SAO PAULO

SAO PAULO 

“It can not get any worse”

By Fatih Eren | 29 December 2010

I am going on analysing localities under global concern. A very problematic city, ‘Sao Paulo’, is going to be examined in detail in this volume.

Sao Paulo is located at the southern part of Brazil. With its population over 20 million, it is the largest metropolitan city of the country as well as the largest city of the South America. Sao Paulo is the gate of Brazil opening to the world. All foreign institutional investors have to visit this city in a way before doing an investment in Brazil because this big metropol is the leading financial, industrial and commercial centre of the country.

Before starting the examination of Sao Paulo as a global city, let’s have a look at the globalisation process of Brazil in general.

The year 1995 became a breaking point for Brazil in terms of globalisation. The State’s protectionist and inward-looking macro-economic policy turned liberal and outward-looking in 1995. In this context, several liberal economic reforms were put into practice after this date in the country. Thanks to these reforms, Foreign Direct Investments (FDIs) to the value of 45 billion dollars flew into the country in 2008 whilst the value of inward FDI flows was only 5 billion dollars in 1995.

Because of three main reasons, the Brazilian government has embraced a liberal economic policy since 1995: Firstly, the government wanted to modernize its macro-economy; secondly, it wanted to decrease unemployment rates in the country; and thirdly, it wanted to pay off all its public debt (total public sector debt was standing at more than 60% of GDP in 1995). Namely, the government considered that the only way to achieve these objectives was of attracting foreign finance capital into Brazil.

I could say that Brazil was not a country which submitted herself totally to globalisation process which was experiencing significantly in today’s world; but, it was a country which read this process in a true way. Brazil aimed to turn this process into its advantage so the country displayed a pragmatic attitude during its internationalization process. In other words, it tried to benefit as much as possible from opportunities which were provided by this inevitable process. For example, Brazil is going to host some international sport organizations in the near future (i.e. the World Cup in 2014, the Olympics in 2016). The country is expected to renew its insufficient infrastructure (esp. transportation and social service infrastructures) with foreign finance capital which will be obtained from these international events.

On one hand, Brazil provided her natural and cultural resources for the benefit of transnational investors and then became one of the ‘passive players’ of the globalisation process. On the other hand, Brazil followed a multilateral foreign trade strategy and then developed into a ‘playmaker actor’ which managed the globalisation process actively in the world. In the context of the multilateral foreign trade strategy, Brazil was worked for the realisation of regional integration into the continental of South America (i.e. The Common Market of the South-MERCOSUL, The Union of South American Nations-UNASUR). In addition, the country developed commercial relations with many countries (esp. US, the European Countries, Japan, China) and established diplomatic relations with varied international organizations (i.e. United Nations-UN, Organisation for Economic Co-operation and Development-OECD, The Organization of American States-OAS).