Is Brazil a "Self-Absorbed Giant"?

In a recent op-ed, the Miami Herald's Andres Oppenheimer discusses the challenges facing Brazil as it competes in the export market with other emerging economic powers, such as India and China.

Oppenheimer writes: "Among the reasons behind Brazil’s unimpressive export performance are the country’s overvalued currency, which makes labor costs more expensive, low productivity, high logistics costs, and a maddening government bureaucracy that increases the costs of doing business, the report says." 

So once again, we see a list of familiar problems. There's Brazil's overvalued currency, low productivity, high cost of "logistics," which I'm assuming could include Brazil's notoriously underdeveloped infrastructure, complex tax structure, and the so-called "Brazil cost," and cumbersome government bureaucracy. 

Oppenheimer believes that Brazil is too dependent on agricultural exports, particularly its export trade with China. He points out that during the past 10 years, Brazil's high-tech exports have only increased 38%, compared to 873% for China, and 389% for India. 

Since commodity prices are not expected to increase as much as they have during the past decade, and Brazil cannot rely on strong, continued growth in domestic consumption, it must look outward to find ways to maintain its impressive economic growth. 

In spite of his rather harsh description of Brazil as a "self-absorbed giant," Oppenheimer sees much that is positive. He writes that "in almost every aspect — except its foreign policy, which remains too friendly with some of the world’s worst dictatorships — Brazil should be a model for its neighbors."

He gives credit to Dilma for working hard to address issues of corruption, as well as to increase educational opportunities, in particular citing her program to encourage Brazilian college graduates to pursue advanced degrees in US and European universities.

He also supports her government's auctions of infrastructure projects to the private sector, and her social welfare programs.

But he feels that Brazil must work faster to become more integrated into the global economy, by entering into free trade agreements with the US and the European Union.  

Otherwise, in Oppenheimer's words, "it risks becoming a 'once-emerging power,'" a phrase that conjures up the old one-liner that "Brazil is the country of the future, and it always will be."

Sources: Miami Herald, Brazil Portal