Venezuela Vs Brazil Essay
You are the CEO of a large company seeking to invest in either Central or South America and have directed your staff to prepare a report and recommendations. Two of the countries you are assigned are Brazil and Venezuela, and it is your task to make the recommendation between these two countries. Assess the various risks in each of these countries. Which country would you recommend and why? Explain your answer with a well-constructed and cogent response.
As a CEO looking to invest in Brazil or Venezuela I would look closely at the past, current, and future economic forecasts for each nation. At a glance, Brazil looks like what could be a burgeoning economy based in a nation with numerous natural resources, but when you look more closely, you see a nation wrought with political corruption on the verge of collapse. Only five years ago, Brazil’s economy grew at a rate three times faster than the Unites States and its economic size surpassed that of Great Britain’s (Gillespie Feb 19th 2015). Since that boom, Brazil has faced corruption issues with the large state owned oil company Pertobas as well as …show more content…
falling approval and mistrust of the elected officials. On the horizon, Brazil has a huge amount money being invested into the nation’s infrastructure in anticipation of the 2016 Olympic Games, something that I believe could lead to future positive economic benefits. Venezuela on the other hand is a socialist country run by completely corrupt officials, who waste all of the potential profit associated with their huge reserves of crude oil.
Because of the policies of the government, the currency of Venezuela, the Bolivar has and continues to devalue to a point that it is affecting US companies already doing business in Venezuela. PepsiCo and CocaCola took $126 and $660 million loses respectively, as a result of the devaluation of the Bolivar (Gillespie Feb 11th 2015). Of the 178 countries ranked by the Heritage Index of Economic Freedom, Venezuela ranks 176th (Venezuela 2015). Venezuela may have many attractive resources, but in terms of investing, now is not the time. The country is still very far from being politically and financially stable enough for me to consider risking my company’s resources as an
investment. Having looked at both of these countries, I would recommend that my company invest in Brazil. Although Brazil is not currently an ideal economic environment, they have a political system in place that lends itself more toward capitalistic and free-market ideals. Venezuela is still very far from creating an economic environment where free market capitalism can thrive.
References:
Gillespie, P. (2015, February 19). Brazil 's scandalous boom to bust story. Retrieved May 7, 2015, from http://money.cnn.com/2015/02/19/news/economy/brazil-economy/index.html
Gillespie, P. (2015, February 11). Venezuela is causing havoc on U.S. companies. Retrieved May 7, 2015, from http://money.cnn.com/2015/02/11/investing/pepsi-venezuela-hurting-us-companies/index.html
Venezuela. (n.d.). Retrieved May 7, 2015, from http://www.heritage.org/index/country/venezuela
As a CEO looking to invest in Brazil or Venezuela I would look closely at the past, current, and future economic forecasts for each nation. At a glance, Brazil looks like what could be a burgeoning economy based in a nation with numerous natural resources, but when you look more closely, you see a nation wrought with political corruption on the verge of collapse. Only five years ago, Brazil’s economy grew at a rate three times faster than the Unites States and its economic size surpassed that of Great Britain’s (Gillespie Feb 19th 2015). Since that boom, Brazil has faced corruption issues with the large state owned oil company Pertobas as well as …show more content…
falling approval and mistrust of the elected officials. On the horizon, Brazil has a huge amount money being invested into the nation’s infrastructure in anticipation of the 2016 Olympic Games, something that I believe could lead to future positive economic benefits. Venezuela on the other hand is a socialist country run by completely corrupt officials, who waste all of the potential profit associated with their huge reserves of crude oil.
Because of the policies of the government, the currency of Venezuela, the Bolivar has and continues to devalue to a point that it is affecting US companies already doing business in Venezuela. PepsiCo and CocaCola took $126 and $660 million loses respectively, as a result of the devaluation of the Bolivar (Gillespie Feb 11th 2015). Of the 178 countries ranked by the Heritage Index of Economic Freedom, Venezuela ranks 176th (Venezuela 2015). Venezuela may have many attractive resources, but in terms of investing, now is not the time. The country is still very far from being politically and financially stable enough for me to consider risking my company’s resources as an
investment. Having looked at both of these countries, I would recommend that my company invest in Brazil. Although Brazil is not currently an ideal economic environment, they have a political system in place that lends itself more toward capitalistic and free-market ideals. Venezuela is still very far from creating an economic environment where free market capitalism can thrive.
References:
Gillespie, P. (2015, February 19). Brazil 's scandalous boom to bust story. Retrieved May 7, 2015, from http://money.cnn.com/2015/02/19/news/economy/brazil-economy/index.html
Gillespie, P. (2015, February 11). Venezuela is causing havoc on U.S. companies. Retrieved May 7, 2015, from http://money.cnn.com/2015/02/11/investing/pepsi-venezuela-hurting-us-companies/index.html
Venezuela. (n.d.). Retrieved May 7, 2015, from http://www.heritage.org/index/country/venezuela