Brazil

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Throughout the last two decades, Brazil's ranking has been low. In 1997, Brazil ranked 85th among 123 countries. Its relative position in the world has been more or less unchanged throughout the period.

The large share of government enterprises is a sign of the government's control over important sectors of the economy. Furthermore, monetary policy remains poor, even following a sharp decrease in annual money growth and the accompanying decrease of the inflation rate from 2,506.5 percent in 1990 to 77.6 percent in 1995 to 7.9 percent in 1997. The high level of inflation variability implies danger.

Remarkable improvement has been made in avoiding negative interest rates: in 1995 the rating was still 0.0 and by 1997, 8.0. The field of government consumption shows a slight improvement, a sign of further reforms under Mr. Cardoso. The share of transfers remains high despite recent efforts to cut the budget. One positive note has been the relaxation of price controls during the 1990s. Brazil's rating in this area rose from 0.0 in 1990 to 8.0 in 1997.

While protectionism remains at a high level, Brazil has moved toward trade liberalization during the 1990s. The mean tariff rate was reduced from 30 percent in 1990 to 11.9 percent in 1997. The standard deviation of tariff rates followed a similar pattern. As the world's 9th largest economy and the main player within the MERCOSUR, reforms of the trade sector would be advantageous for all parties involved.

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Last Modified: Monday, January 10, 2000