International business environment

International business environment


International business environment refers to any business type that involves crossing of national borders.  It involves the buying and selling of products and services across national borders. One of the most significant and dramatic global trends in the recent decades, has been a sustained, rapid growth in international business.  Markets have tremendously turned to be global for goods and services.  World  trading has increasingly expanded.  The International Monetary Fund data on international trading suggests that the trading has been expanded by 6 percent annually since the early 1950s (Armando, 2001). The financial markets are the most dramatic of the globalization trends in the world.  The growth of the world Forex markets is seeing billions of dollars transacted daily all over the world.  Advancement in technologies is key to speeding at which many regions and countries fit themselves in the external events.  Most countries and regional blocs gave up the autonomy of economies because they are influenced by international economists.  Economic powerhouses such as the USA and China are also affected by the international economy therefore the need to have an international economic stimulus.

Contemporary technological and scientific advancements have led to coming up of corporate empires that drive the changes in the international business environment through global production (Juan, 2000).  These corporations have found the whole world has the place of their production and source for their market.  The main objective of international business is for sales expansion, diversification, acquisition of more resources and minimizing of competitive risk.

The country that would best explain the international business transaction and environment is Brazil.  Brazil is well known to the globe for its evergreen amazon forests and to some extend the Rio carnival.  This resource acts as a symbol of the rich nutritional wealth and cultural diversity of this economic powerhouse of South America.  The further showcase the vibrancy of population and resources that continue to make the country’s economy, one of the largest in the whole world.

Overview of history and development profile

The country has been a base for different races and cultures dating back to the time they gained independence from the Portuguese (John, 2007).  The European nations had brought the Indians and Africans to meet the labor demands in the country since the locals could not satisfy the demand.  The country has the largest African population outside the African continent.  The natures’ plenty research has influenced the growth of the economy of Brazil over the years.  This has been achieved through supplying of fresh farm produce and minerals in the world market.  Brazil is the worlds largest producer and supplier of farm products such as sugar, soya beans, beef, cashew nuts, bananas, tobacco, coffee, oranges and iron minerals.

Political environment profile

The economy of Brazil was affected greatly by the political instability that  characterized Brazil in the recent past.  The military rule that governed the state for the better part of the century deteriorated the economy of the country since no democracy was expressed.  The was no freedom of the citizens thus hindering any development.  The coming of democracy in the country in the early 80s did little to revamp the economy and the lives of the people since the regime was guided by rampant corruption and total disregard to law.  Institutions were mismanaged thus resulting to slow economic growth and inequality in income.  The country has of the recent years gained strength in its economy, due to effective political stability that provided an enabling environment for development in all sectors.   The government came up with a real plan that was comprehensive on the economy stabilizing (Don, 2010).

The future scenario in political factors

The Brazilian government has on many occasions intervened in the national economic conditions to improve the trade ties with the international community.  The government does this through  making and implementing drastic changes in the regulations and policies related to the economy.   This is projected to be the same scenario in the near future.  No economy in the world is perfect and therefore it is prone to attack from both external and internal forces.  The future political class is expected to complement the economy during economic crisis like the one experienced in the 2008-2009.  The government will continue to control inflation rates to cushion the people.

The measures that are to be changed in the future include regulations and policies on interest rates, taxing mechanisms, currency devaluation and trading blocs.  The political and diplomatic issues that are uncertain in the future in Brazil will influence the way the Brazilian government implements the changes in regulation or policy.  In addition the federal and state laws in Brazil may also contribute to uncertainty in international trading.  This is because the economy of a country determines the way it trades with other nations.  Other countries will be safe making trading ties with stable governments.

Development in technology, coupled with higher international commodity prices has further strengthened the economy of Brazil and it is also expected to counitnue with the same trend.  More reforms are expected to be formulated under the future  leadership of the country.  These reforms will be implemented and it will lead to improved efficiency in economic operation in the country.  The better economic , management has led to many multi-nationals opening up in Brazil and investing heavily a trend that will be maintained.  This is mainly attributed to the stability in the political scenario.  The Brazilian government is supportive of the economy.

The recent  elections in Brazil clearly depict a political situation that is stable in the near future going by the current scenarios.  The current regime and the political class have continued with the policies set by the previous administrations which was a success.  However, it is always difficult to predict the way the future governments may influence the country’s economy.  In the past the politics of the country have defined the economic policies that influence the performance of the country in international business.  Political instability and crisis have affected the investment and the public, but this is no longer a factor since the country is politically stable.  This is expected to continue in the future thereby increasing investor confidentiality.

