Introduction

Brazil has changed greatly during the past two years, and basically for the better. But we have not been the only ones to change. The world has also undergone a rapid and profound transformation.

Brazil feels quite at home in the contemporary world. Democracy and economic freedom are two ideals dear to all Brazilians. Rather than seeing the world as a threat, we view it increasingly as a series of opportunities that will help us achieve our long-desired objectives of economic development and social justice. External sources must provide ingredients that are essential for our sustained economic growth, such as capital to create jobs and sophisticated technology to make us competitive.

Globalization is an objective fact and not an ideological option. Realistically, we must accept it and struggle to extract from it the maximum benefit for Brazil. Contrary to what many believe, globalization is not a straight-jacket shaped merely by market forces, often undermining the State's independence and ability to act. The rules that discipline the activity of economic agents continue to be set politically by the State. The interplay of political interests is an integral part of the creation of the juridical and institutional framework of globalization. Thus, countries that do not play an active international role are condemned to be marginalized.

The State must be well prepared in order to ensure that its interests are protected while the rules of globalization are being established. It must also define its activities with greater precision because the range of issues with which it deals has become much more complex. Those who announced the death of the State spoke too precipitously. The role of the State has, in a certain way, become even more essential. In addition to such classical functions as security, health and education, the State must now respond, in a democratic manner, to the growing demands for respect of human rights. A cohesive, well-organized and, therefore, strong State will be better positioned to resolve the needs that stem from globalization.

This rationale guides the actions of my government, a government inspired by social-democratic principles. We are successfully promoting changes that improve the country and strengthen our credibility overseas, beginning with the economic stability and growth brought by the Real Plan. These changes produced a perceptible improvement in the distribution of income for the poorest economic sectors.

In my international travels, I have conveyed this message of a rejuvenated Brazil that has entered a new phase of economic growth and of greater social justice. I tell government officials, businessmen, journalists and academicians of this new Brazil that we are building with each passing day. They have listened attentively and have responded positively, as proven by the numerous announcements of new productive investments in Brazil. Foreign interest in Brazil has grown significantly because our credibility has increased.

The following report of my administration's accomplishments demonstrates more than the fact that the country has progressed during the past two years. It shows that the nation is traveling along a well-defined path, a path that already enables us to build a better future for all Brazilians.

Fernando Henrique Cardoso

Publicações

Contents

I - The Economy 1. Inflation