Chapter 2

The Original America Is the New Brazil

Thus in the beginning all the World was America, and more so than that is now; for no such thing as Money was any where known. . . . All the World was for the taking.

—John Locke, The Second Treatise on Civil Government (1690)

The controversial thesis of this book is that the relative advantages of two richly endowed countries, Brazil and the United States, will reverse in the twenty-first century. One of the more fundamental developments of our time is the progressive slowdown in growth rates of the leading advanced economies and the increasing dynamism of what were once known as “underdeveloped” countries. While we don’t often look at it this way, today’s advanced economies are those that were well-suited to prosper in the conditions prevailing during the nineteenth and twentieth centuries.

Even though the United States emerged as the world’s foremost economy in the middle of the twentieth century, Brazil’s growth rate substantially exceeded that of the United States during most of that century. But the twentieth century was not Brazil’s century for at least three reasons:

1. Brazil was growing from a very low base, as its economy had stagnated during the colonial period.1 As John H. Coatsworth, author of the Cambridge Economic History of Latin America put it, “At the time of independence (1822) Brazil had one of the least productive economies in the Western Hemisphere, with a per capita GDP lower than any other New World colony ...

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