The government should be committed to displaying international business in relation to global business to attract foreign investment and capital contributions from external sources.  The political class of the country should in the future focus on reducing inflation and improving the living standards of the people in the country to create an enabling business environment.  This in turn will increase the income of the people and also increase the country’s buying power, effectively attracting multinational companies.  This will be enhanced by the fact  that there would be  a ready market in the country for services and products.  The government should continue stabilizing the economy of the country through exemplary political leadership and sustainability.  The autonomy of the central bank of Brazil given by the political class will facilitate the banking sector to make and implement policies that are in the interest of the economy hence appeasing investors.

The stability and other future expected developments in government policies will definitely affect the way the country relates to the world in trade. The stable government will benefit the country in international economics in the following ways: there will be large scale economies due to the new multinational, provision of wider market as international business will increase and improve market opportunities (John, 2010).  The other benefits in the future will be technological advancement brought by the multinationals which in turn increases the opportunity of domestic organizations.

Social cultural profile

The Brazilian cultural showpiece, the Rio Carnival traces its origin to the Christianity introduction by the Portuguese.   The Brazilian people later transformed it into an exuberant celebration that dazzles many in the world.  The celebration is part of Brazil culture.  The modern Brazilian culture is a combination of cultures.  The cross cultural dimensions can be felt in music performing arts and literature.

The cultures have been amalgamated into one rich culture that is full of African and European  tastes colors and sounds.  The ease with which the cultures are intertwined and expressed is a source of economic strength.  International business thrives where there is cohesion in cultures.  The culture showcasing does not only attract foreigners to the country but gives a memorable experience that spurs tourism therefore economic growth.  Every heritage in the country is shared by the people, something that is cherished by foreign investor who throng to Brazil on annual basis.  The predominant cultures in the country are of European and African ancestry, but the country has fought hard to preserve the indigenous and original cultures of the Amazon basin.  The unique indigenous languages are still spoken in the country, a celebration that inspires tourism growth.

Future scenario in social cultural dynamics

The future of Brazil looks bright .  This is because the country has a domestic ; population of around 200 million people which is projected to grow at the rate of 0.8 percent per year.  The middle class is going to grow significantly due to the favorable economic conditions and the improved wages introduced by the government.  Stimulus social programs put in place by the government have helped many citizens to success and avoid poverty.  This includes educational improvement and attendance.  This implies that the future of the country is to be a strong economic powerhouse due to the increased living standards.

The social indicators in the country that attract international trade in the country will countinue being favorable.  This includes the population growth rate which stands at an average of 0.8 percent annually and is expected to countinue with this trend.  The urban population growth rate stands at 1.1 percent and it is projected to go up in the coming years.  This will be  a good indicator to investors because the customer base is expected to rise significantly in the future.  The social parameters of the country like life expectancy is high at around 70, while fertility rates are 1.7 and they show trends of improvement (Jonathan, 2011).  This will be favorable to the  country socially for a thriving business environment on the global scene and this is expected to improve.

Social progress of the country is projected to continue being impressive.  There has been a remarkable reduction in poverty level in the country and inequality indicating a sustained trend in the future.  The government is oexpected to the fight against poverty at the forefront.  A sharp decline in inequality in the country will be shown by good labor market and effective redistribution policy.  The country is also expected to  device more ways of further reducing poverty and inequality especially in the rural areas (Carlos, 2011).  The government is further expected to extend the scope of cash transfer which should relieve people from poverty providing a conducive environment for international trade in the future.

The buying behavior of the population is to be predictable as many more people move out of poverty.  The communications service industry is to be effective and expanded as more investment in the country continue to trickle in.  The social literacy level is expected to improve thus increasing and cementing the social ties and bilateral agreements with other states.  The rising rates in the education sector and improved social services such as health, especially in the poorest regions of the population points to a sustained economic growth  and therefore conducive environment for international business.  The broken poverty cycle in the country means that the future in the business, signals a customer base that is able to consume domestic products and international products and services.

Economic scenario

The strategy that was started  in desperation following the economic shock in early 70s has worked to position Brazil on the global map economically. Today the economy boasts of significant gains to a point that the GDP has expanded to reaching$ 2.2 trillion the largest in South America region.  The income per capita has risen to $ 11000 by the year 2010.  The GDP growth rate is 4.5% annually (Amanda, 2009).  This is a record in the Latin America region. the Brazil stock exchange is the largest in the South America region with a record share of $ 1.167 trillion .  This makes the exchange the fourth largest in the world. All this facilitates investment and improved capital markets.

