Creating and Sustaining Growth In the Transition Economy of Brazil

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Once the centrally planned economies embarked on the road to the open market, they logically look up to the western economies of the US, UK and other European citadels of capitalism as models. The problem is that the criteria for predicting growth, as well the factors that create and sustain development, are inherently different in the economies that were held in the grips of socialism and militarism for nearly a lifetime.


In 2005, for example, the Goldman Sachs consulting group developed the Growth Environment Scores based on an assessment of companies in 170 countries as regards macroeconomic conditions, social and environmental issues, governance, corruption and other issues. The transition BRIC countries (Brazil, Russia, India and China) placed high on the list. China was on top followed by Russia, Brazil and India, in that order (Rybinski, 2006). This means that these previously planned economies are making big strides in their democratic transition to match the growth of the countries that have a developed market in place for a long time.
In other cases, the transition economy of South Africa was caught flat-footed when its rand stumbled in 2005, Hungarian bonds were sold out, and the Turkish stock market crashed 41 percent in dollar terms in seven weeks (IFC, 2006). Their policy makers failed to predict these events so as to create the necessary safety nets. South Africa is moving to a market economy after years of the contentious apartheid, Hungary was once a member of the communist bloc, and Turkey is shaking off monarchial rule.
The progress of any economy is measured by the amount of the foreign direct investment (FDI) tha ...
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