Settled by the Portuguese in the early 1500’s, there is a distinct difference between the northern and southern regions of Brazil. The south has been primarily settled by Europeans, and has become much more industrialized than the north. The north, were the population is mostly of African decent, is more geared to agriculture, such as sugarcane farming. Most of Brazil’s population lives in urban centers, with a little less that half residing in the southern states. The educational system of Brazil is lacking, well b

ehind the standards for other industrialized countries, and while the government has provided more than adequate funding, changes in educational quality has come slowly. This is reflected in the politics of the country. Many political parties fight for power, and while few of the pubic partake in important affairs, those who hold political power are those with the most economic and social power. All of these factors have been a hindrance for Brazils economic well being.

Despite Cardoso’s initial success with the Real Plan, Brazil\'s fiscal deficit continued to be very large. To combat this Brazil turned to tight monetary policy, which in turn led to high interest rates, bankruptciesm and unemployment. The Asian and Russian crisis make investors more aware of risk within Brazil, and in January of 1999 questions about whether Brazil would be able to pay off debt heightened. Foreign investors left the country, and the Central Bank no longer used reserves to back the real. The value of the real dropped, speculation on the currency increased, and Brazil found itself in a crisis much like the Asian nations and Russia had felt only months before. IMF attempts at reviving Brazil’s economy were unsuccessful and Brazil’s economic state affected other Latin American countries as well. Fears of higher interest rates, and lower growth affected Argentina, Mexico, and Venezuela.

The impact of the plan was seen almost immediately. Within the first year inflation dropped dramatically and by 1998 it was less than 2%. The currency change also allowed foreign companies to convert and measure money against the U.S. dollar. Brazil was now viewed as economically stable since it had its currency and inflation under control. That, along with many comparative advantages such as an enormous population, a fast growing internal consumer marketplace, and free trade led to foreign money pouring into the Brazilian economy, at never before seen rates. By 1998 capital inflows, international reserves, and FDI all saw enormous increases, FDI alone nearly doubled between 1997 and 1998. By all accounts Cardoso’s plan was received positively by the foreign markets.

Some topics in this essay:
Central Bank, Real Plan, Settled Portuguese, Latin America, Asia Russia, Monetary Fund, Asian Russian, War II, Collor Plans, Direct Investment, foreign investors, real plan, brazil’s economy, foreign companies, economic crisis, central bank, free trade, cardoso’s plan, attract foreign, foreign investors left, brazil country, latin american countries, currencies pegged dollar, success real plan,