The country utilizes ethanol in their operation and nearly all new motor vehicles sold in Brazil are environmentally flexible-fuel. The engines are able to blend both the fuel gasoline and ethanol.  This is the new trend that is driving the economy of Brazil to grow and compete with major world economies such as that of the USA (Anthony, 1994).  The world is now becoming increasingly cautious of the environment which means that the country has a ready market for its ethanol both domestically and on the international business market.  The fact that 40% of the population in Brazil use ethanol shows how effective the growth of Brazil is driven by economic innovations (Jim, 2001).  Brazil today is the world’s producer of ethanol and exporter.  The economy is boosted by this new technique and innovation.

Business thriving and booming consumption

The transformation of the consumer and financial sectors in the domestic market.  This was experienced in the recent credit offer of IPOs where an overwhelming $10 billion was realized.  This is something that was unimaginable in the recent past.  In addition to this the subsequent IPOs have increased the share of money involved.  Today the Brazilian market value is ranked with the Europeans’ largest banks.  The income levels of the country have greatly improved hence supporting the  economic growth.  This is due to the stabilized economy and the expansion policies that are initiated.  As of 2008 the monthly household income has risen steadily to a point of reaching $584 on average (Albert, 2001).  Other macro factors such as availability of credit facilities easily and lower interest rates have contributed to the rise in domestic consumption.  The changes have ultimately provided an opportunity for the economy of Brazil to be a broad-based one.

Growth opportunity and future scenario

Brazil as a country and its people have an appetite to grow.  The country has seen large companies set up their operation in the country outlining the extend to which the economy of the country has developed.  The government has been specifically contributing to research and innovation so that efficiency and new products have evolved over time to boost the growing economy.  This offers a chance for investment both from domestic investors and international companies in the present and in the future.  The recent tackle of the economic crisis of 2008 shows the maturity with which the economy has reached and can sustain itself in  any turbulent economic crisis. This is also expected to be maintained in the future as the country has all this potential.  Better product diversification and geographic positioning make the country less vulnerable in the international business market.  The drastic increase in domestic consumption coupled with self sufficiency in energy make the country a world of opportunities for trade and investment.

The future scenario of economic dimensions

The government of Brazil will have a plan to increase its spending up to a trillion dollars in the future.   They intend to do this through an acceleration plan in the growth of the economy.  They intend to boost the energy productivity and infrastructure advancement .  Reforms in the judiciary, security and federal services are required in the future for efficient trade operations.

The reforms and their implementation will be crucial in the comparison of the business environment that Brazil offers and the other competitors in the region such as Mexico.  The region of South America is seemingly being drawn into an economic block of the pacific coast.  This bloc is trying to make it easier for free market , increased investment especially foreign and increased trade ties.

The financial capability of the country is the other contributor of the economic prowess of Brazil (Joe & Samantha, 2011).  This has ensured that the interest rates are lower and affordable by the population, all external debts accrued over the years have been significantly controlled and reduced, and inflation manageable. This is expected to countinue in the future especially with the new reforms being implemented.

Immense potential that lies within the country is the other strong drive of the international business ties.  A perfect example is the way in which the country’s capital was able to outbid the capital giants such as Chicago to be given the status of holding the 2016 Olympic. This potential is yet to be fully exploited therefore implying that the country will countinue with its economic growth.  The cost was high and the scope of operation required is immense but this wil change in the favor of the country.  The world is now acknowledging the potential of the country with its new economic clout and this is expected to grow  (FRANCISCO, 2004). Infrastructure development in the country has easened the operation of business in the country as distribution and production of goods and services improve a scenario that is expected to improve even further in the future.  The government continues to develop major projects to open up the country to international trade.

The energy prices are always high, however this is expected to change in favor of the country since the use ethanol is projected to rise unlike many countries in the world.  The country makes ethanol from sugar cane which is more efficient than ethanol made from other sources and this will rise as the country .  This is expected to make the country to have a competitive advantage in the international market.  The monetary benefits acquired from this are expected to be pumped into the economy to stimulate growth.  The country only provided a small package of around 1.5% of the GDP to sustain the economic growth, but this will lvel and help the country in the case of a recession scenario in the future.  This represents a minimal package compared to other countries who had to dig deeper to put their economy on track.  Japan for instance, had to stimulate their economy by 15% of their GDP and the USA 7% (Alexei, 2008).

The economy of Brazil did not suffer much from the world recession, this is because of its low unemployment rate and less dependence to trading with economic powerhouses.  This scenario might change depending on the prevailing future economic conditions.  Countries like Spain and Greece were affected by the meltdown due to their reliance on trading with European large economies that suffered a recession  (Andre, & Diana, 2009).  The employed population is expected to grow thus offering  a ready domestic market for the products thereby stabilizing the economy.  The diversification of customer base by the political class in the country can be expected to further increase therefore cushioning the economy from meltdown.  This will ensure that the country do not depend solely on developed world for consumption of its products.

