The beginning of Brazils economy started when Portugal colonized the country that is known today as Brazil. The Portuguese were in search of vast riches and they got their first taste of earnings around the 1540’s. With the popularity of sugar cane growing in Europe, the Portuguese quickly started an agricultural enterprise in their colony. The Portuguese took advantage of the Dutch through their commercial skills and financing; in order to quickly get a foothold and build a small sugar monopoly. The financing from the Dutch allowed them to set up this whole sugar cane trade remarkably fast. Allowing the Dutch to also ship the sugar back to Europe made it one less risk the Portuguese had to worry about. The trading of sugar also impacted …show more content…

Although with the overvaluation of the exchange rate, inflation and decreased demand meant increased imports and decreased exports. Under the Vargas government was created an import policy and fixed exchange rates that created a balance of payments problem due to curtailed exporting.

Between 1957 & 1961 the government made changes in the exchange-control system, which was the basis for import-substitution industrialization. As well, the government also introduced measures i.e. Tariff Law of 1957, to protect domestic industries and attract foreign investment. The government also enacted programs to benefit industries such as automotive, cement, steel, aluminum, cellulose, heavy machinery and chemical industries. As a result, the Brazilian economy experienced rapid growth. Between 1950-1961, the average growth for GDP exceeded 7%; industry grew by over 9% and agriculture 4.5%, although the textile industry declined (The Economist). The issue remained that import-substitution industrialization increased the balance of payments problems.

Because of problems associated with import-substitution industrialization and reforms introduced by the military after March 1964, the Brazilian economy lost much of its energy. Both GDP and industry declined. Political troubles deterred measures to control inflation and the balance of payments crisis. The 1964 coup had the objective of transforming Brazil into a