Brazil, Economic Miracle (1968–1974)
Brazil, Economic Miracle (1968–1974)
The Economic Miracle (1968–1974) was a period of prosperity that was marked by high annual rates of economic growth, an expanded number of public and private development projects, and an increase in the volume and the diversity of exports. The miracle resulted from the economic policies adopted by military leaders following the 1964 coup against João Goulart. These policies were designed to favor business and encourage foreign and domestic investment. The economy stagnated in the first few years after the coup, but beginning in 1968 improved dramatically, and continued to grow for the next six years. Between 1968 and 1974 the annual real gross domestic product rose by an average of 11 percent, compared to the average 3.7 percent in the preceding five years.
The industrial sector expanded at an annual average rate of 12.6 percent as basic industries substantially increased production. Steel output rose from 2.8 million tons in 1964 to 9.2 million tons in 1976, and passenger car production soared from 184,000 vehicles in 1964 to 986,000 in 1976. Increased manufacturing capacity helped diversify exports. Coffee accounted for 42 percent of exports in the mid-1960s, but only 12.6 percent in 1974; manufacturing jumped from 7.2 percent of exports to 27.7 percent. To create and maintain this growth, the military regimes sharply augmented spending for development projects and improved conditions for business. When President Artur da Costa e Silva closed the National Congress in December 1968, he revised tax policy to reduce the constitutionally mandated amount of tax revenue the national government shared with the states, from 20 percent to 12 percent. This shift allowed the government to undertake massive economic development projects, such as the Transamazon Highway. Besides shifting resources to development projects, the military maintained relatively low tax rates and checked labor costs by cracking down on strikes and labor turmoil. As a result, foreign investors infused large amounts of capital.
The economic boom helped generate public support for military rule and justify that rule to critics abroad. Although federal spending and foreign capital further developed the industrial infrastructure of Brazil, the "economic miracle" failed to address some basic problems. Wealth was unevenly distributed, with only 20 percent of the population owning 63 percent of the country's wealth. By increasing federal spending and manipulating the financial system, the military regimes created the conditions for the inflation that followed. Moreover, the overreliance on foreign capital led to the massive external debt of the 1980s.
See alsoEconomic Development .
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Smith, Joseph, and Francisco Luiz Teixeira Vinhosa. History of Brazil, 1500–2000: Politics, Economy, Society, Diplomacy. New York: Longman, 2002.
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