Economic Comparison between Brazil and Argentina (Economic Development Term Paper

Economic Comparison between Brazil and Argentina (Economic Development And Growth) - Term Paper Example Introduction Population and economic size Brazil became independent on September 7, 1822. It covers 8,511,965 sq. km with a population size of 203.4 million1. Its population growth rate is 1.02 percent per annum. Brazil is the leading economic powerhouse and regional leader in South America. It is the eight world largest economy in the world. However, the country is bedeviled by high unequal income distribution and crime. Brazil continues to pursue industrial and agricultural growth and development strategy. The country has a well developed service, manufacturing, agriculture and mining sectors. The Brazilian economy experienced solid economic performance even in the face of global financial crisis. The economy recovered early as compared to other countries. It was during Lula’s reign when the country experienced high economic growth and improved social programs that improved lives of millions of Brazilian citizens. Domestic consumption is the key driver of the country’ s economic growth. However, the country experiences rising unemployment rates. Sound fiscal management, inflation control and floating exchange rate provided strong impetus for Brazilian economy to grow and develop over the years. The currency of Brazil is Brazilian reais. On the other hand, Argentina became independent on July 9, 1816. Its area coverage is 2.8 million sq. km with a population of 41,769, 7262. Its population growth rate is 1.017 percent annually. Argentina’s economy has experienced both good and bad times3. The country has suffered hyperinflation, currency depreciation, domestic debt default worth $85 billion, World Bank’s loan default and frozen banking system among others. This is because of poor governance by government officials. Between 1975 and 1990, Argentina paid interest on foreign debt. Furthermore, during the same period, the country experienced capital flights and tax evasion. In 2002, unemployment was 25 percent. The government also starte d repaying defaulted bonds worth $100 billion in an attempt to end shame from 2003. The Argentina’s economy grew at the rate of 9 percent annually from 2003 to 2007 following expansionary policies adopted by the government. The growth was negatively affected by global credit crunch between 2007 and 2009, which reduced growth rate to 0.8 percent. However, the economy rebounded and 8.5 percent growth in GDP was experienced in 2010. The Argentine currency is Argentina pesos. In fact, Brazilian geographical area, population, and economy is larger than that of Argentina. Argentina’s economy is less stable and volatile as compared to that of Brazil due to many past economic hardships. In 2008-2010 global financial turmoil, Argentina experienced diminished domestic growth as well as reduced domestic and global demand, which caused a mild recession in 2009. In 2008, many more people in Argentina are poorer than those in Brazil. In 2008, the population below poverty line in Bra zil was 26 percent while there are 30 percent in Argentina. Section one outlines each country’s natural resource deposits; section two indicates Gross Domestic Product; section three indicates unemployment rates; section four shows the budget; section five shows the inflation and section six shows foreign direct investment. In addition, section seven indicates international trade; section eight outlines exchange rate regime; section