Group work in International Trade (March 2015): PESTLE model should help us to evaluate the country Brazil in terms of its attractiveness as a trade partner country. My part: "Future Development" of Brazil (Slide p. 35) In course of the presentation, you get familiar with Brazil's politics, its economical situation, social environment, legal issues and shortly with its external environment. The research was conducted in March 2015.

1. BRAZIL
Group work

2. Outline
1. Introduction
2. Basics
3. PESTLE
1. Politics, Economy
2. Social, Technology
3. Legal, Environment
4. Future Development
5. Conclusion
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3. BASICS
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4. Basics: Introduction
Source: McKinsey Global Institute (2014). Connecting Brazil to the
world: A path to inclusive growth.
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5. Basics: History of Imports in Brazil
• Nowadays Brazil is open to international market,
but it has not always been like that. During the
Brazilian Dictatorship, the country passed through
a period of opening market and through a period
of almost complete closure.
 Let’s take a look at the brief history and phases
of imports in Brazil
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6. Basics: The Opening Phase (1964 - 1974)
• The Brazilian military coup occurred in 1964. The new
government main priority was to reverse the high inflation rate
to reduce the public deficit. The first years of military
dictatorship embrace foreign investments and loans in order to
expand the Brazilian economy. Imports were allowed in the
country, because the national production was not developed
enough and neither had all the products necessary to supply
the domestic demand
• The regime projected the first PND, the National Development
Program, which established an equilibrium between the private
sector and public sector. Between 1969 and 1973 economic
growth in Brazil reached exceptional levels. This period
became known as the "Economic Miracle”.
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7. Basics: The Closure Phase (1974 -1979)
• Due to the first oil crisis in 1973, Brazil’s government launched the second
PND in 1974, in order to help the Brazilian economy. The new program
established the development of Brazilian national industry, the
maintenance of the first PND, new foreign loans, search for new export
markets and the attempt to substitute imports.
• The national alcohol program also known as “Pró Alcool” was launched in
1975, with the purposes of substituting fuel derived from oil. The use of
biofuels produced in Brazil diminished the Brazilian dependence on
imported oil.
• The Petrobrás discovery of new oil fields in Rio de Janeiro, and the
government authorization to explore it, pushed even more the closure of
the military regime to foreign imports. In 1976 the import of automobiles to
Brazil was prohibited by the government.
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8. Basics: The Lost Decade
•The international context in the end 70s and the beginning
of the 80s was extremely unfavourable for Brazil. The
exorbitant oil prices in the global market, promoted by the
second oil crisis, in 1979, increased the Brazilian oil
import prices as well and, in consequence, the inflation
raised too.
•João Figueiredo's government (1979 to 1985) introduced
import restrictions and price controls. The foreign and
domestic investments declined significantly, compromising
the pace of progress of the economy compared to
previous levels.
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9. Basics: The End of Dictatorship
•In 1985, Figueiredo's government was deposed and the
democratic period of Brazil politics began. In 1988 there
were already moves to open the Brazilian market. The
most luxurious cars came first, since the import tax rate of
85% was unfavorable for cheaper models, which would
not be able to compete with nationals automobiles prices.
•Accumulated inflation remained in 1782.90% in 1989,
year in which 760,000 cars were in Brazilian market. It
was only in 1990 that car imports were finally allowed,
which has initiated the Brazilian market opening process
to imports.
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10. Basics: The End of Dictatorship
• The Real Plan, launched in 1994 in order to stabilize the national
currency, promoted a policy of a valued Brazilian Real against the
American dollar. This allowed great momentum in imports. From
1995 to 2000, the imports resulted on a deficit of USD 24.1 billion