The new economic growth will be  boosted by the new finding in the oil exploration.  The government is expected to use the money and earnings received from oil and fuel exports to fund development projects in the country.  The economic growth rate of Brazil made it to be included in the BRICs  region of emerging power economies of the world and this will countinue for several years to come.  The country has grown considerably to a point of performing fare than other countries such as Rusia and this trend is expected to be maintained(Fabiola, 2009).  The population of the country will countinue being the major contributor of the economy.

Trade and industrial policies and regulations  will influence the way trade is conducted in the future (Keith, 2006).  Economic trajectories and productivity of the country are expected to be affected in the future by reforming policies.  Great care has to be taken and measures at all levels of government should be undertaken to ensure that Brazil becomes a vibrant economy in the world business and economies rather than be a sick or sleeping giant in the world (Gustavo, 2011).  The values and realization of dream 2030 of the world are there to act as a reminder to world governments that the trends being experienced now and conditions might  change in the future.  Improved mechanisms should be put in place in the country to avoid any unforeseen circumstances in the economy.

The country should figure out how well it can deal with any future recession (Benedict, 1997).  The government of Brazil was able to beat the recession of 2009 due to its massive production of farm produce and the boost from domestic market growth.  The Chinese have in the recent past a growing appetite for Brazilian primary goods, which has helped the economic growth and foreign investment (HAL, 2009).  This implies that the relation of China will affect the country, directly in the future.  A sustainable economic growth in China will mean a favorable economy and market for Brazil, while on the other hand, a slump in the political and economic factors in China would spell doom to the economy of Brazil.  The country should be aware of the future challenges and crisis and learn to deal with it early if it intends to continue with growth (Gary, 2009).  The preparedness of the country on its expenditure in the future remains uncertain and how well they will  be able to make difficult decisions on investment  is key to economic control.

The demographic dimensions are expected to change in the future.  The statistics show that the fertility and life expectancy are high implying that the population is expected to grow steadily.  Brazil is a country which is supported by high population advantage.  The working people compared to those not working is expected to reduce significantly in the future as more investment sets in the country.  The population demography projects that by the year 2030, the middle a is expected to be 37.4 which means that at this stage in the future the country will face high demand for pension (Bolsa, 2011).  This will lead to a shrunk labor population thus putting pressure on the economy resulting decline in economic growth.  This is evident as it has happened to more industrialized countries such as Spain.  The economy under pressure, will certainly increase the pressure on the political side in the distribution of resources and public delivery of services.  In case Europe and China experience slowed growth in the economy, together with that of the USA the government of Brazil will face difficulties in , their economy.

The international influence of a country on the business environment is not determined by growth in economy alone (Carmen, &Miguel, 2003).  Brazil has a competitive advantage in the world economy in two significant fields and they include a vast of mineral resources and the technologies of advancing the minerals into required products.  The country is blessed with all kinds of mineral including gas, oil, biodiversity, and fertile land and fresh water for farming. States like India and China have polluted their environment and global warming is expected to affect adversely their food production (Jim, 2005).  This will give Brazill an opportunity to offer them with food products.

Recommendations, the critical factors  of success

Infrastructure development

Infrastructure is key to achieving economic, social political development. Improved infrastructure means that productions of the products and services is not only efficient but faster.  This will ensure that the channels of distribution are effective and faster thereby increasing international trade.  The returns on investment have always been substantial for countries that have invested heavily.  Brazil could utilize this opportunity to increase their market share.  The government should ensure that the infrastructure development is in line with environmental requirements so that they do not create another crisis in the process.

A strict focus should be put on the development projects to facilitate international business ties.  This kind of projects bring success to the country as they form a platform for a conducive environment to perform trading.  The use of technology in such projects in the infrastructure sector is inevitable since it determines the competitiveness of the country when it comes to the world market.  Efficient airport would hasten delivery of products to the international world.  It will go a long way to facilitate the introduction of large multinationals that attract more investment in the country.  More confidentiality on the part of the investors will be crucial to economic sustainability enhanced by quality infrastructure.  The private and public partnership will be crucial in the implementation of this project.  The government should streamline  the public sector to make services required to implement these projects faster. The policies regarding licensing and compensation of population affected by infrastructure improvement  need to be addressed and done in the interest of investors and citizens.  It is critical that sanitation and hygienic standards are upheld to avoid collapse of the economy.

