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.
- O’Neil, Patrick S. Cases in Comparative Politics. 5th ed. W W Norton and Company, Inc, 2015. Print.
- “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.
- 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.