in the Brazilian trade balance, against a surplus of USD 60.4
billion, from 1990 to 1994.
• Brazil needed, from 1995 to 2000, new foreign loans and
investments, to cover the trade balance deficit. The external
dependency was always increasing and this situation only
reverted due to the pressure of the international market. The
adjustment in the Real value in 1999 and in 2002 invigorated
exports. In 2000, according to the World Trade Organization,
Brazil participated in world trade, with 0.9% of imports.
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11. Basics: Imports
• Imports in Recent years
In 2010 the total value of imports in Brazil was USD 187.7 billion. The main
products were machinery, electrical and transport equipment, chemical
products, oil, automotive parts and electronics. The import partners were
mostly the US (16.12% of total imports), China (12.61%), Argentina (8.77%),
Germany (7.65%) and Japan (4.3%).
• From 1959 until 2013, Brazil imports averaged USD 3402.64 million reaching
an all time high of USD 22262.66 million in August of 2011 and a record low
of USD 67 million in March of 1965.
• Raw materials and intermediate goods (45% of total exports), capital goods
(22%), consumption durables (10%), oil (6%) and motor vehicles (4%) are the
Brazilian main import products. While the main import partners are: China
(15%), United States (14.6%) and Argentina (7%), and other countries such
as Netherlands, Japan, Germany and India.
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12. PESTLE:
POLITICALAND ECONOMICAL
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13. PESTLE: Politics
• Federal Government of Brazil
• Democratic Republic
• Executive – Legislative –and Judicial
Dilma Rousseff
Head of State and Head of
Government of Brazil
(Since 1 January 2011)
Michel Temer
Vice President of Brazil
• Executives:
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14. PESTLE: Politics
• Legislative:
Bicameral ( 2-chambered ) of National Congress:
Upper House
• 26 states
• 81 seats
• 8 years
Federal Senate Chamber of Deputies
Lower House
• 513 deputies
• 4 years
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15. PESTLE: Politics
• Legal System: Civil Law – by Portuguese
• Independence day: 7 September 1822
• Pollitical Parties:
• Brazilian Democatric Movement Party (PMDB) – 20 seats in Federal Senate – 78 seats in
Chamber of Deputies
• Worker’s Party (PT) – 12 seats in Federal Senate – 86 seats in Chamber of Deputies
• Progressive Party (PP)
• Brazilian Social Democracy Party (PSDB)
• Democratic Labour Party (PDT)
• Brazilian Labour Party (PTB)
• Democrats (DEM)
• Party of the Republic ( PR)
• Brazilian Socialist Party (PSB)
• Socialist People’s Party (PPS)
• Communist Party of Brazul (PCdoB)
• Green Party (PV)
• Brazilian Republican Party (PRB)
• Party of National Mobilization (PMN)
• Progressive Republican Party (PRP)
• Social Liberal Party (PSL)
• Social Democratic Party (PSD)
• Etc.
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16. PESTLE: Politics
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17. PESTLE: Economical
World rank in terms of GDP
Population in the world
Land in the South America
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18. PESTLE: Economical
• Brazil Agriculture:
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19. PESTLE: Economical
Top Exports list :
• 1. Iron Ore
• 2. Oil Seeds
• 3. Mineral fuel and
Oil
• 4. Poultry Meat
• 5. Machinery
Top Import list:
• 1. Petroleum Oil
• 2. Motor Vehicles
• 3. Vehicle Accessories
and Parts
• 4. Medicines
• 5. Fertilizers
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20. PESTLE: Economical
Source: Statista
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21. PESTLE: Economical
Source: Statista
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22. PESTLE: Economical
Source: Statista
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23. PESTLE: Economical
Source: Heritage.org
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24. PESTLE: Economical
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25. PESTLE:
SOCIALAND TECHNOLOGICAL
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26. • Brasil is the largest country in South America and fifth
largest country in the world.
• Official Language: Portuguese
• Population: 202 656 000 people
• Urban distribution: Brasil’s major urban areas are:
• Sao Paulo: 19.924 mp
• Rio de Janeiro: 11.96 mp
• Belo Horizonte: 5.487 mp
• Porto Alegre: 3.933 mp
• Recife: 3.733 mp
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mp = million people
PESTLE: Social

