By:Adrita Bagchi

Aishwarya JainJahnavi GhelaniShweta Varma

Vidhi Jain

DEVELOPMENT EXPERIENCE

BRAZIL

STRUCTURE OF BRAZILIAN ECONOMY UPTO 1980

1500

1700 1807 Early 1930

Late 1930

Early 19501957-62

1968-731974-80

18221840 -1930

TIMELINE

1945-47

1500 Colonized by PortugalSugar first major export product.Cattle industry developed

1700 Precious metals discovered.

1807 Napoleon occupied Portugal

1822Independence achieved.Population – 3.9 millionCoffee accounted for 19% of total exports in 1821-30 which

increased to 63% in 1891.

Year Decadal coffee exports (1000 bags each of 60 kg)

1821-30 3178

1831-40 10430

1841-50 18367

1851-60 27339

1861-70 29103

1871-80 32569

1881-90 51631

Source: Prada Junior, Historia, p.160

1840-1930Tariffs increased reaching an average of over 30% in 1844.

Rubber exports rose from an annual average of 6000 tons in 1870s to 21000 tons in 1890s.

Cotton exports rose by 73% in 1850-1900.

Irregular expansion of light industries.

Average yearly growth of industrial output fell from 4.6% in 1911-20 to 3% in 1920-29.

Early 1930Exports fell from US$445.9 mn in 1929 to US$180.6 mn in

1932.Decline in coffee economy and an an excess capacity of coffee

production created in the 1920s. Terms of trade fell by 50%.Value of imports to decline from US$416.6mn in 1929 to

US$108.1 mn in 1932.Change in the role of government

Late 1930Output increasedSteel capacity grew with appearance of small firms but there

was little industrial and infrastructure investment.

1945-1947 Trade liberalization was short-lived.

Industrial production grew at an annual rate of 5.4% in 1939-45.

In 1945, No quantitative restrictions on imports and forex freely available for most capital transactions.

Early 1950 the government adopted an explicit policy of import-substitution

industrialization.

in 1953 a more flexible, multiple-exchange-rate system was introduced.

Imports and most exports were retained in the official market and controlled by the CEXIM (export-import dept of the Banco do Brazil)

1957-1962government enacted the Tariff Law of 1957.

Advalorem tariffs increased to 150%.

the average annual rate of growth of the GDP exceeded 7%.

the structure of the manufacturing sector experienced considerable change.

In 1962, phase of intense import substitution, especially of consumer goods, with basic industries growing at significant but lower rates.

1968-1973the average annual rate of growth of GDP jumped to 11.1%,

led by industry with a 13.1% average.personal income became more concentrated and regional

disparities became greater.Brazil suffered drastic reductions in its terms of trade as a

result of the 1973 oil shock. the price of petroleum quadrupled . Country’s import bill rose and trade balance changed from a

slight surplus to a deficit. Current account deficit increased.the rate of inflation had declined steadilyGovernment expenditure as a proportion of GDP increased

from 17.1% in 1947 to 22.5% in 1973.

1974-1980In 1979, a economic package was introduced which included

maxi-devaluation of the currency by 30%, elimination of tax incentives and export subsidies among others.

Between 1974 and 1980, the average annual rate of growth of real GDP reached 6.9 percent and that of industry, 7.2 percent.

The foreign debt rose from US$6.4 billion in 1963 to nearly US$54 billion in 1980.

Since 1973, a upward trend of inflation began. The rate more than doubled from 1973 to 1974, and was in the 30-48% range in the next 4 years. It doubled again in 1978-79 and crossed the 100% mark in 1980.

JAHNAVI

Change in Structure of Economy

The Plano real

THE SECOND PHASE

Socio economic policiessix key policy goals price stabilityefficiency of the taxation Systemprovision of long-term financeinvestment in research and developmenteducation of the workforce selective investments in infrastructure

enacted a series of contractionary fiscal and monetary policies

restricting its expenses raising interest rates

Govt’s macroeconomic policiesachieved through tight controls of growth in

expenditures Vigor in generating revenuesThroughout the first half of 2003 interest rates were

kept at very high levels as the Lula government continued its policy of reassuring the international community.

 Discovery of Tupi oilfields.The discoveries have made Brazil one of the world's

top 10 oil producers.

ECONOMIC OVERVIEW OF BRAZIL SINCE 2002

Brazil has become the sixth-largest economy in the world.

The economy grew at 2.7% last year.The Brazilian economy is now worth 2.5 trillion

dollars (£1.6 tn).

In 2010 the Brazilian economy expanded by 7.5%.While it slowed to expected growth of 3.5% in 2011, this was caused by external factors, primarily the financial crisis in the Eurozone hitting the wider economy.

The currency, Brazilian real, fell 11% against the US dollar last year. That is after two years of huge gains - up 5% in 2010 and 34% in 2009.

GDP GROWTH RATE OVER THE YEARS

However, the country still struggles with inequality. The country's Gini coefficient, a measure of income inequality, peaked at 0.61 in 1990 - but 2010's figure was a historic low of 0.53.

There has been a rise of a new middle class, whose purchasing power has been fuelling Brazil's continuous economic growth amid declining industrial output and weak global economic activity

The country’s interest rates are among the world’s highest for a large economy. Currently Brazil is changing this policy and has cut its interest rates seven times in the past year to a record low of 9%.

With substantial oil and gas reserves continuing to be discovered off Brazil's coast in recent years, the country is now the world's ninth largest oil producer, and the government wishes to ultimately enter the top 5.

Brazil is today the world’s third-largest exporter of agricultural goods.

MACROECONOMIC INDICATORSGDP (current US$) - 2.4 trillion dollars

Income level - Upper middle income

Per Capita Income – US$ 11,500

Exchange rate - 1 Brazil real (BRL) = 0.492053 U.S. dollars or 1 USD = 2.032 BRL

Current interest rates – 8.5%

Inflation rate – 4.92%

Population – 195 million

Referenceshttp://www.mapsofworld.com/brazil/economy/

history.htmlhttp://www.bbportuguese.com/economic-history-of-

brazil.htmlThe Brazilian Economy by Werner Baerhttp://data.worldbank.orgWorld Bank data 2012 http://www.oecdobserver.org/news/archivestory.php/

aid/1582/Brazil_92s_Economy.htmlhttp://www.bbc.co.uk/news/businesshttp://www.business.illinois.edu/Working_Papers/

papers/05-0108.pdf

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