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For years, it was a well-known joke that Brazil is the country of the future and always will be. Indeed, the notion that Brazil would have higher economic growth and lower unemployment rates than the United States would have been unthinkable a decade ago. But today, a country once known for hyperinflation and stark income inequality is building a reputation as a serious country, now known for reducing poverty and improving governance at home while assuming more leadership abroad. Outgoing president Luis Inácio “Lula” da Silva can claim much of the credit for this reversal: his model of orthodox macroeconomic policies coupled with robust antipoverty programs vindicates democratic capitalism and challenges the new strain of authoritarian populism in Latin America.

Brazil is now aiming higher. Seeking to project its newfound credibility and influence beyond its borders, it has also launched a program to modernize its defense capabilities and has shown new audacity in its diplomacy, evident in its recent attempt to shortcircuit United Nations sanctions of Iran. Elections to choose Lula’s successor were held in September 2010, pitting a political neophyte who has been endorsed by Lula against a veteran politician.

What are the implications of a rising Brazil for the United States and Latin America? Can Brazil’s regional influence and validated economic model take the wind out of the authoritarian populists’ sail in other parts of Latin America? What is the likely outcome of the Brazilian elections, and what domestic challenges await the Brazilian government?


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