Case | HBS Case Collection | October 2012 (Revised April 2017)

Brazil's Enigma: Sustaining Long-Term Growth

by Laura Alfaro, Hilary White and Haviland Sheldahl-Thomason

Abstract

Over the past decade, Brazil's future as a leading world economic power appeared certain. An expanding middle class and commodity boom had fueled economic growth, with GDP growth hitting a peak of 7.5% in 2010. However, the high cost of conducting business in Brazil, known as "Custo Brasil," was hurting domestic manufacturing, while incoming foreign investments threatened to overwhelm Brazilian markets. Under President Dilma Rousseff, economic growth stagnated, and the Rousseff administration struggled to find the best balance between reducing inflation, maintaining a flexible exchange rate, and improving the competitiveness of Brazilian exports.

Keywords: capital controls; inflation; Exchange rates; stimulus; competitiveness; productivity growth; foreign investment; infrastructure; Inflation and Deflation; Currency Exchange Rate; Brazil;

Citation:

Alfaro, Laura, Hilary White, and Haviland Sheldahl-Thomason. "Brazil's Enigma: Sustaining Long-Term Growth." Harvard Business School Case 713-040, October 2012. (Revised April 2017.)