Transition Paths of Brazil from an Agricultural Economy to a Regional Powerhouse: A Global Supply Chain Perspective

Abstract

This study examines Brazil’s evolution from a primarily agricultural economy to a pivotal player within global supply chains, contesting the traditional view of emerging markets as mere suppliers of raw materials and labor. It closely examines Brazil’s assertive efforts and the obstacles it encounters, focusing on its role within the context of Latin America. Utilizing macroeconomic data, the research reveals the barriers to Brazil’s deeper integration into global supply chains and outlines novel strategies to enhance its global position. The findings highlight Brazil’s capacity to significantly influence and advance the global economic framework, emphasizing its vital role in redefining the narrative on global supply chain engagement from a Latin American perspective.

1. Introduction

Over the past few decades, the dynamics of global supply chains have witnessed substantial changes, steered by the economic advancements of powerhouses like the US, Europe, and East Asia. Emerging economies, such as Brazil, have traditionally been viewed through a narrow lens, primarily as reservoirs of raw materials and hubs for cost-effective labor [1]. However, current trends indicate a decisive shift. Brazil, moving beyond its agrarian roots, is rapidly staking its claim as a formidable regional entity, keen on redefining its role and influence within the global supply chain [2]. This transformation of Brazil from a passive contributor to an active player [3] forms the crux of our investigation, making it imperative to understand its evolution, the challenges it faces, and the immense potential it holds in recalibrating the global supply chain narrative.

The central objective of this research is to dissect and understand Brazil’s journey from its predominant agricultural identity to becoming a significant regional protagonist in the global supply chain arena. This exploration leads us to pose a critical research question: “How can Brazil, with its rich resource reservoir and growing economic clout, overcome the historical challenges that have so far prevented it from being as integral to global supply chains as countries like China and other South Asian economies?” Such a query not only explore Brazil’s past and present, but also paves the way for forecasting its future trajectory, thereby highlighting avenues for its enhanced role in global supply chain configurations.

To chart this journey and address the research question, a methodological approach grounded in the analysis of secondary data was adopted. This entails examining Brazil’s multifaceted roles over the years, especially its contributions as a provider of agricultural products, raw materials, and labor. By collating and interpreting historical and contemporary datasets, the study aims to shed light on Brazil’s unique strengths and challenges in the global supply chain. Through this rigorous exploration, the research not only seeks to establish a credible understanding of Brazil’s past and present, but also aspires to paint a vision for its promising future in the global supply chain ecosystem.

The structure of this manuscript is designed for an in-depth examination of Brazil’s changing position within the global supply chain. Initially, it outlines our methodology, which utilizes secondary data analysis as the foundation for our study. It then proceeds to explore the historical context of Brazil’s development, starting from the crucial shift in 1930 from an agrarian to a more diversified economy. This examination includes a review of the economic and political strategies influencing Brazil’s path over the decades. Following this, we present our propositions on Brazil’s capacity to leverage its abundant natural resources beyond agricultural products, potentially enhancing its contributions to higher-value segments of global supply chains. The paper concludes by summarizing our findings and discussing the broader implications of Brazil’s transformation for the configuration of global supply chains, providing valuable perspectives for policymakers, industry practitioners, and academic researchers.

2. Methodological Approach

This study employs a comprehensive approach, integrating secondary data from various reputable sources to analyze and address the research objectives. The use of secondary data for analysis and conclusions is well explored in economics, operations, and supply chain management research [4,5,6], providing relevant insights for risk [7], sustainability [8], disasters [9], and health [10], among other topics. Overall, secondary data are usually collected for a well-established purpose, but they can be used whenever appropriate for a variety of tasks [11].

In this study, the data-gathering process involved the systematic collection and analysis of government datasets (such as those of the US Department of Agriculture, Brazilian official data sources like Banco Central do Brasil, and the Brazilian Ministry of Development, Industry, Trade and Services), economic datasets (such as those of the World Bank, OECD, United Nations, ABDIB—Associação Brasileira da Infraestrutura e Indústrias de Base, IPEA—Brazilian Institute of Applied Economic Research), examinations of newspaper article (e.g., from Wall Street Journal and Financial Times), and peer-reviewed journals. Moreover, to ensure the relevance and reliability of the data, we applied strict selection criteria. Only data from peer-reviewed publications, official government documents, and reports from recognized international bodies published within the last two decades were included. This criterion ensured that our analysis was grounded in credible and current information.

Finally, we adopted a thematic analysis approach to synthesize the secondary data. This involved coding the data according to key themes related to Brazil’s role in the global supply chain, including economic transformation, policy evolution, sectoral developments, challenges faced, and future potentials. The data were analyzed and discussed by all authors, in order to avoid bias or misinterpretation. Through this process, we identified patterns, trends, and discrepancies in the data, enabling a nuanced understanding of Brazil’s strategic shift from a passive contributor to an active player in the global supply chain.

3. Historical Perspective of Brazil’s Transformation

The transformation of Brazil’s economy away from a monoculture-based structure that lasted for over 400 years can be mostly attributed to the abolition of slavery in the late 19th century [12]. After the abolition, planters desperately sought European immigrants to replace the lost slave workforce, preventing the coffee plantation industry from collapse [13]. Over 90% of Latin American migrants were European, and Brazil and its neighboring countries offered new opportunities between 1870 and 1930 [14]. Brazil’s government realized the labor deficit was urgent and created immigration laws to recruit workers and their families, providing a stable and long-term agricultural workforce [14]. This unusual job system gave immigrants, especially those lured to coffee plantations, lodging and provisions instead of rent, reducing living expenses and enabling savings [15,16].

