A blessing and a curse.

Photographer: Mario Tama/Getty Images

Brazil Is Still the Country of the Future

Tyler Cowen is a Bloomberg View columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. His books include “Average Is Over: Powering America Beyond the Age of the Great Stagnation.”
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Brazil, it is often and not quite fairly said, is the country of the future and always will be. As the Olympics focuses global attention on the country, it's worth exploring the various ways in which this maxim is -- and may not be -- true.

The puzzle with Brazil is neither its successes nor its failures, but rather the combination of the two. The country has such a dynamic feel, and in the postwar era it saw many years of double-digit economic growth. The Economist featured the country on its cover in 2009 as the next miracle take-off, and in 2012 Germany's Der Spiegel published a long article titled “How Good Governance Made Brazil a Model Nation.”

Yet Brazil never caught up to the developed world: Its gross domestic product per capita falls about 4 to 7 times short of the U.S. -- about where it was more than a century ago. It is now experiencing one of the most severe depressions of any country in modern times. The president, Dilma Rousseff, is in the midst of an impeachment process. The combination of corrupt and violent police, muggings of athletes, polluted water and inadequate facilities have led many to wonder whether Brazil can pull of the Olympics without major embarrassment.

In parsing the contradictions of Brazil’s economy and history, I try to keep a few ideas in mind.

First, Brazil is relatively large, in terms of both surface area and population. Big countries cannot easily establish the coherence and cooperativeness of smaller countries such as Denmark and Singapore. China, India and Russia have all had ongoing troubles establishing good, stable governance -- with the U.S. being only a partial exception to the general rule.

On the upside, Brazil’s size brings dynamism. The country has a large pool of talent and an internal market large enough to gear up manufacturing. Brazilians are renowned for their ability to think big, whether it involves the steak on the plate or ambitious plans to develop the Amazon. The country built its capital city, Brasilia, out of nothing in the savanna -- a modernist dream that, for all the criticism it has received, actually functions fairly well. The country's music may equal the U.S. in its creativity and sophistication, thanks to the size of the country’s talent base and also to the substantial local market for music.

Second, the country is extremely diverse, both ethnically and culturally -- and in ways that go far beyond its history as a Portuguese colony. Sao Paulo is the third largest Italian city in the world, and Brazil has the largest community of ethnic Japanese outside of Japan. Rousseff’s father was born in Bulgaria. In some southern villages, people speak German dialects and live in German-style homes. Another was settled by the remnants of southern Confederates from the American Civil War. The influence of Africans, originally brought in as slaves, remains profound, particularly in the Northeast.

Diversity can be great for creativity and achievement -- as we know from the work of University of Michigan social scientist Scott E. Page. This is obvious in so many facets of Brazilian life, including music, fashion, architecture, design and cuisine -- as well as the country’s impressive business culture and its opening ceremony for the Olympics (despite having to skimp on the budget). But it’s not an unalloyed positive: Harvard political scientist Robert D. Putnam has shown that diversity can hurt civic life and also translate into higher levels of mistrust. Brazil has a long history of underproviding public goods such as basic education, public safety, and clean water.  The race between dynamism and chaos has been going on for a long time, with neither winning.

Third, Brazil's political history has been an odd mix of dictatorship and extreme decentralization. Until the late 1980s, a series of autocratic leaders took power but failed to govern outlying regions successfully. Governance remained based on a colonial model with an authoritarian leader at the center and autonomous power blocs throughout the regions -- a system that, for all of its periodic dynamism, proved ill-suited for modern times.

That colonial legacy is being dismantled, in fits and starts.  Brazil now has a real democracy and some degree of political accountability, though it falls short of a well-functioning federalism, as illustrated by the fiscal troubles of Rio de Janeiro and many other parts of the country. Income inequality has been falling (contrary to the trend in most countries), extreme poverty has virtually been eliminated and Brazil has moved up the rankings in terms of education.

I love to visit Brazil. I have been chased by aggressive pre-teens wielding sharpened sticks and even shot at, yet I remain an unreconstructed optimist. It’s actually a major achievement to remain “the country of the future” for so long. Can you say the same about Argentina or Venezuela? If there's one thing we know from Olympic competition, it's that if you remain in the game through successive rounds, your chances of winning only go up.

(Corrects description of geography around Brasilia in sixth paragraph.)

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Tyler Cowen at tcowen2@bloomberg.net

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Mark Whitehouse at mwhitehouse1@bloomberg.net