Is Brazil sleeping on dynamite?

A question from Yahoo! Answers:

Economically, Is Brazil a country sleeping on Dynamite?

Dynamite here refers to the serious income inequality and the gap between riches and poors

I am now working on a thesis on Brazilian economy. Brazilian, a 2-faced nation as I call it, because in one hand it shows great potential in new technology(using sugarcane to make special substitue for Gas), and industrial development. But on the other hand, the overly-widened income inequaliy result in social instability. My point is, unless someone can do something to narrow down the income gap, all the advances in technology and industry will be eaten up by the inequality, and the economy of the nation will crumble down to nothing. Do you agree with it?

In order for an economy to “crumble down to nothing”, there has to be a full-blown civil war with massive property destruction. But statistically, income inequality is not a reliable determinant of civil war (nor, interestingly enough, is lack of political freedoms). Countries most prone to civil wars are those that depend on exports of primary commodities, have a relatively wealthy diaspora, and experience ethnic dominance (situation where the largest ethnic group is large enough to be a visible factor, yet not large enough to make exploitation of minorities pointless). Brazil exports relatively little primary commodities (commodities that it does export are mainly agricultural), has next to no wealthy diaspora (in fact, it attracts wealthy people from all over the world), and exercises ethnic dominance primarily against the indigenous people (logging companies force them off their hunting grounds), who are badly outnumbered by the descendants of Portuguese colonists and their African slaves.

So, no, by all signs of it, Brazil is not sleeping on dynamite. It may not be the fastest growing economy of the 21st century, but it is not likely to “crumble down to nothing”, either.

Source:

http://econ.worldbank.org/WBSITE/EXTERNA…

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