[RalphJ]

Originally Posted by robh

If external money caused the majority of growth in Brazil then growth would be tiny. There just isn't enough money floating around that can be invested in emerging markets to massively affect the growth of a huge country & economy like Brazil, it's economy is the tenth largest in the world after all.

The United Nations Conference on Trade and Development (UNCTAD) chief economist Heiner Flassbeck warns Brazil that it is a victim of "international casino". The financial markets are making billions in the short-term by taking loans in Japan, with almost no interest, and placing it in Brazil's financial markets. They are making billions of this process as Brazil rewards them with the highest interest rates in the world (40).

So it is not surprising that Brazil's financial market has grown astronomically. But when US interest rates begin to tick-up again foreign investors will return their short-term fortunes to safer US securities. Brazil continues to be a place where investors make immediate profits and then flee towards safer investments. Unfortunately, there continues to be minimal investment in actual long-term production in the Brazilian economy that could generate new employment, transfer technology and usher internal development.