The grandchildren of a Lebanese immigrant to Brazil laugh when they remember their grandfather’s legacy. He invested heavily in a piece of land surrounded by a rain forest, some 200 km from Sao Paulo. In those days, Brazil was run by the military and applied the same principles of "planned economy" which were common at that time all over South America. What characterized it were high tariff barriers, protectionism and state monopolies. In Brazil, things began to change at the end of the 1980’s when a leading economist advocated changing to a free market economy. His argument was that most successful economies were based on a free market and that underdeveloped countries were growing economically isolated and needed to change. Their carefully regulated economies were unable to compete with the blocs of Western economies and their industrial specializations, large scale economies and low trade barriers. These countries had grown by embracing free trade and letting the private sector drive economic development. This shift in thinking had an impact on the value of the Lebanese-owned property. It jumped from being relatively worthless to being worth millions. The family set up a tourist project on some of the land and sold the rest to individual investors.
Foreign investments by multi-national companies naturally go to the most attractive areas; and by that, we mean those with the proper regulations as well as lawmakers who understand the needs of business and the importance of fair and equal application of the law. These laws and their uses must be transparent and apply to both citizens and non-citizens alike. Most foreign investment takes place in countries such as the US, Europe, Japan and Australia — all of which follow these principles.
In South America, Brazil takes a major share of foreign investments because it has changed its economics to a free market system. The government has become more service-oriented and requested the United Nations to investigate irregularities such as theft, corruption etc. In addition, Brazil has formed a Human Rights Ministry which protects investors and ensures the efficient operation of various government departments.
Brazil is a large country consisting of 27 states and naturally has good points as well as bad ones. What is important, however, is that it is willing to admit its mistakes and acknowledge problems in order to work hard at solving them. The West hardly acknowledges this — it is in fact taken for granted in any country that aims at development — and developing nations take no notice of it. The example of Brazil as a developing nation could also be useful to Arab economists who should assess what can be learned there and applied to the economic situation in our part of the world.
