Building Brics: Brazil has gone from a 'hyperinflationary basket case' to a Latin American power. Fernando Henrique Cardoso, a former president and the person credited with the nation's economic rise, visited the UAE for a look at the Emirates' energy-rich economy.
The 'B' in Bric stands for booming
Jim O'Neill, the Goldman Sachs economist who coined the term "Bric" for the dynamic economies of Brazil, Russia, India and China, tells how in the early days of his "Bric dream" he was repeatedly told that he had included the South American nation only to get a "nice-sounding acronym".
Even Brazilians could not believe that their nation, which throughout the 20th century had failed to live up to its billing as "the country of the future", could finally make it into the economic big league.
Since then, that has all changed. Mr O'Neill now says Brazil has moved from "hyperinflationary basket case to a potential 21st-century Latin American superpower".
The change of perception about Brazil among global investors is largely the legacy of one man, Fernando Henrique Cardoso, whose decade as the head of the country's policymakers laid the old image to rest.
He streamlined and modernised Brazil's creaking economy, sold off inefficient state-owned enterprises, and above all ended the hyperinflation that had been the curse of Brazilian life for many years.
In 1997, after four years of Mr Cardoso, first as finance minister, then as president, Brazil had squeezed annual inflation down to a manageable 7 per cent or so. Before his currency reforms, it had been running at more than 30 per cent per month.
"It feels like Brazil has become a new country over the past 20 years," Mr Cardoso said in Abu Dhabi last week.
He was in the UAE partly to argue the case, along with the country's leading bank, Itaú Unibanco, for greater foreign direct investment in Brazil, and partly to see first-hand how the UAE and other Gulf countries had managed their own transformations as energy-rich economies. Thanks to deepwater oil reserves, Brazil is also becoming an energy superpower.
"Countries here in the Gulf have experience of dealing with the economic effects of an economy and society dominated by oil," said Mr Cardoso. "The UAE has looked at the future and produced amazing things, infrastructure, museums, wealth funds.
"They are trying to put the Emirates on the map by using oil to produce long-term revenues and stability," he added. "It is not just to attract tourism, though I see that is important, but also to attract business and foreign investment. Brazil wants the same."
It was his first time in the Gulf, apart from a brief stopover many years ago, but he is familiar with the Middle East by virtue of his place among The Elders, a group of senior statesmen including the former South African president Nelson Mandela, who have advised on the Israeli-Palestinian problem.
He recognises that there are significant differences between Gulf economies and the economy of Brazil.
"My country has a population of 200 million and a much bigger economy, and there are social divisions that do not exist in the Gulf," he said. "But there is more social mobility and more democracy, more checks and balances on what policymakers can achieve.
"Here, it is a top-down process. Governments have the power to make decisions and decide long-term strategy, but as we have seen with the Arab Spring, they also have to be able to produce a trickle-down of wealth for their people," Mr Cardoso added.
"Some Latin American countries have similar problems, with young people an increasing part of the population and with indigenous people not being integrated properly into the social economy," he said.
Although trade between Brazil and the Arab world is rising, up 28 per cent to more than US$25 billion (Dh91.82bn), according to figures from the Arab-Brazilian Chamber of Commerce, Mr Cardoso still thinks there is scope for more foreign direct investment in his country.
"There are still big opportunities, in oil and gas, infrastructure, real estate and agriculture. The Gulf countries understand all these sectors," he said.
With two global sporting events - the 2014 Fifa World Cup and the 2016 Olympic Games - scheduled to be held in Brazil, there has also been an explosion of interest in airports, road construction and the hotel and leisure business, all of which are staples of the Gulf economies.
Brazil's need for foreign investment highlights the fact that the Bric countries, despite all the characteristics that connect them, are not homogeneous.
"China attracts more foreign investment than Brazil, despite its big reserves and savings," said Mr Cardoso. "Brazil is not totally a commodity economy, like Russia. We are much more akin to India in that respect.
"But our saving capacity is low, at only around 20 per cent of incomes. We are not Chinese, we are Latin Americans."
Foreign investment also brings with it access to high technology, especially in the oil industry.
It could also have a big effect on the Brazilian financial industry. The big foreign banks all have a presence in the country but are overshadowed by the domestic financial sector. The equity markets too do not reflect the real economy.
"The Brazilian financial system is Brazilian, but this will change," said Mr Cardoso, foreseeing a boom in initial public offerings and private-equity opportunities in the country.
As one who has had direct dealings with global financial institutions such as the IMF and World Bank, Mr Cardoso has firm opinions on the crisis in the euro zone, which he rates as one of the biggest threats to the world economy.
"I always said it was not possible to follow strictly what the IMF put forward," he said. "In Brazil, we increased taxes but also took measures to stimulate growth. It was subtle. In Europe, they are doing the opposite, and it's killing domestic markets. If I was the president of Greece, I'd be trying to get out of the euro," he said.
The Americans will probably be successful in overcoming the effects of the financial crisis, he believes, although there are inflationary risks; China too faces problems in shifting from an export-led economy.
On Brazil's traditional South American rival, Argentina, he said: "It looks like they are going through a process of under-development."
Spoken like a true Brazilian.