Brazil

Brazil's dominating economic concern in the post-war period has been how to maintain a high rate of growth and at the same time avoid the internal and external financial... Show More + instability that will theater future growth. The stabilization program begun in 1964 was a necessary, difficult, set of measures to restore order in the country's internal and external finances, which had deteriorated to a point where growth had almost ceased, external payments were in arrears and savings and investments were shrinking, while inflation had reached an annual rate of over 100 percent. During the next three years progress was made in correcting some of the profound structural maladjustments of the economy; growth rates were modest in 1964-1967 since relatively little could be done to accelerate growth until sufficient progress had been made in solving these basic problems. When the administration of President Costa e Silva came into officer in March 1967 it found the economy in a recession, but it also found that the reforms of the three previous years had created a much firmer base for renewed economic growth. Monetary and fiscal measures were taken to revive demand, but in sufficient moderation to avoid accelerating inflation, so that 1967 and 1968 were years of substantial growth at the same time as further progress was made toward price stabilization. Brazil's economic prospects have improved dramatically as a consequence of the policies followed in recent years. The rate of inflation has been brought down from close to 100 percent to about 20 percent. Public finances have been greatly improved; expenditures are under better control, tax revenues have been raised from 20 to 30 percent of gross national product (GNP) and borrowing from the banking system to finance budget deficits has been almost eliminated. The freedom of state governments to pursue financial policies inconsistent with those of the Federal Government has been curtailed and progress has been made to use the federal tax system as a device to channel resources from the richest areas to the less developed regions, especially the Northeast. In 1968 gross domestic product (GDP) rose by 7.4 percent to US$27.3 billion. Investment and industrial production led the recovery. Investment expenditures jumped 25 percent the depressed level of 1967. Industrial output increased by 15 percent and industrial employment rose by 12 percent over prior year levels. These favorable trends have continued in the first half of 1969; all of the major economic indicators registered new highs during this period. Show Less -

Foreign direct investments in Brazil are among the largest in Latin America. Their value may be roughly estimated in the magnitude of $800 to$850,000,000 as of 1946.... Show More + By far the greater part of these holdings are controlled by interests in the United States, the United Kingdom and Canada. United States interests are in a wide variety of fields of which public utilities and manufacturing were most important in 1943. Railroads represent the largest category of United Kingdom investments although British interests are also widely scattered. Almost all the Canadian investment is in the public utility field. During and since World War II there has been a marked reduction in the direct investment of the United Kingdom, particularly in railroads and utilities. Prospects are for a continuation in this trend. The value of U.S. interests in Brazil, on the other hand, have been increasing at a substantial rate. Prior to the early 1930's there was, in general, no discrimination against foreign enterprises. In many cases they had enjoyed such preferential treatment as guarantees of fixed return on invested capital, loans at low rates of interest, subsidies, reduced duties on imports, and tax concessions. Show Less -