Brazil is experiencing an economic boom. Photo: adam79 (flickr)

While much of the world fights off fears of recession and economic stagnation, Brazil is having an economic boom. Its steady growth rate has boosted production and has made Brazil a major player in world trade.

Brazil owes much of its new fortunes to its two burgeoning industries of oil and ethanol. Oil was recently discovered off the coast of Rio de Janeiro, which is estimated to hold between 5 to 8 billion barrels. With this discovery, foreign investment has been flooding into the country as companies try to develop this profitable resource.

Brazil is also experiencing windfall profits in agriculture, specifically ethanol. In recent months, ethanol has been gaining in popularity as an alternative fuel because of the rising cost of oil. Brazil, as the world’s largest exporter of ethanol, has greatly benefited from this rapid increase in demand.

Brazil has always been known as a country with a wide gap between the very rich and very poor. In 2004, the bottom 10 percent of the population received only 0.9 percent of the national income while the top 10 percent received 44.8 percent, according to UNDP figures. A surprising and encouraging result of this economic boom is that the gap is finally growing smaller. From 2001, Brazil's income inequality gap has shrunk 6 percentage points as more people moved up into the growing middle class. As well, the bottom 10 percent of Brazil’s population had a 58-percent increase in their incomes.

The government has played a major role in creating this upward social mobility in Brazil. They have used Brazil’s growing wealth to increase funding for many social programs for the poor. One very popular program is the Bolsa Familia program that gives small subsidies to help the poor buy food and other necessities. Millions of people have used this program to help lift themselves out of poverty and destitution. Once they are on a stable financial footing, many Brazilians have then applied for a microloan to start some type of business so that they can have a good income in Brazil's expanding formal economy.

These programs have been very successful in improving Brazil’s entire society. From 2004-2006 the number of people under the poverty line — earning less than $80 a month — decreased by 32 percent.

These statistics, at least, suggest that more and more Brazilians are able to climb out of poverty.

Photo: JohnMMM (Flickr)

Typically, the discovery of “black gold” in African countries has led to conflict over land and overwhelms governments with more revenue than can be effectively managed. Brutal secessionist conflicts have been taking place for years in countries rich with oil, including Sudan, Nigeria and Angola. Ghana hopes to buck the trend. The country is one of the most stable on the continent and responsible development of its oil industry can provide a good model for other African nations.

"There’s no reason that oil should be a curse,” one government official told Financial Times, which recently published a special report on Africa's fossil-fuel resources. “We want to make sure we follow the example of countries like Canada or Norway who’ve used oil to their benefit."

Why can’t African countries – or any developing country, for that matter – use newfound oil wealth to raise living standards for all citizens? For starters, the oil market is vulnerable to price shocks, and the centralized revenues are susceptible to theft. Dependency on oil as a primary commodity can discourage economic diversification.

Another critical issue is the exploitation of indigenous populations near extraction sites, a prime example being the abuses felt by those in the Niger delta region of Nigeria. Governments frequently overlook the fundamental needs of communities adjacent to oil drilling sites. Ghana’s new oil find may not be very beneficial to communities that fish the waters where the discovery was made.

Can Ghana avoid these pitfalls? The government says it plans to use the oil wealth to turn Ghana into "a middle-income country" by 2015, and to invest in infrastructure, health care and education. That's reminiscent of rhetoric used by officials in Nigeria, Angola, and the Congo — all are failing to follow through with those promises.

Can Ghana succeed in turning the “black gold” into a blessing for its citizens, or will oil once again prove a curse?

A recent development in oil-rich Nigeria has all but been overlooked in recent news coverage as the violence in Kenya continues to garner most media attention. The forced leave of absence of an anti-corruption chairman in Nigeria could lead to tensions and international implications similar to those unfolding in Kenya.

Nigeria's failure to encourage positive and widespread development is often attributed to heavy corruption within its governing bodies. Corruption is blamed for the loss of millions in oil revenues; money that is critical for the country to address issues like rampant poverty and a failing infrastructure. Nigeria has great potential to be a positive model for other African countries in the area of international trade and population management. Its success in these areas, though, are directly linked to whether or not Nigeria can curb its corruption problems.

Shock, outrage and, in some quarters, relief, greeted news that Nuhu Ribadu was being sent on a year-long training course in the midst of launching the biggest graft prosecutions ever seen in Nigeria, perhaps in Africa. Although far from universally popular, the chairman of the Economic and Financial Crimes Commission (EFCC) was credited with doing the most to bring some of the country’s hitherto untouchable politicians to book.