The Many Changes in Brazil’s Economy

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 their industry of domestic products and exports. The colonial rule of 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 started to become 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 São Paulo and Rio de Janeiro.

The industrialization development began in the 1950s and 1970s. This process lead to the start of many industries such as the 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 US $ 2,000.

Economic Crisis in the 1980s

Through the 1980s and 1990s, the Brazilian economy experienced large price increases (inflation) that slowed down 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 to the execution of 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 they needed. It also caused the country to experience great economic growth over the next decade. In spit of this rapid growth, the country still has significant corruption, violent crime, functional illiteracy and poverty.