The election of President Luiz Inacio Lula da Silva in the 2002 elections in Brazil has been described as a "milestone," a starting point for secured democratic rule in the nation (Amann 14). Such democratic steps have been important in the establishment of economic norms and practices for the country; the more socialist models of state-run industry have been rejected, and significant international debt has been incurred to address the social ills facing the country. In the wake of other Latin American economic crises, the Brazilian economic situation becomes even more important; additionally, the size and growth of the Brazilian market has come to bear significantly on the world's economy.

             This paper will address the current political situation and economic trends in Brazil through the lens of the allocation of resources in both the public and private sectors. Additionally, the roles of government regulation (or a lack thereof) in each sector will be examined from an economic perspective. In conclusion, the overall performance of the Brazilian economy will be analyzed, especially in relation to other large economies in both the developing world and the established G-7 nations like the United States. Both historical and modern economic trends in similar situations will be applied to assess the current state as well as the future of Brazil's evolving economic status.

             First, a brief historical summary of the economic factors and trends in Brazil can shed light on the recent developments in the nation's economy. Both politically and economically, the trend has been one of boom and bust; instability has been a significant characteristic of Brazil since the 1950s (Amann 15). Periods of rapid growth have quickly fizzled into periods of recession and high inflation; many experts attribute economic instability to the political authoritarianism and military coup which took place in 1964 (ibid.