Henrique Meirelles: The Inflation Tamer

The World Bank recently ranked Brazil near the bottom of a list of 125 countries in terms of openness to trade. What needs to be done?
This has its roots in the country's long period of financial instability. Plus the fact that since the 1950s, the general economic thinking in many countries, including Brazil, was that government control and intervention into markets was the way to achieve stabilization. This generated all kinds of norms, regulations and laws which led to this [restrictive] environment [for trade]. It's very difficult to discuss productivity-inducing reforms when you are fighting one crisis after another. But now that there is financial stability, Brazilian companies are going abroad and becoming more competitive. Now more opinion makers are beginning to discuss things like trade.

How has Brazil ' s image changed in the international financial markets?
Brazil is almost another country. I used to sit on the board of several multinational companies, and every time there was a project to build a plant in Brazil, the demand for return on investment was much higher than in other developing countries. When I asked why, the answer always came with a half smile: "Brazil is unpredictable." All this changed the moment the Brazilian economy became stable. Now investment is growing at 16 percent a year, well above GDP growth. Now people are saying, "What can we learn from Brazil?"

© 2008