No economy whoever strong it is can function without the infrastructure at its highest capacity (Alexei & Ginger, 2010).  Poor roads inadequate technology advancements, and deficient sea ports and airports create radiance at all levels of production.  The government, as said earlier has put its efforts in building and rehabilitating the infrastructure using the new found wealth.  This should continue and quality improved so that faster production and distribution is ensured.  The projects that are under construction need to be hastened.

The main aim of the political dispensation should be to improve the infrastructure so that the potential of the Brazilian economy is realized (Alexander, 2011).  The government thus has a task to expand the development especially areas that are traditionally neglected.  This will also help the population living in these remote areas to be independent and earn a living.  Recent researches pointed out to poor infrastructure being the major contributor of poverty and thus lack of these peoples’ participation in the building of the Brazilian economy.  The poor live in areas that are prone to poor roads, inadequate distribution mechanism, unemployment and ineffective communication channels.  The best the government can do in the Growth plan is to address these issues and curb the poverty level so that these people benefit the state.  This could in away offer job opportunities to the people of these poor regions by offering them work in the building process.  This can be the best result that the planned acceleration growth could achieve.  The impact will double one where the country improves infrastructure that sustain economic growth and offers employment at the same time.

The country has come up with a Growth Acceleration Plan which has had a total of 880 billion dollars being invested in the infrastructure sector to spur growth.  The plan also intends to construct a high speed railway system and make the country ready for the coming world cups thus expanding the economy of Brazil for longer period.

Reduction of poverty

Poverty remains to be the impediment to economic growth of Brazil.  Reduction of poverty can cause enamors changes in the economy.  This is because the people who are affected by poverty can be major players in the economic development of the country.  Poverty could be reduced through many reforms.  First, the government can reduce poverty through education.  Education is power and it has helped many families across the world to get out of poverty.   The education system should be restructured in such a way that it encompasses poverty eradication.  Education enlightens people and makes them to think critically and contribute to the economy.  The breaking poverty cycle, will reduce the government burden.  Currently the government spends around $ 35 million on the families languishing in poverty.  Reduced poverty would change the money and channel them to other economic activities to generate more money.  Another way of poverty eradication is provision of job opportunities for the poor.  This job provision can be through working on infrastructure projects stimulated by the government.

Removal of investment obstacles

The current situation in Brazil, on domestic investment is alarming.  The public does not have a culture of saving and this is the major barrier to economic growth.  The government can act to help save the situation by reforming the systems of pension in the country so that it restores the sustainability.  The government should reduce pension provision so that they nurture a culture of saving.  This would force the population to seek for investment opportunities thus increasing the capital base of the nation.

The federal government should lower the reserve requirements in the bank, lending obligation need to be removed, and liberalism in savings of personal accounts could be a game changer in investment.  A comprehensive tax system that is simplified  will boost the investment of resources in the country.   Other countries that have utilized this scenario have seen an improved investment system the other countries that have had this efficiency include China and Mexico.  The countries ensured that there was an equal playing field for the banks and the whole financial sector.  The reform should further make [provisions for tax credits that are explicit and independent.  The private sector and lending institutions have a chance to exploit in the country in the future  to be done in provided they utilize the financial markets .  This is has worked to give incentives to the investors but the they could be phased out once the investment has taken root.

Institutional reforms

Brazil has grown over the recent past, in the process, it has made strides in institutional reforms in an effort to make them more effective for the citizens and the investors.  The judicial reform was the landmark of all reforms as it increased investor confidentiality and encouraged them to invest in the country, but more need to be done in the overall government and private policies.

A slow legal system is a risk to the economy as it pushes away investment.  The country should then reform the institutions that are currently not performing optimally to realize the economic potential of this giant country.  A strict adherent of the judicial system is the force behind the economic powerhouses such as the USA and the UK.  The reforms especially in the education sector are needed to give the much needed skilled labor and innovation all economic sectors.  The education that is growth centered will help provide jobs or the students will come up with new ways of creating job opportunities thus not only helping themselves but to greater extend the county’s economy.  Tax reforms can also help eliminate poverty, the government need to pass laws and regulations in the financial institutions that are intended at eradicating poverty.

Increased openness

The country should increase its openness to the world of international business.  This could be through the provision of new international trading partners and bilateral agreements.  Foreign investment policies should be designed to favor the investors.  The import tariffs need to be lowered and the import system advanced in technology to improve efficiency and make it cheaper for multinationals to trade in Brazil.  The government should in the future treat all the investors equally may it be domestic or foreign investors.

In conclusion the Brazilian economy has grown tremendously to become a major player in the world economy.  The country should provide favorable and enabling environment for business so that the economy is sustained and improved.


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