worse than last year, with gains in freedom from corruption and fiscal freedom offset by declines in labor and monetary freedoms. Brazil is ranked 19th out of 29 countries in the South and Central America/Caribbean region, and its overall score is below the world average.The foundations for long-term economic development remain fragile in Brazil due to the absence of an efficiently functioning legal and regulatory framework. The state maintains an extensive presence in many sectors, and the legacy of decades of central planning is a substantial tolerance for state meddling in economic activity, even where it has demonstrably failed. Despite some progress, corruption continues to be pervasive.Progress with market-oriented reforms has been uneven. The burdensome regulatory environment discourages private-sector growth and hampers realization of the economys full potential. Increasing inflationary pressure poses a risk to overall macroeconomic stability. Business confidence has floundered, with foreign investments declining about 40 percent in the first half of 2012.Rule of LawContracts are generally considered secure, but Brazils judiciary is inefficient and subject to political and economic influence. Though protection of intellectual property rights has improved, piracy of copyrighted material persists. Corruption continues to undermine economic freedom, although President Rousseff has ousted six cabinet ministers in response to a public backlash and mobilization against lax governance standards.Limited GovernmentThe income tax rate is 27.5 percent. The standard corporate tax rate is only 15 percent, but a financial transactions tax, 10 percent surtax, and 9 percent social contribution on net profits bring the effective rate to 34 percent. The overall tax burden amounts to 32.5 percent of GDP. Public spending is over one-third of GDP, and attempts at fiscal stimulus have added to a history of chronic public deficits. Public debt, however, has been relatively stable.Regulatory EfficiencyProgress in improving the regulatory framework has been uneven. Bureaucratic hurdles remain common, including lengthy processes for launching a business and obtaining permits. The non-salary cost of employing a worker adds to the cost of doing business, and labor regulations remain stringent. Inflation has increased as the Banco Central do Brasil has cut interest rates in the face of sluggish demand and an overvalued currency.Open MarketsThe trade-weighted tariff rate is 7.6 percent. Non-tariff barriers and the use of antidumping measures are a cause for concern. Foreign investors are generally granted national treatment, but their activity is restricted in some sectors. A complex tax and regulatory environment challenges investors. The banking sector emerged relatively unscathed from the global downturn, with credits to the private sector increasing.AnswersQuestion nr. 1 Brazil's HDI for 2012 is 0.730, keeping the country in the group of countries with high human development. Its position in relation to 187 countries and territories classified is the 85th, the same position as in 2011. The HDI of Brazil remains well ahead of other emerging economies such as China (101th), South Africa (121st) and and India (136th). The Report points out that the country has grown significantly in the HDI, a faster pace and with more quality than many of the Latin American neighbors, to balance growth in three dimensions of human development. Between