27. • Age and sex distribution in Brasil:
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PESTLE: Social

28. PESTLE: Social
• 20% of the population lives under the poverty line,
however middle class in Brazil is growing.
• Despite of their actual rank (95th) in the world in GDP,
Brazil is the world’s seventh-largest economy.
• They still have to create better-quality jobs and raise
purchasing power by lowering price in consumer goods.
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29. • Brasil is a world leader in petroleum exploration in deep water,
also leads researches on 1st and 2nd generation biofuels. 80%
of the vehicles sold in Brazil are equipped with biofuel motors.
• Brazilian automation system is the most advanced in the world
according to the World Bank and IMF (International Monetary
Fund).
• Brazilian telecommunications system and digital TV are
amongst the most advanced in the world.
• Another technological advance are their voting machines for
Elections, this machines allows 140 million people to vote and
so Brazilian elector can know the results in a brief time.
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PESTLE: Technological

30. PESTLE: Technological
• Brasil expends between 1.16 and 1.21% from their GDP
in Research and Development.
• A great number of startups have recently developed inthe
country. Also a lot of technological IT providers stand in
the country as: Stefanini, TIVIT, Sambatech, Apdata,
Inmetrics, Stone Age, Dclick, among others startups and
national companies.
• Is expected that these companies increase their revenues
and expore foreign markets.
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31. PESTLE:
LEGALAND ENVIRONMENTAL
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32. PESTLE: Legal
• Civil Code
• Most common types of companies:
- The Corporation (S.A.)
- Limit Liability Quotas Company (Ltda.)
• Companies are treated as separate legal personalities
• Creditors are generally not able to seize partner assets to
pay off debts
• Registration on foreign investment in media, finance,
insurance and public health
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33. PESTLE: Legal
• Legislation varies across states thus increases complexity
and compliance costs
• Although senate suggested tax reform, 33% of GDP is tax
• It takes 120 days to open a business
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34. PESTLE: Environmental
• Environmental policies to stop deforestation and emission
• Compelled industries to initiate eco-friendly combustion
technique
• According to Kyoto Protocol Brazil is one of the largest
emitters of greenhouse gases.
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35. FUTURE DEVELOPMENT
Anton Wischnewski

36. Future Challenges
1. Productivity growth
2. Tax burden ("Brazil Cost”)
3. Integration into global markets
4. Focus on key commodities
5. Expand infrastructure
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37. Future Challenges: Income Growth
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38. Future Challenges: Poverty
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39. Future Challenges: Tariffs
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40. Future Challenges: Taxes (Brazil Cost)
• Need to lower the “Brazil cost” (Tax)
Regulatory burden:
• Brazil ranks 116th out of 189 countries in terms of its regulatory
burden.
Taxation category
• Brazil ranks 159th in the world.
Note: Time per year needed to prepare and declare taxes
• Brazil 2,600 hours (almost 4 months) / each year
• China: 318 h (13 days)
• Indonesia: 259 h (11 days)
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41. Future Challenges: Global Integration
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42. Future Challenges: Infrastructure
• Brazil’s investment in
Overall infrastructure:
• 1970: 5.4% of GDP
• 2000: 2.1% of GDP
Transportation infrastructure:
• 1970: 2% of GDP
• 2000: 0.5% of GDP
• Now: 1.5% of GDP (Global average = 3.8%)
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43. Future Potential
1. Economic growth
2. Deeper integration into global markets
3. Emerging Middle Class
4. Young work force
5. BRICS Bank
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44. 43
Future Potential: BRICS Bank
Source: The BRICS Post (2014). India follows Russia, ratifies $100 bn BRICS Bank. URL:
http://thebricspost.com/india-follows-russia-ratifies-100-bn-brics-bank/#.VPgyFbPF8_N

45. Future Potential: BRICS Bank
• Established: July 2014
• Goal:
The BRICS Bank launched last year will fund infrastructure
projects in Brazil, Russia, India, China and South Africa, and
challenge the dominance of the Western-led World Bank and
the IMF.
• Requirements:
The bank’s creation will have to be ratified by the parliaments
of the individual BRICS countries.
• Start-up capital: $50 billion / each (expanded to $100 billion)
• Currency: n/a (not $US Dollar)
• Start period: end of 2015 (expected)
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46. Future Potential: BRICS Bank
Ratification
• Russia: ratified (February 2015)
• India: ratified (February 2015)
• Brazil: not ratified
• China: not ratified
• South Afrika: not ratified
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47. THANK YOU!
Group work

48. References
• McKinsey Global Institute (2014). Brazil’s path to inclusive
growth. URL:
http://www.mckinsey.com/insights/south_america/brazils_
path_to_inclusive_growth
• The Economist (2013). Has Brazil blown it? URL:
http://www.economist.com/news/leaders/21586833-
stagnant-economy-bloated-state-and-mass-protests-
mean-dilma-rousseff-must-change-course-has
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