This arrangement accidentally prepared colonos for autonomy; by the early 1900s, many immigrants had become successful enough to buy their property and become smallholders, who gained control of many coffee fields by the 1930s [8]. Smallholdings led to agricultural diversification that, beyond coffee, included crops such as maize, beans, rice, and cotton—and the creation of a new agrarian elite, distinct from plantation owners and colonos [16]. Through extensive local and global commercial networks, this arrangement promoted a competitive economy. Early industrialization was driven by capital accumulation from commercial and financial networks not associated with the dominant coffee sector [16]. From the 1930s onwards, the Brazilian government focused on consolidating economic power to fulfill local needs and promote industrial growth, sometimes at the cost of small businesses [17].

3.1. The Role of the State as Promoter of Economic Development

The transformation of Brazil from an agrarian-based economy to a regional powerhouse represents a substantial change in its economic approach. The initial phase of this transition began in 1930 and lasted for nearly 50 years [18]. Notably, the period spanning from 1930 to 1980 signified Brazil’s shift from an agricultural civilization to an urban and industrialized one [19], positioning the nation as one of the largest economies in the world. During this period, the state played a significant role in directing and fostering economic growth through strategic interventions, industrial policies, and investments in infrastructure and social welfare. The rationale of government policies was deeply rooted in the developmental state model, which combines the favorable attributes of private business and the constructive function of government with the aim of establishing and overseeing appropriate circumstances for economic development [20,21,22,23].

The post-World War II era ushered in transformative global trade changes and the reconstruction of international infrastructure, setting the stage for Brazil’s integration into the global supply chain. Critical analysis of how emerging economies became entwined in these dynamics reveals Brazil’s strategic maneuvering within the global market [24,25]. President Kubitschek’s Goals Plan in the 1950s, aiming for accelerated economic growth, heavily emphasized infrastructure development. This not only facilitated modern transportation networks, but also positioned Brazil to capitalize on new agricultural opportunities and reduce food import reliance, thereby reinforcing its logistical framework [26]. Following Kubitschek, Brazil faced the dual challenge of global food insecurity and internal economic strains. The Green Revolution [27] and a focus on agricultural exports led to domestic inflation and inequality. Government interventions in commodity markets, through subsidized credit and price supports, sought to stabilize the sector amidst income and land ownership disparities and the prevalence of unproductive latifundia (large agricultural estates) [28,29].

Additionally, the establishment of the state-owned Brazilian Agricultural Research Corporation, known as Embrapa, was a catalyst in the 1970s for Brazil’s economic growth in subsequent decades. Embrapa transformed the country’s agricultural landscape and has been contributing significantly to its economic development [30]. Embrapa empowers small farms to overcome obstacles with customized productivity and sustainability solutions, helps smallholders adopt modern farming methods through technology transfer and education, and boosts operational efficiency and competitiveness for major agricultural enterprises. Research on crop varieties, animal management, and sustainability practices helps large-scale producers maximize yields and fulfill global market demands. Embrapa bridges scientific research with practical application to create a harmonic ecology where small farms and major corporations can thrive, contributing to Brazil’s agricultural success [31].

Despite experiencing significant economic growth rates throughout the course of five decades [32], there was also a rise in inequality [33] and political instability, characterized by two prolonged periods of dictatorship lasting more than two decades in all. However, the state’s position as the facilitator of economic progress remained unchanged during this period.

3.2. The Emergence of Brazilian Neoliberalism and the “Lost Decades”

In the early 1980s, the Brazilian developmental state model began to exhibit signs of saturation due to the impact of the oil crisis, increasing inflation, and worsening national accounts [34,35]. The remarkable rates of economic growth were replaced by a systemic economic crisis, resulting in the 1980s being labeled as a “lost decade” [36]. Brazil still experienced some years of notable economic expansion in 1980s, but at the cost of growing debt and hyperinflation [37]. The country’s re-democratization, which reached its peak with the direct election of Fernando Collor de Mello as president, also signified the shift from a developmentalist state model to the neoliberal model. Neoliberalism, albeit having multiple definitions [38], is interpreted in this context as a reconfiguration of governmental authority that prioritizes privatization, finance, and market mechanisms. The role of the state in the economy is reduced, and the state’s responsibility to support the well-being of its population is decreased [39].

The Collor administration, however short-lived (he was impeached by congress due to corruption charges), was characterized by the cessation of different types of trade protectionism and a discerning plan for modernization. The measures implemented included deregulation, debt renegotiation, trade liberalization, administrative changes, and privatization [40]. Although Collor made efforts to modernize the Brazilian economy, his actions to curb inflation were ultimately unsuccessful [41], and political and social instability persisted. Only in 1994, with the implementation of the Real Plan, was Brazil able to effectively end nearly two decades of uncontrollably high inflation [42]. The Real Plan, implemented during President Itamar Franco’s tenure following his predecessor’s impeachment, successfully stabilized the Brazilian economy. This achievement also contributed to the election of Fernando Henrique Cardoso (FHC) as president in 1994, who had served as the Minister of Finance and played a key role in implementing the Real Plan.

President FHC maintained the neoliberal agenda by implementing privatizations, deregulation, and constitutional amendments, and agribusiness was no exception. In the late 1990s, agricultural policies were liberalized as part of a comprehensive reform that eliminated production and supply control regimes and restructured pricing interventions. Trade liberalization eliminated tariffs on exports, and included agricultural licensing and quantitative limits, and state regulation of wheat, sugar, and ethanol commerce. Brazil signed major trade deals, which allowed it to shift agricultural resources to areas where it had a comparative advantage in the global market. The departure of less efficient producers and the rise of large farms using economies of scale and technology transformed the agricultural structure [43]. Furthermore, the establishment of MODERFROTA, a program that aimed to modernize agricultural tractors, implements, and harvesters by providing financing for rural producers and cooperatives to acquire these assets at a fixed interest rate, with the goal of increasing the productivity of Brazilian agribusiness, significantly benefited the segment [44].

