Economic Growth and Recession
Brazil is a country in the South American region characterized by one of the strongest growth rates not only in that region, but worldwide. Its economy is sustained by agriculture and the energy sector. Apart from this, it is blessed with a plethora of natural resources ranging from minerals to petroleum. This, in recent times, has helped it grow out of the effects of inflation experienced in the early to mid nineties. The effects of the inflation were reduced by the efforts of the then president through the development of policies that could see to it that the economy improved within a desired time frame. The GDP of Brazil currently stands at 1.482 trillion placing it at position eight in size of GDP worldwide. It comes in second after the USA in the wider Americas region. This is an economically free country driven by the policies of a country that considers its trade as free and fair. Purchasing Power Parity is 1.9trillion. Around 97million people are employed in the agriculture, service and industry sectors converting to 7 unemployment rates. 26 of the people live below poverty line in Brazil.
Zimbabwe, on the other hand, is a country whose economy has received the biggest battering from political instability leaving it with the highest inflation rates ever in the history of the world. Its GDP is placed at 1.925billion. Its economy, like most of those in Africa, is heavily supported by the agricultural sector. In addition to agriculture, it also has huge deposits of minerals like platinum. Platinum deposits are recorded as among the highest in the world. The surprising rates of inflation have driven the economy to a status of constant importation of goods as opposed to its previous strong record of exportation of agricultural products. The population is relatively very literate with literacy levels placed at 90. This is among the highest in Africa. Agriculture takes the hugest chunk in labor force placed at over 60. The stability that the current political dispensation has provided has reduced the effects of inflation so that the economy is now recording a growth rate for the first time in a decade. Despite the high literacy levels, unemployment is placed at slightly over eighty percent.
Appraisal of How Growth Theory can Explain Difference in the Economic Growth Rates
An appraisal done on the economic growth of Brazil shows one trend that the economy, according to Oreiro and Nakabashi (2007, 2), grows due to the exponential growth of exported goods. Immediately after the inflation of the early nineties, the exportation of petroleum products and agricultural products grew immensely. Growth theory suggests that the expansion of research in the scientific field enhances the growth of the economy. The growth and exponential expansion of research such as in the use of ethanol as clean fuel has led to cheaper and more environment-friendly combustion in industries. This implies that the agricultural sector has benefitted a big deal as more and more agricultural produce like sugar and corn are used in the production of this fuel. As such, the money drawn from these ventures has helped fund so many development projects.
Zimbabwe, on the other hand, has experienced zero growth in the scientific field. This is contrary to the effects of the high literacy levels. Madise (2009, 1) states that misappropriation of funds meant for critical issues such as scientific research hamper attempts to make the economy flourish. This is coupled with inconsistency in the agricultural sector after shifting from an exporter to importer of basic food commodities. Therefore, the standards of living have been affected as people are forced to struggle to make ends meet. This means that the government concerns itself more with providing the basic needs of the people than on expansion of research in the scientific field. Jovanovic (2000, 1) offers an explanation through which growth theory is not favored in Zimbabwe
Growth could begin only when hard work and business enterprises are free of heavy taxation, of social stigma and of other interference by government and church.
This gives us an idea of how the political instability in Zimbabwe has messed up the economy. In addition, price control that was abandoned recently contributed to the effects of hyperinflation that the Zimbabwe has experienced. (Data on these statistics presented in the appendix).
Hindrances to Growth of Brazils Economy
The growth of Brazils economy is so much based on perspectives similar to those experienced during the Agrarian and Industrial revolutions of the late nineteenth and early twentieth centuries where agriculture and technology was important for the expansion of economies. An effect could be that the farming might render the land derelict. Relying on agriculture is therefore not a solid solution. The president of Brazil, Lula da Silva (2009) opines that the use of protectionism during the just ended recession could have been lethargic. Protectionism through introduction of tariffs for imports would server important economic ties with relating countries. Tariffs would have been used to control the number of goods that enter the country or better still, the taxes paid could be raised so that funds could be collected to help fund the economy. Natural resources are also known not to last very long. The democratic government in Brazil, according to Przeworski and Limongi (1993, 51-69), could contribute to an economy that grows slowly. This is due to the socialist tendencies of democratic governments.
To offset this, the country needs to adopt policies that regulate tariffs on imports to a level that would not hurt the country from which goods are exported. In addition, the country needs to spread the dependence on agricultural produce to other areas too. This is due to the fact that the land might not be productive for eternity. Policies that affect the economies from the political arena need also to be introduced so that the economy does not rely a lot on the political goodwill of the political class.
The Hindrances to the Growth of Zimbabwe
The employment rates in Zimbabwe are at an all time low. Pegged at a dismal twenty percent employment rate, the unemployed remain a very high eighty percent. This is one of the effects that could cause the economic growth to stagnate further. This is coupled with the onslaught of HIV AIDS on the masses. Brown (1997, 3) suggests that the workforce is the most affected due to them being in the sexually active bracket. This implies that the employable are at a high risk of being infected.
Inflation rates are high. The current government has managed to stop it but the effects are already very huge. Reliance on exports alone places the country in a risk of being manipulated by donors or any other section from which they draw their resources. Crenshaw, Ameen and Christenson (1997, 974-984) attribute slow economic growth to population explosion. Zimbabwe experienced this in the late eighties to the early nineties when their economy was rapidly growing. This they attribute to the diversion of interests to address issues affecting the population. To stop the stagnating economy, Zimbabwe should introduce policies that regulate and specify time intervals within which growth policies should work. The inflation could also be stopped if the government ceases the printing of money to cover the budgetary deficits. The population growth is not necessarily a bad thing but it should be regulated and aimed at the development of a strong working force. Importation should be regulated so that the country also involves in the production of goods while at the same time protecting the indigenous products.