Tag Archives: Brazil

05.11.2013 | International Trade: The Story of a Subsidy

Oddly, some US farm subsidies go to Brazil.

Imagine a safety net when you think of a subsidy. If prices are too low, then growers get money from the federal government. During the 1930s Great Depression, the goal of subsidies was to sustain a farmer’s purchasing power when he had a bad year.

Fast forward to 2013. Because the US is the world’s leading cotton exporter, our farmers depend on the world price. if that price is too low, they get a subsidy.

This is where Brazil enters the picture. Because US subsidies lower production costs, they depress world cotton prices for Brazilian farmers. Complaining to the WTO, a World Trade Organization composed of 151 countries that include the US and Brazil, Brazil said US cotton subsidies violated WTO rules. A WTO panel agreed.

However, Brazil still had a problem. Because WTO decisions are not enforceable and the US Congress was not about to eliminate subsidies voluntarily, the panel’s decision was virtually meaningless. Then though, Brazil threatened retaliatory measures that would include ignoring US pharmaceutical patents and music copyrights. It worked. Faced with WTO condemnation, angry Brazilians, US firms fearing retaliation, and subsidized US farmers, the US government devised a unique solution. As of 2010, through the Brazilian Cotton Institute, we would pay Brazilian farmers $147.3 million every year–$12.275 million monthly–until an acceptable farm bill is passed.

The farm bill is still being debated.

Our bottom line? Subsidies, like tariffs and quotas, are barriers that diminish the efficiencies of free international trade. As barriers, they obstruct David Ricardo’s comparative advantage and the ability of nations to produce goods and services for which they have the lower opportunity cost..

Sources and Resources: NPR’s Planet Money explains the US/Brazil cotton dispute in one wonderful 30 minute podcast. But then, for more of the specifics, I recommend this 2011 report from the Congressional Research Service. To complete the picture, this Slate column provides all you want to know about the Farm Bill that the US Congress is considering. (Econlife looked at the bill’s impact on the dairy industry here.)

Posted by: adminEcon
Tags: Brazil, cotton, exports, farm subsidies, international trade, Texas, world price, World Trade Organization (WTO)
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02.07.2013 | Do Brazilians or Russians Work Shorter Hours?

Brazil or Russia?

Who tends to work shorter hours?
Who takes longer lunch hours?
Who watches more TV?
Who is more likely to sleep 8 hours or more each night?

Brazil was the correct answer to every question.

My source of data was a Jana emerging markets survey. Gathering information during 2011 and 2012 from 11,687 respondents, their goal was to demonstrate how different cultures define “The Good Life.”

For me, though, the information illustrated just how much developing economies differ. Far from “one-size-fits-all,” the world economy has cultures that work harder and those that lunch more. In some places, 4 hours are an average night of sleep while elsewhere 8 are more typical. Also, where you vacation and how often you watch TV vary. It all depends on what you call home.

I wonder how much the information in Jana’s infographics (below) correspond to these World Bank growth projections for the developing world. Compared to the higher income nations, you can see that emerging markets could be fueling the world economy during the next several years. But might our specific data provide clues about which nations will lead?

Sources and Resources: I suggest looking at more of the Jana infographics here and here. For a more academic perspective, the World Bank report has the details and was the source of my growth table.

Posted by: adminEcon
Tags: Brazil, businesses, consumers, developing nations, emerging markets, India, Jana, lunch hour, night's sleep, Philippines, Russia, TV watching, vacation trips, work hours
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01.08.2013 | A Safety Net: Will India Copy Brazil?

If anyone asks you about India’s anti-poverty initiative, just say UID and CCT.

India’s current welfare-in-kind social support system is woefully inefficient. Sort of like a leaky pipeline, a part of the food, fuel, and fertilizer that the Indian government distributes to its poorest citizens never gets where it is going because of corruption and waste.

Through retinal scans and fingerprinting India’s unique identity project (UID) is supposed to cope with the problem by giving people a provable identity. Once you can prove who you are, the government, instead, can give you cash.

And that takes us to Brazil and its Bolsa Familia. A conditional cash transfer program (CCT), short term, Bolsa Familia is about alleviating the daily impact of poverty. Long term, it targets human capital and health. The cash transfer half is just that–a small regular electronic transfer. The conditional part is, you do not get your money unless your children go to school for a specified number of days. Absent 15% of the time and the cash stops.

