With an area of 8.514 million km², Brazil is the fifth largest country in the world in terms of territorial expanse and first in the southern hemisphere of the American continent. With the exception of Chile and Ecuador, Brazil’s 15,700 km of land borders are shared with all the other South American countries. Parallel to this, the country also has 7,300 km of maritime borders (Atlantic Ocean).

Brazil is a Federative Republic composed of the Union, 26 states and the Federal District, with a total of 5,500 and municipalities. The country is divided into five macro regions, each of which is composed of states with similar physical, human, economic and social characteristics.

The Brazilian Institute of Geography and Statistics (IBGE) estimates Brazil’s current population at approximately 183.9 million inhabitants, scattered in an almost haphazard manner throughout national territory. Some regions are marked by very high demographic density, such as the southeast, with 84.19 inhabitants/km², while other regions are practically devoid of population, such as the north region, formed basically by the Amazon forest, with slightly more than 3 inhabitants/km². Brazil’s population is predominantly urban, with approximately 81% concentrated in cities. Even in this case, however, there are enormous differences from one region to the other, as demonstrated by the fact that the urban population reaches 91% in the southeast, while the urban population of the north/northeast is no more than about 69%.

In 2006, Brazilian Gross Domestic Product (GDP) reached a level close to R$ 2.322 trillion, equivalent to approximately US$ 1.067 trillion in average 2006 American dollars. The country’s economically active population is estimated at 97.5 million people (2006). An overview of the Brazilian economy is marked by accentuated regional imbalances that require the State to assume a redistribution role, clearly one of the major characteristics of the current tax model. The following chart provides us with an overview of some of these interregional disparities.

Aside from the interregional disparities, the country is also marked by profound intra-regional differences. By way of example, per capita GDP in the State of Amazonas, located in the Northern Region, is more than double per capita GDP of the other States. In the Northeast, the per capita GDP of the States of Bahia and Pernamuco is approximately twice that of Piaui. Even in the Southeast Region, the region with the highest level of development in the country, per capita GDP of the State of São Paulo is 1.53 times greater than in the State of Espirito Santo and 1.76 times that of Minas Gerais.

Another characteristic of the Brazilian economy is that of income concentration, as demonstrated by the fact that the poorest 50% of the population hold just 12.3% of national income, while the wealthier 20% of the population hold 62.4%. The rural area of the country is marked by intense land concentration, in which more than 35% of properties belong to just 1% of rural landholders.

Together with Argentina, Uruguay and Paraguay, Brazil is a member of Mercosul – the Southern Common Market. Created by the Asunción Treaty (03.26.91), which went into effect on January 1, 1995, Mercosul has the overriding objective of fostering the social and economic progress of its member countries. Mercosul is an economic bloc, characterized by free trade among its member countries and utilization of a common external tariff (extra-bloc). In its current stage of implementation, this would be termed a customs union.