Despite all of FHC’s efforts to modernize the Brazilian economy, financial problems, currency devaluation, and a notable increase in the amount of government debt [45] marked his two terms in office. In particular, the relative economic stability did not result in significant economic expansion, and there was only a slight improvement in income equality [46]. Indeed, the “lost decade” experienced a more substantial economic growth compared to the 1990s.

3.3. The Liberal Neo-Developmentalism and the Rise of Brazilian Global Influence

A significant devaluation of the Real and a severe energy crisis paved the way for Luis Inacio Lula da Silva to be elected as the President of Brazil in 2002, marking the end of the FHC era. Lula’s administration, marked by its deep socialist and unionist orientation, represented a return to the state as a catalyst for development. During Lula’s tenure, the government strengthened its role as an owner and investor in industry and banking, and implemented an industrial policy that promoted an open economy and adopted a cautious approach towards the free flow of capital. At the same time, Brazil experienced substantial privatization, liberalization, and deregulation measures. The developmentalist approach, therefore, was combined with neoliberalism.

Lula’s strategy of incrementally increasing the minimum wage, enacting focused industrial policies to stimulate job creation in specific sectors, and utilizing state-owned enterprises to expand social welfare and employment initiatives, aligns more closely with a neo-developmentalist framework [47,48,49], and the combination of interventionist strategies with economically liberal policies resulted in a liberal kind of neo-developmentalism [47]. Furthermore, this blended approach was significantly supported by the rise of globalization. During the 2000s, Brazil emerged as a major global provider of mineral and agricultural commodities, particularly to a rapidly growing and influential China, which increasingly drove Brazil’s economic growth [50].

Brazil’s late 20th-century agricultural expansion turned it into a key exporter of soybeans, beef, and sugarcane, reshaping its role in the global supply chain. With this growth came the necessity to adopt sustainable farming and reconcile the demand for exports with domestic food security [25,51,52]. The 2000s further saw a surge in foreign direct investment and agricultural exports, fueled by stable economic policies and market reforms, positioning Brazil favorably for international investors [29,53]. The Brazilian experience in the global supply chain is also marked by its strategic partnerships and trade agreements. The country has sought to expand its market access and strengthen its position through alliances within the BRICS (Brazil, Russia, India, China, and South Africa) and Mercosur (Southern Common Market). These collaborative networks helped the country to better accommodate global economic fluctuations, trade disputes, and changing consumer preferences in the international arena [27,54]. Additionally, substantial investments in technology since the creation of Embrapa and the favorable climate allows for the cultivation of multiple crops each year on the same land [2,55]. These unique capabilities drew the attention of international investors, and acquisitions globally have strengthened its position [56]. The influx of multinational corporations and foreign investments, and consistent growth in exports, underscore international recognition of Brazil’s agribusiness potential [57].

The combination of neo-developmentalism and globalization has proven extremely successful. Between 2003 and 2014, the period covering Lula’s first two terms in office and the first term of Dilma Rousseff, Lula’s former minister of mines and energy, Brazil’s GDP grew by 50%. In 2011, Brazil surpassed the United Kingdom and became the sixth largest economy in the world, reaching the peak of its economic boom [58]. Simultaneously, this era witnessed a substantial decrease in socioeconomic disparity due to the implementation of the federal government’s welfare initiatives [59]. Nonetheless, the conclusion of the commodities cycle in 2011, along with uncontrolled government expenditures and excessive intervention by Dilma Rousseff’s administration in the economy, weakened the previously prosperous development model and resulted in Brazil experiencing its most severe economic downturn to date, accompanied by untamed inflation. Dilma’s impeachment in 2016 was a result of her unpopularity and involvement in corruption scandals. Michel Temer, who was then vice president, assumed the presidency in her place.

3.4. The Return of Neoliberalism and the Role of Brazil in Global Supply Chains

The Michel Temer administration not only marked the conclusion of 13 years of left-wing administration in Brazil, but also initiated a subsequent and more profound age of neoliberalism linked to globalization, which reached its peak during the Jair Bolsonaro administration from 2019 to 2022. Temer prioritized fiscal consolidation and the implementation of key economic changes, including labor reform [60]. Bolsonaro subsequently carried on with these reforms and made substantial endeavors to decrease the scale of the government and bureaucracy [61,62]. Furthermore, significant investments have been made in logistics, with a particular focus on enhancing the competitiveness of Brazilian agribusiness. These investments included the construction of railways and bridges, improvements to roads, and the privatization of ports and airports. The amalgamation of neoliberalism and globalization in this development model failed to yield the same levels of economic growth achieved in earlier administrations in Brazil. Nevertheless, this era was characterized by significant growth in Brazilian exports, propelled by the agribusiness sector, resulting in substantial trade surpluses. Brazil has become a pivotal player in multiple global supply chains, taking on the direct task of feeding a population of more than 1 billion people in the years to come [63].

In this context, Global Commodity Chain (GCC) Theory forms a relevant theoretical pillar, emphasizing the global interconnectedness of production, distribution, and consumption. This theory explains how value and profits are apportioned within global networks, and highlights the power dynamics and economic relationships that shape these chains [64]. For Brazil, GCC Theory explicates the country’s evolution within the global supply chains, illustrating its journey from a primary exporter to an influential market participant. It allows for an analysis of Brazil’s strategies to enhance its role in global supply chains, considering the broader dynamics of global production from a Brazilian perspective [65].

