Luiz Inácio Lula da Silva, president of Brazil
Brazil is widely tipped for economic greatness. Its leader revealed the vision behind the country's moves to growth during a keynote speech at a recent Financial Times investment conference.
The president of Brazil, Luiz Inácio Lula da Silva, 'Lula' to everyone, is an enthusiastic fan of entrepreneurship. Indeed, he has worshipped it since selling packets of peanuts on the street to help the family budget as a boy. Yet, unlike many advocates, he combines a fierce pride in the business capabilities of his fellow citizens - even those who, like him, have their roots in the humblest strata of society - with an equally firm belief in the need for the state to provide for society.
For instance, under his 'Light for All' scheme to get power to the tens of millions of Brazilians without electricity, the state has been spending up to $3100 a time on providing power connections to individual households in Amazonia, a job which private business - and even state companies - would never contemplate.
"Since March 2009 we have connected 2.02 million consumers using 906 kilometres of cable, enough to go round the world several times," said Mr Lula da Silva, adding that the move has generated sales of TVs, refridgerators and other goods by the million.
He tells the tale of businesswoman Eliane, who he met while visiting the construction site of an irrigation scheme. "Eighteen months ago," he said, "Eliane borrowed 50 reais ($29.20) and made pasties, which she sold to the workers on the project. This year she's got a restaurant serving 400 meals a day. She told me with immense pride not only that she had been able to buy items she never owned before, but that she'd already paid 5000 reais in income tax.
"Think of it", he added with a broad grin, "last month as the president of the republic, I got 5000 reais out of an investment of 50 reais which that woman made last year."
Then there are the refuse collectors and waste-paper sorters, Mr Lula da Silva added. "A few years back the BNDES [Banco Nacional de Desenvolvimento Economico e Social, the state development bank] didn't have the money to lend even to established businesses. Today the BNDES has lent 228 million reais to these people who are doing a fantastic recycling job. So I'm telling mayors up and down the country that they shouldn't give the cleaning contract to some company. That would make only one person rich. They should contract teams of rubbish collectors so the profit is spread about."
The Brazilian leader has a deep faith in the potential for growth and development that is locked up in the unsatisfied demand of poorer Brazilians. This belief helped to sustain the Brazilian economy during the time when the US's financial problems put a brake on its demand for Brazil's exports. To compensate, the country's trade promotion efforts pushed up China to become Brazil's principal trading partner and increased sales in Latin America from 19% to 26% of exports.
Opportunities for all
"Years ago," he said, "investors said it was impossible to develop a market which would serve the whole population. So they devoted themselves to cultivating one Brazilian consumer in four. It was like a family with four children devoting all their efforts to one child."
"My government is the political expression of the popular will to advance the interests of every citizen," he continued, with emphasis on the fact that a better distribution of income in a country such as Brazil with enormous inequalities was perfectly compatible with economic growth - and indeed was a vital ingredient of it.
The public sector was spending lavishly, said Mr Lula da Silva, with a $200bn scheme of public investment already being carried out. "Energy, highways, railways, waterways, ports, airports, housing - we're investing in it all. Brazil's becoming one big building site."
Next year investment will start in earnest on the development of the pre-sal offshore oil deposits.
"We don't just want to export crude oil, but with our advanced and sophisticated industrial base, transform it into a tool for national development.
"Our development plans need foreign investors - from all over the world. The invitation has gone out."
At the same time, financial speculation must not be at the source of political strategies or be the way to control production. A crisis which nearly became a cataclysm now demands the creation of new jobs and new hope. "Developing countries are indispensable agents in the building of a better and more transparent world financial system and for changes in the International Monetary Fund and the World Bank", he said.
Written by Hugh O'Shaughnessy, who is a contributor to The Banker
