Brazil is underdeveloped because its economy failed to grow or grew too slowly for most of its history. ... At the time of independence (1822) Brazil had one of the least productive economies in the western hemisphere, with a per capita GDP lower than any other New World colony for which we have estimates. Brazil is underdeveloped because its economy failed to grow or grew too slowly for most of its history. ... At the time of independence (1822) Brazil had one of the least productive economies in the western hemisphere, with a per capita GDP lower than any other New World colony for which we have estimates. Brazil is underdeveloped because its economy failed to grow or grew too slowly for most of its history. ... At the time of independence (1822) Brazil had one of the least productive economies in the western hemisphere, with a per capita GDP lower than any other New World colony for which we have estimates. Brazil is underdeveloped because its economy failed to grow or grew too slowly for most of its history. ... At the time of independence (1822) Brazil had one of the least productive economies in the western hemisphere, with a per capita GDP lower than any other New World colony for which we have estimates. Brazil is underdeveloped because its economy failed to grow or grew too slowly for most of its history. ... At the time of independence (1822) Brazil had one of the least productive economies in the western hemisphere, with a per capita GDP lower than any other New World colony for which we have estimates. Brazil is underdeveloped because its economy failed to grow or grew too slowly for most of its history. ... At the time of independence (1822) Brazil had one of the least productive economies in the western hemisphere, with a per capita GDP lower than any other New World colony for which we have estimates. Brazil is underdeveloped because its economy failed to grow or grew too slowly for most of its history. ... At the time of independence (1822) Brazil had one of the least productive economies in the western hemisphere, with a per capita GDP lower than any other New World colony for which we have estimates. Brazil is underdeveloped because its economy failed to grow or grew too slowly for most of its history. ... At the time of independence (1822) Brazil had one of the least productive economies in the western hemisphere, with a per capita GDP lower than any other New World colony for which we have estimates.
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The numbers tell the story (see the tables). Brazil is underdeveloped because its economy failed to grow or grew too slowly for most of its history. In the colonial era, sugar, gold and slavery did not create a dynamic economy. In the mid-eighteenth century, Brazil’s economic backwardness worried its Portuguese rulers, but not even the great Pombal, as historian Kenneth Maxwell has shown, could not make good policy substitute for good business. At the time of independence (1822) Brazil had one of the least productive economies in the western hemisphere, with a per capita GDP lower than any other New World colony for which we have estimates.
After independence, while the industrial revolution gather steam elsewhere, imperial Brazil stagnated, growing at a mere 0.2 to 0.3 percent from 1820 to 1870. By the time slavery ended and the empire fell (1888-89), Brazil had a per capita GDP less than half of Mexico’s and only one sixth of the United States. Even when the end of slavery (1888) stimulated massive immigration, the economy failed to grow consistently.
Then came the turn around. From 1913 to 1980, Brazil experienced sustained growth, interrupted only briefly in the early years of the Great Depression, at nearly two percent per year from 1913 to 1950 and nearly four percent from 1950 to 1980. In this period of nearly seven decades, Brazil had the fastest growing economy in the western hemisphere. Per capita GDP increased over eight hundred percent, from $678 in 1900 to $5570 in 2000, measured in 1990 dollars. Brazil’s economy gained on the U.S. economy, rising from only ten percent of US GDP per capita to over 20 percent.
Brazil’s long era of economic growth ended with the crisis of 1982. For the past quarter century, the Brazilian economy has barely grown at all. It has occasionally spurted ahead, as in the past three years, but has fallen back each time it does so. Unfortunately, Brazil cannot turn the clock back and restore the conditions and policies that spurred growth up to 1980.
Why has Brazil grown so slowly for most of its history? Economic historians point to three kinds of answers: geography, institutions and policies.
Geography is the easy part. Most of Brazil’s valuable (that is, tradable) natural resources were too far from potential markets for profitable exploitation until the late nineteenth or twentieth century. For example, the major export of the colonial era, sugar, had to be produced within 15 miles of a port or navigable river. Without railroads or trucks, most of the country’s agricultural lands lay fallow. The huge Amazon river system flows through vast tropical forests with thin soils that lack nutrients, but there are practically no navigable rivers running where export crops could be produced without modern fertilizers. Brazil has a long coastline, but few protected harbors. Without railroads or trucks, the only colonial “crops” produced in the interior were cattle and slaves that walked to market and gold that had a high value to bulk ratio. Even with modern transport technologies, the investment needed to build railroads, highways, and airports proved to be enormous. And in many regions, the environmental costs of destroying forests and using chemical fertilizers have outweighed the economic benefits from doing so.
The institutional obstacles to Brazilian growth fall into three main clusters: slavery and its long after effects, excessive centralism before 1889 and too much federalism thereafter, and a persistent failure to define and effectively protect human and property rights.