Brazil’s strategic positioning in global markets, especially considering its shift towards export-oriented agriculture and the subsequent diversification of exports, is based on robust exports of commodities like soybeans, beef, and sugarcane [19,58]. Those businesses have successfully managed to capture value and forge economic relationships within the global market. Since seminal efforts for Brazil’s infrastructure development in the 1950s, the country has improved its position in global commodity chains. By investing in transportation and logistics, Brazil not only enhanced its internal economic connectivity, but also positioned itself more favorably in the global supply network [66,67,68]. This aligns with the GCC Theory’s emphasis on the importance of distribution and logistical capabilities in enhancing a country’s role in the global economy. A summarized timeline of the key events that led to Brazil’s rise in the world economy is shown in

Table 1. Timeline of key events in Brazil’s transformation into a global player (1930s–present). Source: Devised by the authors.

1930–1980	1980–1990	2000–2016	2017–Present
State as the promoter of economic development. Transition from an agrarian to an urban society. Post-war period favored Brazil’s introduction into global supply chains. Creation of the state-owned Embrapa to foster agricultural research. Brazil becomes one of the largest economies in the world.	Neoliberal approach replaces saturated developmentist model affected by hyperinflation and inequality. Brazil expands international trade through liberalizations, deregulation, and trade deals. Government fosters modernization of agricultural tractors, implements, and harvesters.	Return to developmentalism influenced by liberalism. Brazil’s GDP expands 50% between 2003 and 2014. Brazil becomes a key exporter of many commodities. Strategic partnerships and trade agreements (BRICS, Mercosur, etc.) strengthen the country’s position in global supply chains.	Return of the neoliberal approach. Privatization and government investments in logistics foster interconnectedness and competitiveness of agribusiness. Substantial growth in commodity exports. Prospect of Brazilian agribusiness to provide sustenance for over 1 billion people by 2030.

.

4. Propositions

In the context of the evolution of global supply chain management from a Brazilian perspective, propositions are crucial for framing the study’s exploration of how Brazilian firms are shifting from being mere providers of raw materials and labor to taking on more active roles in global supply chains. Propositions in this research examine how Brazil’s resource-rich economy has the potential to offer more than crops and food, possibly stepping into more value-added roles in global supply chains. The following propositions, through the lens of macro-data and other research methods, provide timely insights into the changing dynamics of global supply chain management and Brazil’s evolving role within it.

4.1. Brazil’s Evolving Role in Global Supply Chains

Brazil’s economic landscape has undergone a significant shift, transitioning from an agriculture-centric economy to a diversified, regional powerhouse with a more pronounced role in global supply chains. This evolution, historically rooted in agriculture and raw material exports, is steering Brazil towards a multifaceted economy. The focus is now expanding to include manufacturing, processing, and service provision, reflecting a move towards economic diversification and an enhancement in the sophistication of Brazil’s global market contributions [69]. Such a transition indicates a broadening of economic activities, pointing towards a future of sustainable and resilient growth that is less reliant on fluctuating commodity markets. This transformative journey of Brazil’s economy is vividly illustrated by demographic and economic trends over the past decades, as highlighted in Figure 1.

Figure 1 presents two key trends in Brazil’s demographic and economic structure from 1960 to 2022: the decline in the percentage of the rural population and the increasing share of services in GDP. The downward trajectory of the rural population reflects a significant societal shift from rural to urban living, suggesting a decline in the agrarian sector’s dominance [70]. Conversely, the services sector exhibits a clear upward trend, albeit with some fluctuations, signaling growth in the tertiary sector of the economy. This trend is further emphasized by a steady increase in the service sector’s GDP contribution. Collectively, these trends signify a fundamental transformation in Brazil’s economy, moving from an agriculture-based, rural society to an urbanized, service-driven economy [71]. This shift has profound implications for labor distribution, economic development, and urban planning in Brazil [72].

Figure 1. Brazilian rural population (% of total population) vs. share of services in GDP [73].

Figure 1. Brazilian rural population (% of total population) vs. share of services in GDP [73].

As Brazil intensifies its engagement in global supply chains, moving beyond the role of a raw material or crops supplier, it opens opportunities for technological advancement, job creation, and higher income levels, contributing to overall economic development [74]. This shift also has significant geopolitical implications, potentially increasing Brazil’s influence in international trade negotiations and global economic policymaking. The transition envisaged in Proposition 1 requires a strategic approach, encompassing policy reforms in education, infrastructure, technology, and trade. Successfully navigating this transition could set a precedent for other emerging economies, illustrating a path to economic diversification and enhanced global integration [75]. Thus, the following is proposed:

Proposition 1.

As Brazil transitions from a predominantly agricultural economy to a regional powerhouse, its engagement in global supply chains will significantly increase, enhancing its role from a raw material provider to a more complex, multi-dimensional contributor.

4.2. Brazil’s Agricultural Productivity Growth

A forward-looking view of Brazil’s emerging role in the global economy should focus on its potential to actively shape and redefine global supply chain dynamics [65]. This proposition is grounded in the belief that Brazil’s economic growth and diversification will elevate its status from being a passive participant to a strategic influencer in the international supply network. Historically perceived primarily as a resource-rich nation contributing raw materials to global markets, this new perspective envisions Brazil stepping up as a key player with the capability to initiate changes, influence decisions, and drive innovations in the way global supply chains are configured [76]. Such a transformation is significant, as it suggests a shift in the global economic balance of power, with Brazil moving to the forefront, asserting its priorities and perspectives in the design and functioning of international trade networks.

Figure 2 illustrates substantial growth in Brazil’s agricultural sector over a span of 60 years. This surge can be attributed to a host of factors: enhanced productivity [77], optimized utilization of agricultural land [51], technological advancements in farming methods [78,79], and favorable shifts in global market conditions that have benefited Brazilian agricultural exports [2,43]. Based on these observations, we posit the following:

Proposition 2.

Brazil’s economic landscape has undergone profound changes, transitioning from a traditional, labor-intensive agricultural economy to one that leverages large-scale, production-enhancing tools and machinery. This transition has significantly boosted agricultural productivity, leading to economies of scale in production and a broadening of the agricultural export portfolio. Consequently, this transformation has enabled Brazil to transcend its conventional economic roles, fostering a more active and multifaceted participation in the global market.

