Time for Shippers to Get Big on Brazil

Over the years, Walter Zinn, Associate Professor of Logistics & Marketing, Fisher College of Business, The Ohio State University at Columbus, OH, has enhanced his expertise about business and logistics in Central and Latin America. At the present moment, he's optimistic about possibilities in Brazil. The country's new president, Luiz Inácio Lula da Silva has created a team with strong links to Brazil's business community. Dr. Zinn draws this analogy: "When Nixon was President, he was such an anti-Communist that he could go to China and no one complained. With Lula, it's the same thing. He has such credibility with the left that he can bring in discipline to Brazilian governmental programs that need it."

Dr. Zinn sees industry in Brazil growing, its trade surplus larger than it has been in years, and confidence increasing in its markets. Importantly, Henrique Meirelles, former president of the US-based Fleet Boston financial group moved to Brazil and was elected as a Congressman from his home state, He is not a member of Lula's party. In early January, Lula appointed Meirelles to head Brazil's Central Bank. This is a clear signal that although Lula wants more investment in social programs, he is not going to cut spending elsewhere--he won't compromise the government's budget to achieve those ends.

When Mexico defaulted a few years ago, investment in Brazil dried up with the market thinking the same failure would happen there. This was called the "Tequila Effect."

Dr. Zinn feels today's potential investors are more sophisticated and can differentiate between countries. He offers these words of caution. "It's important that business people not look at Latin America as a region. Differences between countries were always big, but now are bigger than ever. Mexico's economy is as large as Brazil's. Brazil is moving forward. Argentina and Venezuela are moving backward. It's very important not to endure a new Tequila Effect. Understand each country individually, and even regions within countries. There is a tendency to look at the region as a homogeneous entity. It was always false, but is more so now than ever."

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