Outcomes of Brazil’s Rapid Economic Growth

While Brazil has seen incredible bouts of economic growth over the past half century, the transition between regimes (democratic and undemocratic) have subsequently caused Brazil to also experience devastating economic crises that are primarily caused by its statist policies (O’Neil, 654). Despite being described as capitalistic during the start of the Estado Novo, the economy was left in the hands of the state, who chose to pursue “import substitution industrial policies” that have limited imports and regulated wage and credit, while directly investing in various industries and controlling the currency (O’Neil, 653). These policies, while overseeing an impressive period of economic growth known as the “economic miracle”, caused the growth rate to come to a stunning halt in the mid 1970s as the economy began to collapse and domestic unrest grew (O’Neil, 633). Because of its economic turmoil, the military regime ruling Brazil faded away, gradually replaced with a democratic regime that has been sustaining itself since.

Since the transition to a democratic regime in Brazil in the late 1980s, Brazil has slowly seen the liberalization of its markets and has experienced improvements in its economy. Throughout this period of democratization, Brazil experienced multiple waves of growth and decline, with its declines suffering from hyperinflation (Sharma). Beginning in the early 2000s, however, Brazil’s handling of the economy successfully allowed for rapid growth and low inflation that managed to pull millions out of poverty and into the middle class (Roberts, et al). This growth also allowed for increased investment in education, healthcare, and other programs that affected over 11 million families living in poverty (Roberts, et al). This growth and state leadership also allowed Brazil to stay afloat during the 2008 financial crisis and managed to maintain growth of 4% throughout those economically tumultuous years (Sharma).

Despite a decade of impressive growth in the early 2000s, Brazil’s economy, as it is wont to do, began to stagnate as inflation rose markedly (O’Neil 655). Today, regardless of its prior period of such impressive growth, Brazil continues to suffer from “endemic poverty and persistently high levels of inequality” (O’Neil, 655). Much of this poverty, and many people’s subsequent squalor urban living conditions are attributed to the rapid growth in the 1960s – 1970s that caused an influx of people moving into “already overcrowded” cities, which exacerbated the concentration of poverty as the economy began to falter (O’Neil, 623-624). Additionally, its reliance on certain industries that helped spur their rapid growth in the early 2000s makes it increasingly subject to the “violent swings in commodity prices” that for so long helped sustain their growth (Sharma). Despite Brazil’s transition to democracy being a good thing that led to rapid growth that increased its middle class, its over-reliance on certain industries propagates its tendency to fall into economic crisis, furthering Brazil’s already-difficult struggle with poverty and inequality.

Works Cited:

  1. O’Neil, Patrick S. Cases in Comparative Politics. 5th ed. W W Norton and Company, Inc, 2015. Print.
  2. “Bearish on Brazil.” Sharma, Ruchir, and Responses: “How Busted is Brazil? Growth After the Commodities Boom”. Debate by Shannon K. O’Neil; Ruchard Lapper; Larry Rohter; Ronaldo Lemos; and Ruchir Sharma. Foreign Affairs. July/August 2012. 4 Nov 2015. Web.
  3. ¬†Roberts, James M., Mark Schreiber, and Derek Scissors. “Brazil: Restoring Economic Growth through Economic Freedom”. heritage.org. The Heritage Foundation. 20 Sept 2012. Web. 4 Nov 2015.

4 thoughts on “Outcomes of Brazil’s Rapid Economic Growth

  1. The juxtaposition within a single decade between the apparent stable development of Brazil and its prevailing poverty and homogeneous industry, as Roberts, et al. and O’Neil portray, is fascinating. I must agree with you that the lack of diversity in the industry and in the economic system as a whole, seems to be undermining the model development that democracy was achieving in the population hotspots of the nation. Nonetheless, I also believe that one of the reasons why it is evident that there is a deterioration in the economy leading to poverty and inequality is that international and national control measures are now better at observing the state of the country, as a whole, in better unison. That is, the densely-populated areas are now more accurately measured along with the rural spots. This is critical given the size of Brazil, the diversity with both the ethnicities and corresponding population distributions in the country, and lack of resources, had prevented coming to the conclusion of a “national crisis” earlier. I think the democratic development, hand in hand with economic and capitalistic systems in the big cities of the country, is a system that works in Brazil given the massive surplus of manwork. Nonetheless, the Federal policies do not, and have never been effective in the isolated places. That is why a “growing development” in the 90s-00s was perceived in Brazil, because it had poorly accounted for the reality of the population outside and distant from the cities. Better observation of this population, mixed in with the “natural” disparity in the large cities due to industry, led to enhancing the more current state of crisis.

  2. I really thought this insight into one of the BRIC countries was fascinating. Brazil has played an important role as a regional player within South America and has tried recently to assert itself more on the world stage. The over reliance of certain industries to grow their economy has absolutely been a problem for them and the ability to diversify their economy and make sure that future benefits primarily target the poorer of its citizens will help it become a more vibrant nation. Hopefully a move on Brazil’s part from the logging and farming industry both so that their economy can diversify and so that the rainforest can be preserved would be a welcome step. Having read some articles on Brazil in my job at Brookings I can say that this insight of the author is very keen and I look forward to future observations by him.

  3. The analysis of all the BRIC countries generally has yielded similar conclusions that you point out: over reliance on certain industries that cannot sustain high market value, leading to almost as many problems as it starts. While it’s true that democratization and economic liberalization has led to a more substantial middle class than the previous statist regimes in Brazil, I am worried that an economy too focused on big business will eventually lead to a reversal of this trend, with poverty and economic inequality as flagship characteristics of Brazil, and the other BRIC countries.

  4. Very well written and succinctly stated. Unfortunately free market economies often are the victim of “Market Forces” and thus the most vulnerable are the recipients of these variations. While we have certainly observed many “centralized” economies falter due to a lack of capitalist sentiment, pure capitalistic economies also often fail to successfully stabilize a population’s economic progress.

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