4.3. The Impact of Foreign Direct Investment (FDI)

Foreign direct investment (FDI) flows can significantly influence an agriculture-based country’s transition towards a more manufacturing- and service-oriented economy [81,82]. Firstly, FDI often brings capital, advanced technology, and managerial know-how, which are key ingredients for developing manufacturing and service sectors. This influx of resources and expertise helps to establish new industries and modernize existing ones, fostering a shift from traditional agricultural practices to more industrial and service-based activities. Secondly, FDI can create new job opportunities in manufacturing and services [83,84], attracting labor from the agricultural sector and gradually changing the employment landscape. This labor shift not only diversifies the economy, but also encourages the development of a skilled workforce suited for these new industries. Finally, FDI can stimulate local businesses [85,86] and infrastructure development [87,88], creating a more conducive environment for manufacturing and services to thrive, further accelerating the transition of the economy away from agriculture.

Figure 3 depicts the trend of foreign direct investment (FDI) in Brazil, measured in US dollars, from 2010 to 2021. There is a notable dip in FDI around 2015–2016, reflecting a period of recession that may have affected investor confidence [89,90]. However, following this decline, there is a robust recovery and a steady upward trend, with FDI reaching its peak in 2021 within the observed period. This upward trend suggests increasing investor confidence in Brazil’s economic prospects, improvements in the business environment, and favorable changes in economic policy [91]. The overall growth trend in FDI indicates a positive outlook for Brazil’s integration into the global market and its potential for economic expansion.

Figure 3’s upward trend in FDI, particularly post-2016, suggests an environment increasingly favorable to investors, which is mirrored in Figure 4 by the significant and consistent allocation of FDI into the services sector [93]. As FDI inflows have increased, so too has the proportion of investment in services, underscoring the sector’s role as a primary beneficiary of foreign investment and a contributor to Brazil’s economic diversification.

The industrial sector consistently holds the second position, suggesting it also attracts a sizable portion of FDI, reflective of Brazil’s manufacturing capabilities and potential for industrial growth [94]. Agriculture, livestock, and mineral extraction, despite being critical components of Brazil’s economy, attract the least FDI, which could be due to their capital-intensive nature and higher perceived risks, or lower returns compared to the other sectors. This distribution underscores the evolving nature of Brazil’s economy, signaling a transition from traditional sectors like agriculture to more service-oriented economic activities, and indicating where international investors are directing their capital within the country’s economy [81,82]. Figure 3 and Figure 4 suggest that there has been a continuous increase in foreign direct investment flows, favoring non-agricultural sectors such as services over the agricultural sector. This shift has significantly impacted the transformation of an agriculture-based economy into a more diversified and vibrant one [71]. Therefore, we posit the following:

Proposition 3.

The influx of foreign direct investment across diverse sectors has been a catalyst in Brazil’s economic transformation. Such investments have not only bolstered Brazil’s industrial and service sectors, but have also positioned the country as a proactive force capable of shaping and influencing global supply chain dynamics.

4.4. Brazil’s Agricultural Export Growth

When Brazil increases its agricultural production, it widens the opportunities for exports of agricultural products to the world. Brazil has expanded its role as a key global supplier of agricultural commodities. This increase signifies that Brazil is producing more agricultural goods than needed for domestic consumption, enabling it to sell these products internationally [66]. As a result, Brazil enhances its economic growth, strengthens its agricultural sector, and gains greater influence in global agricultural markets.

Figure 5 illustrates the trends in Brazil’s trade of agricultural products and food over the period from 1961 to 2021. Beginning in the early 2000s, Brazil experienced a notable increase in its agricultural exports, indicating significant growth in this sector. This rise may be attributed to improvements in productivity, the expansion of agricultural land, and increased integration into global supply chains. On the other hand, while Brazil’s imports of agricultural products and food also increased during this period, the rate of growth was more gradual compared to that of exports. The difference between Brazil’s exports and imports suggests that the country is efficient in producing its own food and has a surplus available for export. This surplus has contributed to Brazil’s position as a major player in the global agricultural market [2].

Brazil’s agricultural productivity surge stems from three principal factors: firstly, a favorable climate and vast area of arable land that enable the cultivation of diverse crops, boosting export growth [55,95]. Secondly, technological innovation and enhanced farming practices have escalated yields and improved produce quality, sharpening Brazil’s competitive edge in global markets [2]. Lastly, government policies and trade agreements have been instrumental, providing subsidies and opening new markets, thus facilitating the export process [96].

This increase in exports has important effects on Brazil’s position in global supply chains, including strengthening food security, promoting economic diversity and growth, and improving Brazil’s bargaining power in international trade talks. Brazil’s major exporter status stabilizes food prices and supply [2], fuels GDP growth, generates employment, and strengthens related sectors. Consequently, Brazil’s growing export prowess not only reflects, but also amplifies, its burgeoning influence and strategic position in international markets. Overall, the growth in Brazil’s agricultural exports reflects its strengthening position in the global supply chain, contributing to economic prosperity and increased influence in international markets [97]. Thus, the following is proposed:

Proposition 4.

Brazil’s significant increase in agricultural exports has driven its economy’s diversification, enhancing sectors like logistics and processing. This growth has strengthened Brazil’s position in global agricultural markets, influencing international trade negotiations and policymaking. Additionally, Brazil’s role in bolstering global food security has been solidified, stabilizing food prices and supply on a worldwide scale.

