Brazil: The world's next economic superpower?

This story was first published Dec. 12, 2010. It was updated on June 23, 2011.

For decades, the joke about Brazil has been that it's the country of the future -- and always will be. Despite enormous natural resources, it has long displayed an uncanny ability to squander its vast potential. Now it's beginning to look like Brazil might have the last laugh.

While most of the world is consumed with debt and unemployment, Brazil is trying to figure out how to manage an economic boom. As we first reported last December, it was the last country to enter the Great Recession, the first to leave it, and is now poised to overtake France and Britain as the world's fifth largest economy.

With the World Cup and the Olympics on their way, Brazil is about to make its grand entrance on the global stage.

Extra: Meet Brazil's richest man
Extra: Hard times ahead for Brazil?

When most people think of Brazil, they think of its passion and excellence in soccer -- not of skyscrapers in Sao Paulo, the financial hub of a fledgling economic superpower. They think of the pulsating beat of the samba and Carnival -- not commodities, or the world's largest cattle industry.

They see the beaches of Ipanema and Copacabana and breathtaking vistas -- not Brazilian tycoons like Eike Batista, who has the best view in Rio, not to mention a net worth of $27 billion.

Kroft sat down with the billionaire and asked him, "How do most Americans see Brazil?"

Batista replied, "They think Buenos Aires is the capital of Brazil, so they mix us with, you know, other countries around South America."

"The most powerful country in South America?" Kroft said.

Batista said, "GDP-wise, we are bigger than all the other countries together. And you know, in the last 16 years, Brazil has put its act together. This is it. Hello, time for Americans to wake up."

With most of the world's economies stagnant, Brazil's grew at 7 percent last year, three times faster than America. It is a huge country, slightly larger than the continental U.S., with vast expanses of arable farmland, an abundance of natural resources, and 14 percent of the world's fresh water.

Eighty percent of its electricity comes from hydropower, it has the most sophisticated bio fuels industry in the world, and for its size, the world's greenest economy. Brazil is already the largest producer of iron ore in the world, and the world's leading exporter of beef, chicken, orange juice, sugar, coffee and tobacco - much of it bound for China, which has replaced the U.S. as Brazil's leading trade partner.

Batista told Kroft Brazil has the size to match the China's appetite.

Kroft said, "You have everything."

Batista answered, "It's a big dragon on, on the other side."

"You have everything they need," Kroft said.

"Yeah," Batista responded. "You need a Brazil to basically fulfill the Chinese needs."

Batista, who has interests in mining, transportation, oil and gas, is building a huge super-port complex north of Rio with Chinese investment. The complex will accommodate the world's largest tankers and speed delivery of iron ore and other resources to Asia.

But it's not just commodities that are driving the Brazilian boom. The country has a substantial manufacturing base and a large auto industry. Aviation giant Embraer is the world's third-largest aircraft manufacturer, behind Boeing and Airbus and a main supplier of regional jets to the U.S. market.

But Batista says the one thing that Brazil could use more of is skilled labor.

"We have to create more engineers," he told Kroft. "In my oil company, I'm importing Americans to weld our platforms, just to give you an, an idea."

"To weld the platforms?" Kroft asked.

"Yes," Batista said. "There's a lack of welders. We are walking into a phase of almost full employment. Already we have created this year 1.5 million jobs. It's unbelievable."

Produced by Draggan MihailovichBrazil has seen periods of prosperity before, only to have the bubbles burst. It spent billions in the '50s and '60s moving its capital to a barren savannah near the middle of the country where it built Brasilia, a futuristic city right out of "The Jetsons." Then it borrowed billions more to develop the country's interior. Corruption and ineptitude eventually led to a financial collapse, 2000 percent inflation and, at the time, the largest financial rescue package in the history of the International Monetary Fund.

Then, a few years later, President Luiz Inácio Lula da Silva walked into the president's office.

Known simply as "Lula," he is a former metal worker with a fourth-grade education -- and a doctorate in charisma.

When he was elected eight years ago on his fourth try, Lula was a firebrand labor leader with socialist tendencies. Some predicted another Hugo Chavez.

But he left office at the end of last year with an 87 percent approval rating and much of the credit for turning the country around.

"60 Minutes" talked to him at the presidential residence in Brasilia. Kroft asked Lula, "When you took office, there were many businessmen, both in Brazil and abroad, who were very nervous about you, who thought you were a socialist and that you were going to take the country sharply to the left. Yet these people now are among your biggest supporters. How did that happen?"

Lula responded, "Look, every once in awhile I joke that a metal worker with a socialist background had to become president of Brazil to make capitalism work here. Because we were a capitalist society without capital."

He added, "If you look at the banks' balance sheets for this year, you will see that the banks have never made so much money in Brazil as they have during my government. The big companies have never sold as many cars as they have during my government, but the workers have also made money."

So how has he managed to do that?

Lula told Kroft he has "found out something amazing."

"The success of an elected official is in the art of doing what is obvious," Lula said. "It is what everyone knows needs to be done but some insist on doing differently."

One thing obvious to Lula was the social and economic chasm separating Brazil's rich and poor. He gave the poor families a monthly stipend of $115, just for sending their children to school and taking them to doctors.

