Brazil's economy is 55.9 percent free, according to our 2008 assessment, which makes it the world's 101st freest economy. Its overall score is 0.2 percentage point lower than last year, with lower scores in freedom from corruption and labor freedom. Brazil is ranked 21st out of 29 countries in the Americas, and its overall score is below the regional average.
Brazil is a regional economic power but is not notably strong in any of the 10 economic freedoms. The personal tax rate and the corporate tax rate are burdensome. Overall tax revenue is high as a percentage of GDP relative to other developing countries.
Brazil suffers from weak financial freedom and a large central government. Regulatory inflexibility makes starting a business take much longer than the world average. Significant restrictions on foreign capital exist in many areas, and the government remains heavily involved in banking and finance. The judicial system and other areas of the public sector are inefficient and subject to corruption.
Background:
The world's fifth-largest country, Brazil has abundant natural resources but has not realized its full economic potential. Real GDP growth was positive but relatively low over the past decade. High income inequality and the rapid growth of the urban poor population have fueled pressure for socialist policies. A convoluted tax system, inadequate transportation infrastructure, and barriers to foreign investment have also impeded growth. Other problems include government management of most of the oil and electricity sectors, an ineffective judiciary, weak public education, and excessive regulation. Agriculture and industry account for 10 percent and 40 percent, respectively, of GDP.