4.5. Critical Infrastructure Investment Needs

As a country transitions from an agricultural to an industrialized economy, establishing a robust infrastructure is crucial [98]. Key to this is a comprehensive transport network, including roads, railways, ports, airports, and advanced logistics systems, facilitating the efficient movement of goods and people. For Saudi Arabia, for instance, a developed road network has been pivotal in economic development, reducing transportation costs and fostering regional and international integration [99]. Equally vital is energy infrastructure, encompassing a reliable electricity supply and maintenance of power grids, with an emphasis on oil and gas for resource-dependent countries [100].

Additionally, digital infrastructure, like broadband highways, is essential for generating data that support rural development in various sectors [101]. Financial infrastructure, including secure banking systems and capital markets, is foundational for economic activities and growth [102,103]. Social infrastructure, encompassing clean water, sanitation, healthcare, and education, is vital for population well-being and productivity [104]. Research hubs drive innovation, while a solid legal and regulatory framework, with environmental protection measures, ensures sustainable, law-abiding growth [105,106].

Table 2. Infrastructure investment as a share of GDP in Brazil in 2023 [107].

Industry	Required Investment	Current Investment	Investment Gap
Electricity	0.84%	0.87%	-
Transport and Logistics	2.26%	0.39%	−1.87%
Telecommunications	0.76%	0.48%	−0.28%
Sanitation	0.45%	0.25%	−0.20%
Total	4.31%	1.99%	−2.32%

presents data on infrastructure investment as a percentage of GDP in Brazil for the year 2023. It breaks down the investment requirements, current investment levels, and the resulting gaps across four industries: electricity, transport and logistics, telecommunications, and sanitation. For the electricity industry, the required investment is 0.84% of GDP, and the current investment almost matches this at 0.87%, showing no significant investment gap. This suggests that Brazil is investing adequately in its electricity infrastructure.

However, in the transport and logistics sector, a significant shortfall is evident. The required investment is 2.26% of GDP, but the current investment is only 0.39%, resulting in a substantial investment gap of −1.87%. This indicates that Brazil’s transport and logistics infrastructure is likely underfunded, which could impact the efficiency of goods movement and overall economic productivity. In the telecommunications sector, the required investment is 0.76% of GDP, compared to the current investment of 0.48%. The investment gap here is −0.28%, pointing to a moderate underinvestment in this industry. This may affect Brazil’s digital connectivity and technological advancement. The sanitation industry also shows an investment gap, with 0.45% of GDP required but only 0.25% being currently invested, resulting in a −0.20% gap. This underfunding can have significant public health and environmental implications, as adequate sanitation is critical for both. Overall, the total required investment in these sectors is 4.31% of GDP, but the actual investment is nearly half of that at 1.99%, leading to a total investment gap of −2.32%.

This considerable discrepancy suggests that Brazil may face challenges in maintaining and improving its infrastructure, which is vital for economic growth and the well-being of its citizens. Without addressing these investment gaps, Brazil could experience inefficiencies and obstacles in economic development, as well as potential impacts on public health and quality of life related to insufficient sanitation infrastructure. Thus, the following is proposed:

Proposition 5.

Brazil is uniquely positioned to become a central force in addressing escalating global food demand. Leveraging its status as a top producer and exporter of coffee, soy, and sugar cane, along with its strong foothold in meat and grain markets, Brazil has an excellent opportunity to shape global food security in the future.

Brazil’s agricultural sector is at a crossroads, needing to innovate continually while ensuring environmental sustainability and responsible land use [51,108]. The challenge lies in harmonizing agricultural growth with biodiversity preservation and minimizing the environmental impact of expansion. Additionally, Brazil must adeptly maneuver through intricate global trade dynamics, investing in infrastructure to boost its export efficiency [68,109]. This calls for a holistic strategy encompassing policy reforms, research, development, and international partnerships, enabling Brazil to emerge as a global food leader while upholding environmental and sustainable principles.

For Brazil, the development of transport, logistics, telecommunications, and sanitation infrastructure is crucial for economic vitality. Efficient infrastructure lowers business costs, promotes industrial growth, and maximizes the use of natural and human resources [110]. This strategic investment in infrastructure is more than modernization; it is about creating the essential channels for economic flow, impacting the global economic landscape. Quality infrastructure, coupled with healthy employment rates, signifies economic progress and potential for future preeminence. This synergy between infrastructure and job creation can foster a cycle of growth, where infrastructure projects generate employment, further stimulating economic development. These elements collectively reflect Brazil’s current economic health and its trajectory towards becoming a global economic powerhouse. Thus, the following is proposed:

Proposition 6.

The delay in Brazil’s transition from an agricultural to an industrialized, modern economy is substantially attributed to insufficient investment in heavy infrastructure. While Brazil stands as a pivotal player in meeting rising global food demands, the country’s potential to influence global food security is hindered by the underfunded state of its transport, energy, and technological sectors.

4.6. Public and Private Investment Expenditures

Public investment expenditures by governments are crucial for creating and maintaining infrastructure that serves public interests, encompassing transportation, communication systems, healthcare, education, and essential utilities like water and power [111]. These investments are not profit-driven but aim to boost national economic capacity and improve citizens’ quality of life. They provide a foundation for the private sector, characterized by large capital costs, long-term benefits, and widespread societal returns [112]. Such investments are non-excludable and essential for industrial transition, reducing operational costs for businesses and attracting private investments. For example, government-funded ports can stimulate private investments in shipping and export industries. Public investments also ensure social equity by funding vital community projects that may not yield immediate profits, laying the groundwork for a modern economy and creating a conducive environment for private sector growth and sustainable economic progress [67,113].

Figure 6 presents a bar chart illustrating infrastructure investment in Brazil from 2010 to 2023, separated into public and private contributions. Each year is represented by a pair of bars: the dark-colored bar indicates public investment, while the lighter-colored bar shows private investment, with the total height reflecting the combined infrastructure investment in billion reais. An evident pattern in the chart is the disparity between private and public investments. Private investment consistently surpasses public investment throughout the years, with a notable decrease in public spending after 2013, which does not recover to its previous levels in the projected data until 2023. The height of the private investment bars also fluctuates, but shows an upward trend, especially in the projected years towards 2023.

