Module 1 Project: Brazil

Module 1 Project: Brazil

BMBA5031-44487-Fall

Module 1 Project: Brazil

As one of the largest countries in South America, Brazil has set precedence for other countries to follow. Until recent years its economy was growing at a fast pace and was on track to make up more than 40% of the world growth by 2025. Its political environment is the same as that of European countries following Roman law and has vast regulations in place for infrastructure. The government protects its people from foreign companies taking away from them, but also allows for growth within the country. While it does not go without its problem, Brazil has a high level of poverty and corruption within its borders.

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Globalization

As part of the BRICS (acronym for Brazil, Russia, India, China and South Africa) Brazil is one of the fastest growing economies in the world. In 2001 and subsequently in 2004 and 2011, Goldman Sachs predicted that Brazil’s economical share, along with the other countries, of world growth would could rise from 20 percent in 2003 to more than 40 percent in 2025, and that the total weight in the world economy would rise from approximately 10 percent in 2004 to more than 20 percent in 2025 (Luthans, 2018, p. 15). While other countries were hit hard by the economic recession in 2008, Brazil remained strong and was not affected by it, continuing to grow at an unprecedented pace. However, in 2015 Brazil’s economy took a hard hit by lower oil and commodity prices that ultimately sent it into a recession that it is still struggling to overcome.

Brazil has been a member of the World Trade Organization (WTO) since January 1, 1995. They are also a part of Mercosur, a South American trade agreement created by the Treaty of Asuncion in 1991 by the heads of state for Argentina, Brazil, Paraguay, and Uruguay. The goals of Mercosur include the harmonization of the economic policies of its members and the promotion of economic development (Mercosur, 2004).

According to the World Economic Database published in October 2015, Brazil’s GDP (in billions) was $657 in 2000, $2,209 in 2010 and is projected to be $2,054 in 2020. As mentioned above in 2015 Brazil went into a deep recession causing their GDP to take a hit as well and reducing their GDP. Throughout the 1990’s and 2000’s Brazil attracted a considerable amount of foreign investments, including such companies as AES and General Electric. Brazil has benefited from one of the most stable governments throughout Latin America, which has helped secure the country’s place as the undisputed economic leader of South America (Luthan, 2018, p.30).

Political Environment

In 1985 Brazil transitioned from a government controlled by the military, also known as a dictatorship, to a democracy. In 1988 the new democratic constitution took effect and provided for direct election of a president and vice-president to 4-year terms with the president being head of both state and government (“Brazil Government and History”, 2018). It is made up of 26 states with each of the states holding their own election for governor and representatives to terms varying between 4 and 8 years.

Brazil operates under civil or code law, a law that is derived from Roman law. In 2012 Brazil signed the Vienna Convention on International Contracts. Brazil has opened its infrastructure services up to private investors, this move necessitated regulatory tools be put in place. The government did so in order to secure the necessary investments, improve the well-being of the users and ensure positive results for the overall economy. Regulatory agencies monitor the delivery of public services provided by private companies. Price regulations are placed on merchandise via three different categories: maximum price, minimum price, and range of price. Medicines, health insurance, interest rates and fuel are subject to maximum price regulations; cigarettes are subject to minimum price regulations; and Notary fees, public transportation, telecommunications, electricity and water all have defined range of prices. Brazilian law has restrictions on foreign companies’ participations in internal markets. Health care and security services are    completely forbidden. Cable tv, road transportation and fishing are partially forbidden. Telecommunications and rural properties are not forbidden (Bruha, 2014). Module 1 Project: Brazil

Ethics, Social Responsibility, and Sustainability

Over the years the Corporate Social Responsibility (CSR) in Brazil has grown tremendously, but it does not go without its issues. Social inequality is one issue that Brazil faces, more than 30% of its population lives below the poverty line. Enforcement of the labor laws is difficult due to the legislation making high demands on companies and the legal system is slow and shows partiality to influential people. Corruption is high in Brazil as the culture is based on relationships and status and less on responsibility and compliance with the laws making it difficult to draw the line between corruption and relationship management.

The sustainability of the environment has been less emphasized over the years, however in the last decade a number of companies have made the environment part of their certification of their production process with ISO 14001, which sets out the criteria for the Environmental Management System (Corp. Social Responsibility in Brazil).

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In summary, Brazil has been at the top of its game in the aspect of globalization and growth both inside and outside of its borders. The overthrowing of the government and going from a military government to a democracy has allowed the people of Brazil to have more say so in the government and given the people more control. While the president still holds all of the power on both sides of the legislation, he still has to listen what the peoples needs and wants are. Brazil is one of the leading nations for corporate social responsibility, leading the way and giving example to businesses worldwide as to how and what they should be doing to help with the economy and the environment.

References

Brazil: Government and History. Retrieved from http://www.scholastic.com/browse/subarticle.jsp?id=944

Bruha, P. (23 July 2014). Regulatory Environment for Business in Brazil. The Brazil Business. Retrieved from http://thebrazilbusiness.com/article/regulatory-environment-for-business-    in-brazil

Corporate Social Responsibility in Brazil. AboutBrasil, your starting point in Brazil. Retrieved http://www.aboutbrasil.com/modules/brazil-brasil/business_brasil_business_brazil.php?hoofd=2&sub=9&art=1389

Luthans, F., Doh, J. P., (2018). Globalization and Internal Linkage. International Management, 15, 30.

Mercosur: South American Economic Organization (2004). In Encyclopedia Britannica Online. Retrieved from https://www.britannica.com/topic/Mercosur.

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