With the goal of diminishing an inefficient, corrupt social support system, India is considering the Brazilian model. Brazil, though has a social safety net that has impacted 13 million poor families; in India, we might be talking about 440 million people. Below are graphs from The Economist displaying Brazil’s success.

Bolsa Familia Appears To Have Been More Successful in Rural Areas.

Through Education, Bolsa Familia is Developing Human Capital.

Sources and Resources: Here, The Economist describes the impact of Bolsa Familia in Brazil (also the source of my graphs) while this paper is good for a more academic perspective. I then went on to read more about India’s anti-poverty initiatives here in The Economist and here in the NY Times where they allude to Bolsa Familia as a model.

Posted by: adminEcon
Tags: anti-poverty programs, Brazil, human capital, India, retinal scans, social safety net
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11.16.2012 | Pooches and Prosperity

Chloe and Gus, my daughter’s miniature Pomeranians, consume organic dog food and use wee-wee pads, they visit the vet, the groomer, and enjoy their treats and toys. Because of Chloe and Gus, my cats, and the dogs in 1 out of every 4 households in the US, we have a growing pet industry.

I started listing the discretionary spending that supports Chloe and Gus after reading about the Euromonitor Dog Index for 53 countries. Here are some facts that connect pooch spending to prosperity:

Averaging one dog in every 4 households, the US has the world’s largest pooch population. But Norway does the most per capita pup spending at $639 while Switzerland and Australia ranked 2 and 3.

In the developing world, Brazil, with a more affluent urban population, has the most small dogs per capita. But the biggest proportional increase in dog ownership was led by India, and then the Philippines, Venezuela, Russia, and Argentina. Still though, while dog ownership in India rose 58% during the past 5 years, they have only 4 dogs per thousand people. By contrast, dog ownership in the Middle-East is much less popular. In Saudi Arabia and Egypt, with only 2 dogs for every thousand people, dog ownership is rare and typically relates to big dogs and security.

Finally, the financial woes in the euro-zone appear to have affected dog ownership. France, with a sagging economy and Greece, on the brink of economic cataclysm, have fewer dogs than 5 years ago.

Our bottom line: Chloe and Gus are much more than family dogs. Dog ownership can be an indicator of a country’s economic growth and decline.

Sources and Resources: My facts on dogs are primarily from the Atlantic article and from a marketplace.org report. You might also enjoy this Bloomberg article on a NJ legislative proposal for mandating doggy seat belts and Governor Christie’s response. Finally, these econlife links look at aspirational purchases in the developing world.

This chart is from the Atlantic article cited above.

Please note that this post’s conclusion was edited after it appeared.

Posted by: adminEcon
Tags: Brazil, developed nations, developing nations, Dog population, dogs per household, economic growth, emerging markets, euro zone, Euromonitor, France, Greece, large dogs, pet food industry, pomeranians, small dogs, urbanization
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09.01.2012 | Living Solo: Part 2

Soup and ready-made meals sales are soaring in Brazil. The reason is probably more singles. In the United Arab Emirates, if you are over 30 and female, there is a 60% chance you are unmarried. For Japan, 31.5% of all households are one-person.

Looking at Japan, we would see a contracting population but more households. The reason is a growing singles population that has a distinct economic impact. A person in an affluent nation who moves into a new apartment needs consumer durables (goods lasting 3 years or more) that include a refrigerator, furniture, a TV, maybe a washing machine. Single people tend to live in apartments rather than houses.

There are some universal causes of single living. People are getting married later, there is more divorce, we are living longer and marriage is no longer as attractive. In China and India, male baby selection results in too many bachelors looking for wives.

Where are we? While single person households are increasing around the world, we should be wary of generalizing. We can remember, though, that when more people live alone (please see graph below), it is a major demographic shift that affects demand for certain consumer goods and services.

This Economist article provides an excellent overview of the trend toward living alone around the world and was the source of my graph. It also led me to a Euromonitor report on Japan’s singles. For unmarried mothers specifically, this NY Times Magazine article was interesting because of its focus on 2 families and also provided a sound statistical base.

Econlife Living Solo: Part 1 is here.

Posted by: adminEcon
Tags: aging, Brazil, consumers, demand, demographics, divorce, durable goods, households, Japan, living alone, marriage, single women, United Arab Emirates, US
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