The implications of this disparity are significant. The lack of public investment suggests that crucial public infrastructure needs may remain unmet. Public investment is typically directed towards long-term, large-scale projects that benefit society, such as highways, public transportation, hospitals, and schools. These investments are often not immediately profitable, which is why they are not attractive to private investors whose investments are more focused on the immediate and direct returns [114]. Private investment, although essential for economic growth, tends to prioritize sectors that provide quick or substantial financial returns, catering to the immediate needs of private firms and individuals [115]. As a result, essential services that form the backbone of the economy and are necessary for an equitable social development might lag, such as widespread road networks for rural farmers to bring products to market or the expansion of sanitation and water treatment facilities for underserved communities. Low public investment can lead to low productivity and lower growth rates significantly [116,117]. Thus, the following is posited:

Proposition 7.

Brazil’s increasing reliance on private capital for infrastructure financing is catalyzing a shift towards development that disproportionately favors profitable enterprises and urban centers, leading to a potential exacerbation of economic inequality. This trend threatens to undermine Brazil’s evolution into a diversified and industrialized modern economy, thereby impeding its ability to fully leverage its strategic position in the global landscape as a viable economic powerhouse in terms of value-added outputs from manufacturing and knowledge-intensive industries.

4.7. Employment Distribution by Economic Sector in Brazil

Employment distribution across economic sectors such as agriculture, manufacturing, and services reveals a country’s development stage and economic focus, with developing countries typically having more agricultural jobs, while industrialized nations show higher employment in manufacturing and services [118]. This distribution is vital for guiding policymakers and economists in economic planning, labor market regulations, and shaping educational and vocational training to align with current and future job market needs.

Figure 7 suggests that in Brazil, the employment landscape is dominated by the retail and trade sector, underscoring its vital role in the economy, followed by substantial workforce engagement in the transformative industry and public administration, reflecting active manufacturing sectors and government services. The administrative and health and social services sectors also mark significant employment, highlighting their fundamental roles in supporting business operations and public welfare. As we look at sectors with moderate employment, like education, transportation and logistics, and construction, their contribution to national development is evident, albeit less pronounced compared to the leading sectors. Employment in the professional, scientific, and technical sector, accommodation and food services, and finance and insurance is lower, indicating their specialized and less labor-intensive nature. Agriculture, a strong element of Brazil’s global economic influence, surprisingly does not match the employment levels of service-oriented sectors, likely due to increased mechanization. The smallest employment figures are found in sectors such as real estate, waste management, arts and recreation, and the capital-intensive gas and electricity and extractive industries, highlighting their specific, targeted roles in the economy. The varied distribution of employment across these sectors illustrates the multifaceted character of Brazil’s job market and sheds light on potential areas for economic focus and development [119].

Brazil’s workforce composition, heavily skewed towards the retail and trade sector and with significant employment in public administration, points to a potentially unbalanced economy. This skewness suggests a deficiency in the manufacturing sector, often considered the growth engine for developing economies due to its role in driving innovation and job creation [66]. The substantial employment in public administration might indicate an overextended government presence, potentially leading to inefficiencies and hindering growth in more economically productive sectors [75]. For Brazil to enhance its global competitiveness and strengthen its economy, a balanced mix of agriculture, manufacturing, and high-value-added service sectors is essential. Agriculture, a key economic component, needs to be complemented by technological advancement and efficient manufacturing, while the service sectors, especially those driven by knowledge and technology, should focus on high-value innovations [120,121]. Such sectors have the potential to catalyze the nation’s overall economic development, pushing Brazil up the value chain in the global market while simultaneously enhancing national capabilities across the board. Thus, the following is posited:

Proposition 8.

Brazil’s economic advancement is contingent upon transitioning from lower value-added sectors to those producing higher value-added goods and services, essential for climbing the global value chain. The current workforce distribution, heavily concentrated in retail, trade, and public administration, points to an under-emphasis on manufacturing and innovation-driven sectors. To establish global competitiveness and robust national industry, Brazil must strategically nurture its manufacturing prowess alongside agriculture and high-value service sectors, fostering a balanced and innovation-oriented economic landscape.

4.8. Domestic Focus and Brazil’s Global Diversification Challenge

While Brazil is an economic powerhouse, its largest companies primarily concentrate on the domestic market, a counterintuitive strategy in a globalized business world. This focus is driven by Brazil’s diverse market, which offers ample growth opportunities and allows companies to develop innovations specifically tailored to meet the unique needs of Brazilian consumers and varied economic conditions [1].

Table 3. Leading companies in Brazil by revenue [122].

Rank	Company	International Standard Industrial Classification (ISIC) Division
1	JBS	Meat Processing & Preservation
2	Vale	Iron Ore Mining
3	Raizen	Manufacture & Distribution Through Mains
4	Vibra Energia	Solid, Liquid, Gaseous Fuels & Related Products
5	Ultrapar Participacoes	Other Chemical Products
6	Braskem	Refined Petroleum Products
7	Marfrig Global Foods	Fruit & Vegetable Processing & Preservation
8	Petroleo Brasileiro	Natural Gas Extraction
9	Metalurgica Gerdau	Manufacturing
10	Gerdau	Manufacturing
11	Atacadao	Retail Trade, Except Motor Vehicles
12	Ambev	Malt Liquors & Malt
13	Companhia Brasileira	Retail Trade, Except Motor Vehicles
14	Bndes Participacoes	Finance & Insurance-Related Activities
15	Companhia Siderurgica Nacional	Cement, Lime & Plaster
16	Raizen Energia	Sugar
17	BRF	Food
18	Neoenergia	Real Estate
19	Suzano Holding	Paper & Related Products
20	Suzano	Forestry Support Services

shows the largest Brazilian companies predominantly in heavy industries like mining, oil and gas, and food processing, indicating a focus on the internal market due to high domestic demand, resource wealth, and protective policies. These sectors, including retail, energy, and construction, cater to basic needs and infrastructure, suggesting Brazil’s developmental stage and the potential for growth. However, the predominance of resource-based sectors underscores the need for diversification and innovation to compete globally. While many companies focus domestically, firms like JBS and Vale demonstrate potential for international expansion. Future success may hinge on global supply chain integration, R&D investment, and strategic partnerships, but the current shortage of global players raises concerns about Brazil’s long-term economic viability.

