Brazil's "resource curse." Part 2
The countries that did not face the "resource curse" were the most successful in developing their economies.
Of the countries that have joined the Organization for Economic Cooperation and Development since 1995 - the Czech Republic, Hungary, Poland, South Korea, Slovakia, Chile, Slovenia, Israel and Estonia - only Chile is a major exporter of raw materials. Since the colonization of Portugal in the 16th century, Brazil's economic development has had a series of ups and downs. It all started with cesalpinia, a tree used to make dyes, then sugar, gold, rubber, cotton and coffee. Beginning in the 1970s, Brazil transformed vast savannas into grasslands where soybeans began to be grown, making great strides in tillage and pest control. Brazil worked hard to break its dependence on commodities through industrialization in the 1950s and 1960s.
The government at the time was influenced by the writings of the Argentine economist Raúl Prebisch, who argued that the price of raw materials fell below the price of manufactured goods. Even decades after combating the "resource curse," Brazil remains the largest exporter of iron ore, soybeans, sugar cane, coffee and poultry, and its customer base continues to grow. In 2009, China overtook the U.S. as the largest customer.
Rising commodity prices have lifted Brazilian stocks 2.73 times, with companies such as Vale SA, the world's largest iron ore producer, and BRF Foods SA, the largest poultry producer, benefiting from higher prices. Brazil's state-controlled oil company Petroleo Brasileiro SA is the fifth-largest oil company in the world.
To be continued...
Based on foreign press for ForTrader.org