Essay Brazilian Case Study

3227 Words May 12th, 2014 13 Pages
Executive Summary
Brazil is Latin Americas largest economy and since the 1990’s has shown steady economic reforms. These reforms were necessary as Brazil suffered years of hyperinflation as high as 1000% and deficit spending. The government decided to pursue economic policies that changed the Brazilian economy into a dynamic market based system.
Some of the key policy changes made were the privatization, of state owned enterprises, deregulation that allowed for greater domestic and foreign competition, perusing regional and multinational free trade agreements and the removal of red tape associated with foreign investment. The mainstay of all these reforms was the Plano Real (Real Plan).
This real plan involved the scrapping of the old
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The Brazilian government decided that they were going to defend the real and whether this policy was in the best interest of Brazil remains a debatable point. In the following analysis,

Brazil was a slumbering giant in Latin America and years of hyperinflation and deficit spending was preventing Brazil from becoming a force in world markets. In the 1990’s the government decided to pursue economic reforms to make the Brazilian economy a dynamic market based economy.
The government based their reform policies on the Real Plan and other strict monetary and economic policies. The real plan was designed to drive down inflation and to encourage foreign investment. These economic reforms also saw the real pegged against the U.S. dollar and the government wanted the International Monetary Fund (IMF) to take notice of these reforms so that loans and funding could be obtained from the IMF to assist the Brazilian economy.
Although the real plan was successful and Brazil weathered the economic cries fairly well, sceptics and government oppositions were critical of the reform policies. The following questions that were answered by 4 STAR will evaluate whether this criticism is founded and if there were other options that the Brazilian government could have considered or if the policies that the government implemented were the correct ones.
The questions were

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