism. In its latest
international poll, the Gallup Organization found that Brazilians
are the most optimistic people on earth. Fully two-thirds of
Brazil's population of 165 million expect this year to be better
For many Americans, perceptions of Brazil are outdated. A
recent Foreign Policy Association survey disclosed that 9 out of 10
respondents believe that the Brazilian economy is suffering from
hyperinflation, that 8 out of 10 were unaware that Brazil is a
democracy, and that 7 out of 10 wrongly assumed that Russia's gross
national product was larger than Brazil's.
Brazil, once a paradigm of central planning, is in the midst
of a significant transition as it adopts a "market friendly"
approach to economic development.
Brazil's economic expansion, now in its fifth year, is
displaying considerable resilience.
Pedro Malan, Brazil's finance minister, forecasts that by the
end of 1997 the Brazilian economy will have grown 24 percent since
1993 - a far cry from the economic slowdown of the '80s, known in
Brazil as the "lost decade." Direct foreign investment in Brazil,
which was below $1 billion in 1993, will surpass $15 billion in
Credit for the economic turnaround goes to Brazil's
president, Fernando Enrique Cardoso. While finance minister, he
crafted the ingenious stabilization program (the "Real Plan") that
has brought inflation down from four-digit levels in the early
1990s to 6 percent this year.
A massive privatization program and a repudiation of import
substitution policies have given additional momentum to the
The Cardoso administration appears resolute in its commitment
to liberalizing the Brazilian economy. It has taken the lead in
building the Mercosur common market with Argentina, Chile,
Paraguay, and Uruguay, creating a $1 trillion market that gives it
leverage in its negotiations with the US for a Free Trade Pact of
the Americas in 2005.
The stabilization of the Brazilian economy has benefited a
large and growing consumer base (50 percent of the population is
under 20) and spurred a resumption of investment in productive
assets. Brazil continues, however, to have the most skewed income
distribution in the world. Economists are concerned about both the
country's current account deficit and an overvalued foreign
exchange rate. Speaking of Latin America in general, Maurice R. …