Brazil's "Resource Curse." Part 3

The development of the productive sector in the economy lags behind the commodity sector, which hurts exporters by making Brazil's goods expensive.

Last week, the government pledged to take all necessary measures to shield the economy from the "monetary tsunami" of weak currencies in Europe and the United States. Finance Minister Guido Mantega said he would try to protect Brazilian industry with tax breaks for local producers and help the textile industry. "The country's commodity sector has to shrink by 20 percent to become stable," said Jim O'Neil, chairman of Goldman Sachs Asset Management in London. Even with rising commodity prices, Brazil slipped from 73rd to 84th place out of 187 countries in the U.N.'s human development rankings last year. The ranking is based on GDP, health and education levels.
The upcoming oil boom has already sparked intense debate in Congress over how Brazil's oil-producing regions are going to share profits with the rest of the country.
"If Brazilians use income relatively wisely and invest for the long term, the outlook is very good and the 'resource curse' can be avoided," said Professor Anthony Pereira, director of the Brazil Institute at King's College London.

Based on foreign press for ForTrader.org