Economy in Brazil
The economic history of Brazil involves many different economic phases and changes throughout the country’s history. From the colonization of Brazil in the 1500s to the 1930s, the Brazilian economy relied on its industry of domestic products and exports. The colonial rule of the Portuguese greatly affected Brazil’s economy. It had such a lasting effect it almost stopped development completely.
Important changes began in the 1930s. At this time, significant steps were taken to give Brazil a more developed society. Small industries like textile industries began to crop up during this period. When slavery was abolished, and the republican government was formed, the Brazilian economy became more stable.
Industrialization After WWII
A fast transformation took place after World War II. Only 31.3% of Brazil’s 41.2 million residents lived in towns and cities in the 1940s. By 1991, 75.5% of the country’s 146.9 million residents lived in cities. At this time, Brazil had two of the world’s largest metropolitan centers. These centers were So Paulo and Rio de Janeiro.
Industrialization development began in the 1950s and 1970s. This process leads to many industries such as steel, automobile, and other important transportation industries. Until 1974, Brazil’s GDP was one of the highest ranking in the world (7.4%). During the 1970s and 1980s, Brazil continued to have a notable GDP (8.5%). In 1980, the per capita income (income per person in a population) grew to the US $ 2,000.
Economic Crisis in the 1980s
Through the 1980s and 1990s, the Brazilian economy experienced large price increases (inflation) that slowed economic growth. Because of the increase in the interest rate in the world market, they were forced to make important economic changes. The government came up with many economic plans that were unsuccessful. In 1994, the Plano Real was set up, which created the Unidade Real de Valor (Unit of Real Value).
This was a significant step in executing the current currency in Brazil (the real). Most were hesitant to believe that the Plan could succeed. Fortunately, it worked in giving Brazil the stability it needed. It also caused the country to experience great economic growth over the next decade. Despite this rapid growth, the country still has significant corruption, violent crime, functional illiteracy, and poverty.
Statistics of the Economic Boom
Brazil’s economy has grown and developed quite a bit since 2004. This has caused a rise in employment and wages. The economy of Brazil is now the 7th largest in the world in terms of GDP and the seventh largest in purchasing power. Brazil has fairly free markets. A free market is a market without regulation by the state.
Among Latin American nations, Brazil’s economy is the largest. It is also the second largest in the western hemisphere and one of the fastest-growing economies in the world. It has an average annual GDP growth rate of over 5%. The GDP is the market value of all final goods and services produced within a country. In Brazilian reais (modern currency of Brazil), its GDP was estimated at R$ 3.143 trillion in 2009. The Brazilian economy is estimated to become one of the five largest economies in the world.
The Difference in Time Periods
Brazil had weaknesses before the economic boom of 2004. These were mostly regarding debts. Domestic debts went up quite a bit from 1994 to 2003. In 2006, this rise was controlled. The President did this by setting up economic programs to control taxes and boost public investment.
Today, Brazil’s industrial sector makes up for 3/5 of the economy of Latin American industrial production. Their scientific and technological progress is (debatably) attractive to foreign direct investment. This has recently averaged US$ 30 billion per year compared to only US$ 2 billion per year last decade. Brazil’s agricultural sector (agronegócio) has also been very lively. Its agricultural sector and the mining sector also brought about trade surpluses. A trade surplus is an economic measure of a positive balance of trade. These trade surpluses in Brazil caused great financial increases.
Abundance in Natural Resources
Brazil currently has a population of 190 million and a wealth of natural resources. This has contributed greatly to the economic boom. They currently produce tens of millions of tons of steel, 26 million tons of cement, 3.5 million television sets, and 3 million refrigerators. About 70 million cubic meters of petroleum were being processed annually into fuels, lubricants, propane gas, and a wide range of hundred petrochemicals. Additionally, Brazil has at least 161,500 paved roads and more than 93 Gigawatts of installed electric power capacity. Major industries in Brazil are textiles, shoes, chemicals, aircraft, steel, and motor vehicles. Their agricultural products include coffee, wheat, rice, and sugarcane.