Brazil and China - Reputations and Reality

From Brazil on the short end of a 7-1 score by Scott Sumner. An interesting and constructive conversation in the comments section. Sumner is trying to identify what are the variables that explain the persistent difference in economic performance between China and Brazil as well as determine why there is a perception of Brazil doing so well.

Remember that Brazil is a sophisticated country that has been exporting products like commuter airliners to the US for many years. They have a huge internal market and a fabulous agricultural sector. Waterpower and lots of resources. Modern big cities. We aren’t talking about Lesotho or Laos.

And their per capita income is $12,200 and going nowhere. It’s a mystery to me. And it’s also a mystery as to why they get such a good press. Why aren’t they expected to grow like China? The soft bigotry of low expectations? Is the mental image of Brazil the beach life in Rio, whereas the mental image of China is hard-charging, sharp-elbowed businessmen in Shanghai and Shenzhen? What do you think?

But.

I checked online and it looks like Brazil has averaged 1.5% RGDP growth over the past 3 years. In contrast, RGDP in China has been rising at about 7.5% per year. In per capita terms that’s a roughly 7-1 advantage to China. Ouch. (Sorry to my Brazilian readers for mentioning 7-1, but I just couldn’t resist.) What could explain such a vast difference?

I hadn't looked at comparative per capita GDP numbers in a good while and was surprised by this.

Perhaps it’s because Brazil is about 20% to 25% richer, and richer countries tend to grow more slowly. But that would explain only a slight difference. Both are solidly middle income countries, thus the two growth rates should not differ that much.

I would have estimated that China had passed Brazil some years ago.