Brazil’s “Lost Decade” Needs New Economic Drivers Such as Global Value Chains

The Brazil economy doesn’t have the raw force to drive it forward. The Federative Republic GDP per capita is today back where it was in 2010; this means the people of Brazil have lost the entire last decade.  Worse yet, during the 80’s they had another “lost decade.” The current lost decade is the second time this has happened in the last 40 years. Over the last forty years, Brazil had over 20 years of zero GDP growth per capita.

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The overall economy of over 200 million people will decline by a record 5% this year, and is now forecast to rebound by 3% in 2021, according to consensus forecasts.

With emergency aid to millions of Brazilian families expiring, unemployment is at a record of 13.5 million. “From Q3 this year I think you will see a strong deceleration in the recovery.  We will have GDP growth next year due to statistical effects, but the pace of recovery will be slow,” said Guilherme Mello, economic professor from the University of Campinas in Sao Paulo state.

South America’s largest country has been affected by Covid 19 causing basically no economic growth over 10 years.  What is a real path for this largest Portuguese language nation to have an organic economic recovery?

Many studies claim the best and most successful way for Brazil to economically expand their organic economy, in an effort to employ the over 13 million jobless citizens, is for companies to aggressively adopt Global Value Chain (GVC).

It is time that the country understands the recently published research that shows using Global Value Chains have proven to be one of the single best ways to raise the country’s middle class incomes while also increasing global manufacturing, improving local lives and providing higher quality opportunities.

Business confidence has rebounded since June. However, the outlook for many industry sectors, such as oil and textiles, remains poor to bleak. So what should Brazil do to improve their long term rudderless course?

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They need to focus more on providing quality, often high labor intensive, global exports.  Possibly the best way to improve the economy, according to studies, is providing a truly global value chain (GVC) – where one’s goods could be shown globally. (For example ShopTheGlobe offers a fast growing platform) –  as it is proven GVC raises incomes, provides jobs and reduces poverty.

When countries such as Brazil begin expanding their use of GVCs, it allows each company to utilize its country’s very strong comparative advantages (for Brazil it’s very low cost employment combined with unlimited  labor). Historically, this has greatly advantaged export markets, helping many counties in achieving a global market entrance, making it easier to raise capital to improve and expand existing and growing products.

Brazil needs to increase its economy and business profitability and not always focus on more government debt, or additional debt spending for their Covid 19 recovery. It needs to improve its global position by focusing on its country-wide strengths and competitive advantages, in global free and fair trade markets. One of the best advantages for individual companies is to utilizes a strong GVC (such as ShopTheGlobe).  Strong company adoption of GVCs could help them expand on world wide platforms, thus greatly increasing their global awareness and increasing their bottom line and the need for more employment.

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