RIO DE JANEIRO – Ready or not, Brazil is rolling out the welcome mat for sports fans from around the world. As soon as the clock winds down on the final FIFA World Cup soccer match in July, the country will resume preparations to host the 2016 Summer Olympics.
But, even as Brazil steps into the international spotlight, it maintains considerable barriers to the global economy, damaging its prospects for future growth and prosperity. In a world that is constantly becoming more interconnected, Brazil risks being left behind.
Brazil has risen to become the world’s seventh-largest economy, propelled by a commodities boom, a demographic dividend, and rising consumption. Yet it ranks 95th in per capita GDP. This disparity can be at least partly explained by its 43rd-place ranking for “connectedness” in terms of flows of goods, services, finance, people, and data and communications.
Sealing itself off from the bracing effects of global competition is sapping Brazil of much-needed momentum, with serious consequences for households, most of which have experienced only modest income growth in recent years. While Brazil has halved its official poverty rate since 2003, prohibitively high consumer-goods prices and astronomical credit-card interest rates (averaging 145%) have prevented many of those who have escaped poverty from attaining middle-class lifestyles.