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The Brazilian Samba continues
Our Beijing Bureau
31 DEC

The Brazilian finance minister announced that per capita income has close to doubled over the last ten years after the financial crisis that it encountered in 1998. Brazil has managed to achieve an aggregrate gowth of 8.5% over the last ten years to a per capita gross domestic product to about $10,000.

The main reasons for this are the various policies followed by the Brazilian government in the wake of the financial crisis of 1998. The government implemented tough measures to increase productivity and managed to have a growth of 6% . In 1998, it's investment rate was at approximately 19%, but higher government & individual savings coupled with productivity growth in banking & investment goods sector has increased it to 25% of GDP.

Brazil has also undergone tax reforms and strict control over it's fiscal & monetary policies.

In food retailing and house building, tax evasion by small informal companies reduced the cost advantages that larger tax-paying companies could have obtained if they improved productivity. It was in informal firms� interest to stay small and disorganized; growing larger would mean having to pay taxes. As a result, these businesses, which made up more than three-quarters of the construction and food retailing industries, were effectively locked into unproductive scale and levels of capital. Effective tax reform measures including sops and enforcement measueres were undertaken to ensure tax payments.

These and various other poverty controlling and infrastructure developing schemes have enabled this rampant growth. Increase in productivity has resulted in Brazilian services & products to compete in the global economy at competitive rates & prices. Brazilian industries have achieved substantial gains due to the increase in productivity spurred by the overnment and today stand as rocks to further cement Brazil's place in the world economy.



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