Are Brazil Nuts What They’re Cracked up to Be?

Brazil is known for being the world’s largest producer of ethanol as a fuel additive – from sugar cane – a strategy that was focused on weaning this South American giant from imported oil: “[The] military dictatorship in charge in 1975 instituted an ambitious ethanol program out of fear that the country was too dependent on foreign oil, doling out subsidies to sugar-cane farmers and requiring gas stations to install ethanol pumps. Decades later, 40 percent of the nation’s fuel supply comes from ethanol.” Washington Times, March 20^th. Very important for the sixth largest nation on earth (based on population, estimated at just over 200 million).

But there’s been this little “change” in the nature of Brazil’s economy over the last five years… the reason the world’s super-economic growth countries are referred to as the BRIC nations (Brazil, Russia, India and China)… with an emphasis on the “B.” You see, late last year Brazil discovered a massive off-shore oil reserve: “The volume of recoverable oil belonging to the nation could vary from 3.7 billion to 15 billion barrels, with the most likely estimate being 7.9 billion barrels,” the national petroleum agency (ANP) announced in a statement last December.

Wow, what excellent news for Brazil. Except Brazil had already discovered another off-shore oil reserve of about the same size – known as the Tupi oil field – in 2007. Brazil could easily become the tenth largest producer of oil. As we reel from job stagnation, rising debt, a collapse of consumer confidence and a recession that never seems to end, Brazilians are struggling with insufficient numbers of trained or educated people to fill untold number of job openings. Recession is comeuppance for arrogant gringos to the north but most certainly isn’t a remote concern for the denizens of this Portuguese-speaking giant. Their banks never played fast and loose a la Wall Street, and with massive oil reserves on board and rising currency values, they are poised for success.

And those children of Brazil who emigrated to find opportunities abroad are coming back in droves. “Since the economic crisis struck in the U.S. three years ago, the Brazilian economy has continued to surge, and the currency, the real, has appreciated dramatically against the dollar. The unemployment rate here is at a historic low, and incomes, especially of the lower and middle classes, are rising rapidly. In many sectors, Brazilian workers earn more than their U.S. counterparts.

“‘It's hard to get specific numbers,’ said Eduardo Gradilone Neto, undersecretary-general for Brazilian Communities Abroad at the Foreign Ministry. ‘But we're seeing that a significant part of what we call the Brazilian diaspora is coming home, because there are comparatively so much more opportunities here than there were five or 10 years ago.’… He said Brazilians began emigrating in large numbers in the 1990s, when opportunities in Europe and the United States looked attractive compared with the economic problems in their homeland. At one point, he said, 3 million Brazilians were living abroad, many of them the young people who are the country's future. ‘That was the trend until 2008, when we saw the crisis in the developed countries.’… About a third of the Brazilians living in Japan, for which there are official numbers because of a special visa agreement, have returned since 2008, Gradilone said.” Los Angeles Times, Sept. 2^nd.

It’s not as if Brazil doesn’t have major issues; the country is awash in uneducated urban poor living in crime-infested ghettos (the infamous favelas), but low income people who escaped to other countries with hope for jobs and higher pay learned new languages, often achieve literacy and new skills along the way. The official Homeland Security numbers for undocumented Brazilians in the U.S. is 200,000, but the Brazilian government pegs that number at a million. No worries, a good chunk of these workers are heading home. While their skills in the United States may be marginal, in Brazil, their educational equivalent puts them at a much higher level. “It's not just low-income workers who have been drawn home by the economy. Companies and business schools say they are luring back Brazilians who might have previously planned on working in the U.S. For one thing, the money is better. The Economist magazine found this year that executives earn more money in Sao Paulo, Brazil's economic capital, than in any other city in the world. New York came in second.

‘We are seeing all kinds of Brazilians return,’ said Rodrigo Zeidan, professor of international economics at the Fundacao Dom Cabral, one of Brazil's top business schools. ‘And doing so makes perfect economic sense. Brazil has found its own internal growth engine, and incomes are rising, especially in the middle and lower-middle classes. … I myself have recently come home from abroad, and we in Brazil are living through something that unfortunately a lot of the rich countries like the U.S. don't have at the moment. Young people tend to take it for granted that with a little hard work they can do something bigger and better than what their parents are doing." LA Times. Sad words, but true. We’re cutting our ability to compete in the future, to give our children a better life to save current dollars…

I’m Peter Dekom, and tell your kids to learn Portuguese!