Brazil overtakes Canada and Spain to become world’s eighth largest economy
Brazil has overtaken Canada and Spain to become the world’s eighth largest economy, relegating Spain to ninth place, Spanish newspaper Expansión reported Wednesday.
According to the paper, and based on data from Bloomberg, comparing the growth of the world’s top ten economies between the period ranging from the second quarter of 2006 to the first quarter of 2007, and the second quarter of 2009 to the first of 2010, Spain lost its eighth place to Brazil and became the world’s ninth largest economy (by gross domestic product in these periods).
The Brazilian economy also overtook the Canadian economy, which became the tenth-largest (despite officially being a G7 member).
China’s performance was also notable, as it became the second-largest economy in the list of the top ten, relegating Japan to third place.
Out of the top ten countries, just two posted lower GDP in 2010 than at the end of the first quarter of 2007, with the biggest drop posted by the United Kingdom, followed by Italy.
The United States remained in first place, with a GDP of more than double that of China (second) and Japan (third), as well as being bigger than both of these economies combined.
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Having said that, there is something that worries me about the rise of China, India and other new world champions, including of course Brazil.
Their rise seems to be based on the power of big states controlling large chuncks of their economies with huge populations providing endless supplies of cheap labor and surviving on very low income. The new global companies emerging from China, India and other nations are mostly state controlled entities.
These new world economic powers do not seem to favor the prosperity of their workers or people, but rather the prosperity of a rich state.
It is a remarkable divide from the “old” world economies like the US, Britain, Germany, etc., based on free and independent enterprise, where most companies are privately and publicy owned, not by the state, and their societies benefit from high GDP per capita levels.
Compare the GDP (PPP) per capita for 2009 in the US: 46,380, Switzerland 44,717, United Kingdom 36,496, Germany 36,449
Vs China: 6,675, India 3,248 or even Brazil 10,427 or Mexico 14,337, Chile 14,331, Argentina 14,559.
These huge differences in gdp per capita levels speak volumes about the challenges these new economies are faced with. These countries are not working on basic structural regulatory frameworks to allow fair competition and balanced and sustainable development of their societies, industries and commerce. They lack anti-trust regulations and insitutions. In many cases they lack basic infraestructure for their people.
My fear is that some of these new powerful states don´t even care about the gdp per capita levels, their huge population numbers suffices to project their country´s power and influence around the world, as it is the case with China.
In the economies of China and Brazil there's a great role for the state to play, that is true. But is that a bad thing? Orthodox dogmatism would have that high growth in a free market economy is more sustainable than in a more closed - or more state controlled - economy. But at least in the case of Brazil that can be rebutted with empirical evidence. The period in which Brazil was most market-friendly - the period that goes from 1995 to 2006 - it grew at 2.5% to 3.5% a year. It only started to grow at levels above 5% in 2007, precisely when the government commenced to take a more active role in the economy by means of partnerships with private enterprises and loans to the private sector by the state-controlled development bank (the BNDES). I don't know about China, though. I don't think the Chinese gov controls the economy by means of state enforced monopolies. I imagine it does something similar to what is practised in Brazil: it gives stimuli to the private sector through loans by state banks.
What you said about lack of concern by governments of large developing countries to internal inequality, seems to apply perfectly to China. But not to India, I think. India's growth is of higher quality than China's. It's achieved through serious investments in hi-tech innovation. That it is still an overwhelmingly poor state, doesn't mean of necessity that the government isn't serious about reducing misery.
As for Brazil, per capita income has increased 35% from 2003 until 2009, and some millions of people have experienced social ascension. The number of poors in 2002 was of about 50 millions/150 million in the general population. In 2008 it was 30 million/180 million general population.
I think Brazil´s economic growth has been remarkable, as has been its fight on poverty.
Here in Mexico a lot of people talk about a free trade agreement with Brazil with exitement as it will clearly open new opportunities for Mexican products and businesses in the largest market in Latinamerica, learning portuguese is now in vogue, and of course there are always other people who are not so exited about opening our market to Brazil...let´s simply say they´d rather have us climb a tree.
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