a large and diverse economy. Within the developing world it is recognised
as having the potential to become a developed industrial nation. In the
1970s economists referred to Brazil as one of the Newly Industrialised
Countries (NICs). Yet despite predictions that the Brazilian economy would
take off and climb to the status of a developed industrial
nation this has not happened. In fact throughout the 1980s Brazils
economy was beset with economic problems including runaway inflation.
industrial development in the 20th century has relied on a series of economic
plans that have restricted foreign ownership of the economy and foreign
imports. These strong nationalist economic policies allowed Brazil to
exploit its own resources and develop certain sectors of its economy.
Brazil could not generalise this development and was always susceptible
to pressure from stronger economies in the West. More recently in the
1980s, Brazil tried to establish its own computer and information technology
industry through national protective policies and investments in the information
technology sector. The US through economic pressure on Brazil and by taking
measures to restrict its access to high technology, forced Brazil to abandon
the development of its own computer industry. US computer companies like
IBM now dominate the Brazilian market.
one of the worlds largest debtor nations owing a massive $157.4
billion in foreign debt. Debt owed to Western banks is one of Brazils
major economic difficulties. Income and potential investment is used to
pay off the interest on this debt. Today the Brazilian economy is relatively
stable. This has been brought about by a series of austerity measures
which have cut living standards and increased prices of goods. A massive
programme of privatisation is now under way as Brazil opens up its markets
to the world economy. Since 1994 the Brazilian currency has been based
on the Real (R$) which is tied to the value of the dollar. The exchange
rate is approximately R$1.01 per US dollar.
the largest Latin American economy. It produces 40 per cent of Latin Americas
Gross Domestic Product (GDP) with a purchasing power of $785 billion,
the ninth largest in the world. It has a growth rate of about four per
cent. Brazil holds 50 per cent of Latin Americas top 500 companies
and has the best performing stock market in Latin America. Brazil has
one of the largest foreign exchange reserves in the world of $60 billion.
of the economy
Agriculture accounts for approximately 13 per cent of GDP and about 35
per cent of exports and employs some 30 per cent of the work force. Mining
contributes over five per cent of GDP and uses four per cent of the work
force. Manufacturing contributes about 34 per cent of GDP and employs
20 per cent of the work force. National unemployment is about five per
cent. The unemployment rate in Greater São Paulo, Brazils
main industrial zone, is about 15.5 per cent or 1.342 million people.
There are great regional and social disparities in wealth and poverty
in Brazil. Forty two million people live below the poverty line. There
is little in the form of a welfare system as we experience in Europe.
The cities of the south east such as Rio de Janeiro are relatively wealthy
with modern infrastructures. Yet there is a great divide here between
the haves and have-nots. A large proportion of the urban populations live
in extreme poverty. The northern regions are the poorest and in regions
like Amazonia many still try to survive on subsistence agriculture. For
the poor the recent shake up of the economy has made things worse, with
unemployment and the cost of living increasing.
coffee (10 per cent); soya beans (7 per cent); iron ore (7 per cent);
steel and products (9 per cent); capital goods (9 per cent); textiles
and footwear (8 per cent); transport (car parts) and materials (7 per
cent); fuel and lubricants (7 per cent); chemicals (6 per cent); which
in 1993 accounted for about $39 billion. The main partners for these exports
are EU (27.6 per cent); Latin America (21.8 per cent); US (17.4 per cent
); Japan (6.3 per cent).
mineral fuels and products (49 per cent); capital goods (15 per cent);
chemicals (11 per cent); foodstuffs (11 per cent); transport products
(4 per cent); which in 1993 accounted for approximately $26 billion. The
main partners for imports are the US (24 per cent); EU (23 per cent);
Middle East (13 per cent); Latin America (11.8 per cent) and Japan (6.5
per cent) (1993). Brazils current trade deficit is $1.23 billion.
overview of the 1990's
The economy, with large agrarian, mining and manufacturing sectors, entered
the 1990s with declining real growth, runaway inflation, an unserviceable
foreign debt of $157.4 billion and a lack of policy direction. Ownership
of major industrial and mining facilities is divided among private interests–including
several multinationals–and the government. Most large agricultural
holdings are private, with the government channelling financing to this
sector. Conflicts between large landholders and landless peasants have
produced intermittent violence.
Government, which assumed office in March 1990, launched a reform program
that sought to modernise and reinvigorate the economy by stabilising prices,
deregulating the economy and opening it up to increased foreign competition.
The Government also obtained an International Monetary Fund (IMF) standby
loan in January 1992 and reached agreements with commercial bankers on
the repayment of interest arrears and on the reduction of debt and debt
inflation continued to undermine economic stability. Further measures
to open up Brazil to the Western market economy through the privatisation
of state enterprises and liberalisation of trade and investment policies
have gained momentum under the present administration of President Fernando
Henrique Cardoso. These measures and a budget cutting programme led to
a lower inflation rate in 1995 of 12.9 per cent.