This inward focus has implications for Brazil’s presence in the international business arena. Global expansion presents a myriad of challenges, including the need to comply with rigorous international regulations and to compete in a highly competitive global environment [66]. These challenges are further intensified by the substantial investments required in technology and human capital to meet global standards [94]. Crucially, Brazil’s long-standing focus on exports of commodities and raw materials has led to a relative neglect of sectors like manufacturing and high-tech, which are typically instrumental in driving global business growth [123].

Brazil’s 2022 export profile (Figure 8) shows a heavy reliance on natural resources, with soybeans, crude oil, and iron ore leading in revenue, emphasizing its role in global food and mineral supply chains. However, the relative scarcity of manufactured goods in the export portfolio exposes Brazil to the risks of raw material price fluctuations and competition from industrialized nations. While the export chart indicates a primary sector-dominated economy, there are signs of diversification, such as the inclusion of animal feed and some manufactured goods, pointing to potential growth in value-added industries. This paradoxical scenario highlights Brazil’s need to develop a more diverse manufacturing sector to ensure future economic resilience and reduce dependence on its natural resources.

Corporations may prefer to focus domestically in response to Brazil’s fluctuating economic and political climate. By concentrating on the local market, companies can better manage risks related to political changes, economic policies, and currency fluctuations [66]. Moreover, Brazilian firms have adapted to the nation’s unique regulatory environment, which includes complex tax systems and bureaucratic processes [66,125]. This local expertise gives them an advantage domestically, whereas navigating the regulatory frameworks of multiple countries can be daunting and resource intensive. Thus, the following is posited:

Proposition 9.

Brazil’s corporate landscape is characterized by firms that cater primarily to domestic or regional markets within Brazil and Mercosur. This observation contradicts the global perception of large-scale Brazilian companies as major international players. The immense demand within these local and regional markets has shaped the strategic focus of these organizations, leading them to prioritize domestic needs over global expansion. This trend underscores a unique aspect of Brazil’s economic structure, where internal market dynamics significantly influence its role as a regional powerhouse.

5. Conclusions

Brazil’s transition to a service-oriented economy, focusing on high value-added sectors, is fundamental for its global supply chain role. Investments in infrastructure are critical for supporting emerging sector growth, while advanced IT systems, efficient transportation networks, and robust healthcare services are essential for establishing an international competitive edge. As a result, these developments require a skilled workforce, fostering a more balanced employment distribution and propelling Brazil into a leadership position in the global supply chain. Public–private partnerships, along with research, development, and sustainable practices, are key to this transformation. This shift enables Brazil to contribute more significantly to global markets, addressing complex supply chain demands and ensuring economic resilience and stability.

The shift from agriculture-based to service-oriented industries does not come without its costs. The Brazilian transition has the potential to exacerbate existing environmental issues and inequalities, and marginalize vulnerable populations. To counteract this, concrete actions have and must be taken to prioritize social inclusion and equitable development. Brazil and the United Nations have signed the Brazil–UN Cooperation Framework 2023–2027, aiming to support sustainable development across five key themes: Economic Transformation, Social Inclusion, Environment and Climate Change, Governance and Institutional Capacity, and Conflict Prevention. This collaboration seeks to align the UN’s efforts with Brazil’s national sustainable development policies, emphasizing the participation of various government branches and civil society in the creation of this framework.

When it comes to sustainability, particularly considering the environment and climate, Brazil faces significant challenges. Preserving the world’s largest rainforest and its unparalleled biodiversity is a daunting task. This is especially critical as Brazilian ecosystems face increasing threats from the expansion of agribusiness and urbanization. Brazil’s advantage lies in its high-yield crops, particularly in the Centre West region, and its vast tracts of land suitable for agriculture and livestock that can potentially be utilized without harming existing ecosystems. However, without clear policies and concerted efforts to conserve Brazil’s ecosystems, these advantages may only delay the deterioration of vital biomes.

In this transformative journey, Brazil is redefining its role, by not just participating but actively shaping the global economic narrative. This evolution is articulated through nine reasoned propositions presented in this study, each offering a unique perspective on Brazil’s strategic pivot and its implications for global supply chain involvement. These propositions collectively paint a picture of Brazil’s future, where its influence in the global supply chain extends beyond regional dominance. Future research should examine the environmental and socio-economic impacts of Brazil’s shift to high-value sectors, providing deeper insights into how this transformation affects its biodiversity, societal structure, and the global economic landscape. Such exploration is crucial for understanding the full scope of Brazil’s role in the international supply chain arena and the broader implications of its strategic decisions.

Despite advancements in data analysis techniques, researchers often underutilize existing data to explore new ideas or formulate theories. Some are concerned about their validity in responding to the researcher’s objectives or merely providing an acceptable approximation [11]. To address these limitations and concerns, data interpretation was meticulously discussed between the authors to minimize misinterpretations or bias. Moreover, this study explored various credible data sources, thereby enhancing the robustness of the analyses for generating fresh insights and proposing innovative perspectives in the field. Rather than creating entirely new theories, the analysis aims to encourage critical thinking.