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3 Companies Improving Brazil’s Emerging Market

Brazil's Emerging Market
Brazil currently has the ninth-largest economy in the world. It has a gross domestic product (GDP) of $2.05 trillion which accounts for slightly more than 2.5% of the global GDP in 2020. Brazil would account for 2.5% of the world’s wealth if one measured it by all of the goods and services it exchanged in 2020. Thus, Brazil’s emerging market has become a reputable force on the world economic stage. It has now surpassed some developed economies in GDP. For example, Brazil’s economy is now larger than Italy’s, which accounted for 2.4% of global GDP in 2020. Several factors contribute to the success of Brazil’s emerging market: better international relations, the adaptation of technology and improved education. However, the most important element of an emerging market is a solid mix of domestic companies. Here are three Brazilian companies that have been driving the economy forward.

Eletrobras

Eletrobras is the number one supplier of electricity in Latin America. Additionally, it projects that it can be one of the top three clean energy suppliers for the entire world by 2030. Furthermore, Eletrobras differentiates itself from other energy companies by focusing on generating electricity through renewable methods. In fact, the company strives to ensure that less than 10% of electricity produced comes from sources that have high greenhouse gas emissions. Eletrobras utilizes hydropower and wind farms to create the vast majority of its electricity.

The company supplied about one-third of Brazil’s total energy in 2020. As a result, there was a reduction in reliance on foreign energy companies. In addition, it provided vast employment opportunities to Brazilians and residents of other Latin American countries.

Vale

Vale is a Brazilian mining company responsible for churning out more iron ore and nickel than any other mining company. Iron ore has multiple applications and is the raw ingredient for steel. One can find it in cars, trains, sinks, dishwashers and much more. Additionally, a battery’s fundamental material is nickel. It has a shiny appearance and is inexpensive. Therefore, many countries use it to make their currencies.

Vale now employs more than 100,000 workers ranging in countries from Canada to Indonesia. The company has been able to successfully push into other sectors including artificial intelligence and energy production.

Itau Unibanco

Itau Unibanco is Brazil’s largest bank in the private sector. The company’s headquarters are in Sao Paulo and it employs more than 90,000 people across nine countries. The government now owns the majority of the company’s equity because it is in the private sector. The primary shareholders are private institutions, corporations and individuals. As such, Itau Unibanco is a bank for everyday workers.

Furthermore, Itau Unibanco has a commitment to giving back to the community. The company invested more than $0.5 billion into education projects and improving transportation infrastructure in Brazil. It shows that people should not consider domestic companies that give back as charities, but rather as an investment in the people.

The Reason these Companies Matter

These companies are critical to Brazil’s emerging market for two major reasons. First, Brazil needs businesses that spark interest in countries abroad to make the leap from emerging markets to the developed economy. All three of these companies successfully accomplished this goal. As such, these companies are appealing to many nations. As a result, there is an inflow of non-domestic goods and services. This allows the economy to expand and raise the overall quality of life for everyone.

The second reason is that these companies provide employment opportunities to Brazilian citizens in diverse sectors. Brazil needs companies such as Eletrobras to provide electricity in an economic boom and a severe recession. In addition, Brazil needs Vale to produce steel. In the end, these companies create many opportunities for Brazilian citizens in many sectors.

If Brazil can navigate through the pandemic while keeping companies like Eletrobras, Vale and Itau Unibanco afloat, it has a fair shot at becoming a developed economy in the future.

– Jake Hill
Photo: Wikimedia Commons

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The Pros and Cons of Brazil’s Port Development

Port_development
A port owned by a mining company in northeast Brazil is helping the local economy but polluting the region.

The Ponta da Madeira terminal was established in 1986 by Vale for the shipment of iron ore while simultaneously guaranteeing job stability for young people in Itaqui-Bacanga, an impoverished location in Brazil.

“Company trains arrive at the port, transporting minerals from Carajas, a huge mining province in the eastern Amazon region that has made vale the world leader in iron ore production,” said Global Issues. “The port also exports a large proportion of the soya grown in the centre-north of Brazil.”

However, George Pereira, the secretary of the Itaqui-Bacanga Community Association (ACIB), said Vale and other companies located around the area brought the wrong type of development into the region.

“We have more money in our pockets but no water to drink, because the rivers are polluted,” said Pereira. He believes that sanitation and education developments are more important for the community.

According to the article, ACIB was ironically created by Vale a decade ago to clean up the Itaqui-Bacanga area. However, Vale’s own creation is being awfully easy on the corporation.

On the other hand, Friends of the Earth International (FoEI) calls Vale the worst corporation in the world today.

The organization claims that the mining company is also among the largest producers of raw materials and has reported a profit of $17 billion in 2010.

But a FoEI study also found that Vale failed to help keep the environment clean.

“Despite setting out in 2008 its intention to cut its carbon dioxide emissions, Vale emitted – according to tis own figures – 20 million tons of CO2 in 2010, an increase of a third on 2007 levels (15 million tons),” said FoEI.

Moreover, FoEI also said that Vale has representatives both in the Brazilian government and the UN delegation who work hard to promote policies that “undermine global action on the climate crisis”.

Although Vale was able to create jobs for the impoverished in Itaqui-Bacanga, the company is actually causing more damage to the earth in the long run.

– Juan Campos

Sources: Global Issues, Friends of the Earth International
Photo: Panoramio

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EITI Improves Transparency and Payment

EITI Improves Transparency and Payment
The G8 Summit in Northern Ireland on June 17 focused heavily on transparency and trade and brought the EITI — the Extractive Industries Transparency Initiative — into the spotlight. Immediately after the G8 Summit, it was announced that Italy and Germany would be implementing and piloting EITI, respectively, a step forward towards increased transparency for extractive industries worldwide.

Transparency for extractive industries is particularly necessary for developing countries that suffer from what is known as the resource curse– the trend for countries with high amounts of natural resources to be low in development. The resource curse is often perpetuated by irresponsible extraction processes that disrupt life in the host country and negatively impact its economy.

EITI, an initiative first introduced in 2002 by UK Prime Minister Tony Blair, focuses on transparency in the extraction industries — mining and logging being the largest ones worldwide — so as to address at least one element in the “resource curse”: the countries from which the extraction companies originate. While the initial implementation of EITI standards between 2002 and 2005 was aimed at voluntarily committing companies, by 2005 EITI standards took the form of “a disclosure standard implemented by countries.”

Stakeholders in EITI include over 70 of the world’s largest oil, gas, and mining companies, including Britain’s BP, America’s Chevron, Britain and Australia’s Rio Tinto, and Brazil’s Vale. The transparency standards include improved payment and revenue reporting on the parts of both company and host country. It aims to answer the questions, “How much are governments receiving?” and “Where does this money go?”

The G8’s commitment to and support for the EITI shows a continued dedication to improving transparency worldwide and addressing the resource curse. While EITI still faces obstacles such as ensuring members procure timely reports and that these reports are not so delayed as to prove entirely unhelpful. At present, 23 countries are considered EITI Compliant, and 16 have status as EITI Candidates including the recent additions of the Philippines and Honduras.

– Naomi Doraisamy
Source: Christian Science Monitor, EITI, Thomas Reuters Foundation
Photo: Christian Science Monitor