The infusion of cash helped lift 21 million people out of poverty and into the lower middle class, creating an untapped market for first-time buyers of refrigerators and cars.

But he was also far friendlier to business than anyone expected. Lula encouraged growth and development, and maintained conservative fiscal policies and tight banking regulations that left Brazil unscathed by the world financial crisis.

Eduardo Bueno, a colorful commentator and best-selling author of popular Brazilian history, told Kroft, "Lula was the right man at the right time it seems. You have to admit, to admit it, you know? He's, he's a kind of pop star."

"What's his secret?" Kroft asked.

"He's streetwise," Bueno said. "He knows people, he knows the feeling. He knows what he wants. He knows how to deal with the rich. He charms President Obama."

And Lula charmed the international committees that awarded Brazil the 2016 Olympics and the World Cup of 2014: political victories that announced the country's arrival as an international player, and will present some challenges for Brazil's new president.

She is Dilma Rousseff, Lula's former chief of staff and his handpicked successor, who was elected in October because he was ineligible to run for a third term.

Kroft asked Lula, "There are people that believe that once you are gone, Brazil may revert to its old ways. Will the momentum continue, once you leave office at the end of the year?"

Lula said, "If there is something I am proud of, it is to have told my people that we are not second-class citizens, that we can get things done, we can believe in ourselves, and then people have started to believe."

However, Kroft reported, there are still some non-believers. Given its checkered record for living up to its promise, the rap against Brazil is that it lacks ambition. Kroft said it is called the Brazilian way: "Why do something today that you can pay someone to do the day after tomorrow?"

Brazilians put up with incredibly high taxes on almost everything, have a high tolerance for corruption, bureaucratic red tape, and according to Bueno, harbor a secret love affair with incompetence.

Kroft said, "President Charles de Gaulle of France once said that Brazil is not a serious country. Do you believe that? Is Brazil a serious country now?"

"It's not a serious country in several instances, because they say they're gonna do something, and then don't do something," Bueno said. "Here in Rio de Janeiro, you can invite someone to your house, they say they're gonna come and they don't show up, and they don't think it's, no, who cares? But how can you do business in a loose way? How can you run a country in a loose way?"

While many in Brazil's cities lust for first world status, the third world is never far away. For decades, Brazil ignored the festering slums known as favelas, which wrap around Rio, overlooking some of the most valuable real estate in the city. They have been a staging area for street crime against tourists, and safe havens for drug gangs so well armed that they brought down a police helicopter a few years ago with heavy machine gun fire.

Finally, after years of looking the other way, the military police have begun to move in.

Last fall, some parts of Rio became a battle zone, with the drug traffickers burning buses near some of the sports venues. But so far the police have pacified 17 of the most dangerous favelas. And there are still 23 more to go.

"This is a revolution," Batista told Kroft. "I myself did not believe this three years ago. There is a solution for the slums all over Brazil."

But there are also massive problems with infrastructure. If the road to Brazil's future is long and wide, it is also jammed with traffic and filled with potholes. Ninety percent of the roads in the country are still unpaved, and in the cities there is not much in the way of public transportation. And already there are major delays in the building and renovating of stadiums for the 2014 World Cup.

Kroft remarked during his talk with Lula that FIFA, the world soccer organization, says Brazil is way behind in making preparations for the World Cup.

Lula laughed and said, "Look, first we need to be careful about European perfectionism. Because everything that happens here, in the South, they think they know better than us. Well, the Europeans may put their minds at ease because we will organize the most extraordinary World Cup ever."

Bueno joked, "What they didn't make in 500 years, they wanna make in four because the World Cup's gonna be in Brazil."

Kroft asked, "Do you think they'll be ready?"

"No, I don't think it's gonna be ready, especially because Brazilians don't mind to be late," Bueno said. "You know, they think, 'Oh, just get a little late, what's the problem,' you know? They gonna be planting the, the grass while the ball was already rolling, you know?"

Whatever happens in Brazil, no one will be able to blame it on a lack of money. That's because 150 miles off the coast, lie what are believed to be the largest discoveries of oil found anywhere in the world in the past 35 years.

Petrobras, the state-owned oil company, is preparing to drill 20,000 feet below the surface of the Atlantic to reach oil fields that sit underneath layers of salt beds.

Batista said, "This oil story is a trillion dollar story, right here in front of us here."

Kroft asked, "What do the offshore oil discoveries do for Brazil, what do they mean for the country's future?"

Batista said, "Oh, it, it means we should be producing in excess of six million barrels a day. So it'll put us in among the third, fourth largest producer in the world. Massive exporting."

President Dilma Rousseff joked recently that the oil discoveries were just the latest proof that God is Brazilian. And economists from Goldman Sachs no less are predicting that Brazil - along with Russia, China and India - will dominate the world economy in the 21st century.

If it happens, Brazil would be a different kind of superpower, one that would rather make love not war. It has no nuclear arsenal, and aside from contributing a small number of troops to the allied cause in 1944, Brazil hasn't fought a war since 1870.

"Why fight?" Batista asked. "With all the pleasures, beach and sun. War? Forget it. Soccer? Let's watch a soccer game. Let's go to the beach. Let's drink a beer."