A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics de Paiva Abreu, Marcelo Working Paper The Brazilian economy, 1928-1980 Texto para discussão, No. 433 Provided in Cooperation with: Departamento de Economia, Pontifícia Universidade Católica do Rio de Janeiro Suggested Citation: de Paiva Abreu, Marcelo (2000) : The Brazilian economy, 1928-1980, Texto para discussão, No. 433, Pontifícia Universidade Católica do Rio de Janeiro (PUC-Rio), Departamento de Economia, Rio de Janeiro This Version is available at: http://hdl.handle.net/10419/175937 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. 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The same applies to the bibliographical essay. 2 Professor of Economics, Pontifical Catholic University of Rio de Janeiro. The author wishes to thank Professor Leslie Bethell, the Department of Economics at PUC-Rio, the Centre for Brazilian Studies, University of Oxford, St Antony’s College, Oxford, and CNPq for the support which made possible to write this paper over the years. 2 1. Structural change, 1928-1980 2. 1928-1945 2.1. Depression and recovery:1928-1933 2.2. The 1933-1936 boom 2.3. Recession and the war economy: 1937-1945 3. 1945-1964 3.1. The quest for re-equipment: 1945-1955 3.2. The golden years: 1956-1962 3.3. Crisis in the early 1960’s 4. 1964-1980 4.1. Stabilization and reform: 1964-1967 4.2. Years of high growth: 1967-1974 4.3. Oil shocks, adjustment and stagnation: 1974-1980 5. Bibliographical essay 3 1. Structural change, 1928-1980 Brazil was a very poor country in the late 1920’s. Gross domestic product (GDP) per capita peaked in 1929 at around US$ 900 (1996 US$ dollars). This was about 17% of its level in 1980 when GDP per capita reached around US$ 5,400 (at 1996 US$ dollars). In about half a century GDP per capita increased at 3.7% yearly, one of the highest country rates on record. It was only between a quarter and a third of the Argentinian GDP per capita in 1929. In 1980 it had risen to more than 85% of the Argentinian GDP per capita. In 1929 its GDP per capita was about half that of Japan and in 1980 it was still a credible 44% of the Japanese level. GDP per capita yearly growth rates after 1931 were always positive with the exception of the years of 1940 and 1942 due to the shocks caused by the Second World War, and 1963, which was the worst year of the 1963-1967 recession. In 1956 and 1965 GDP per capita also fell but not by more than 0.1-0.2%. GDP growth was especially rapid in 1942-1962 (7.5% yearly), 1968-1974 (10.7%) and 1975-1980 (7.0%). There is no information on regional GDP for 1930. In 1980 GDP per capita of the Southeast, the richest region, was more than 43% above the national average while GDP per capita of the poorest region was 59% below the national average. Brazil was very sparsely occupied in 1928: with a population of about 35 million there were only slightly more than 10 inhabitants per square mile. Population was very unevenly distributed with a heavy concentration in the coast and in the Southeast and Northeast. Population increased 2.8% yearly in the half century to 1980: at increasingly higher yearly rates until the 1960’s then at decreasing rates afterwards. In 1980 population was 119 million and population density had increased to almost 36 inhabitants per square mile. But density variance was still considerable: density in the North was 2.5 inhabitants per square mile while in the Southeast was around 102. The decline of the population share of the Southeast has been very low: it was 44.6% in 1920 and it was still 4 43.5% in 1980. The share of the Northeast in total population fell in same period from 36.7% to 29.3%. Urbanization was massive since 1920. Data not strictly comparable indicate that the share of the population in cities with population of 20,000 and more has increased slowly to reach 16% in 1940 and then very rapidly in the 1950’s and 1960’s to reach 51.5% in 1980. No reliable data on life expectancy or infant mortality exist for 1930. Since 1940 improvement in GDP per capita was not reflected in similar improvement in the major social indicators. Life expectancy improved little in the 1940’s and was stagnant in the 1960’s: it was 42.7 years at birth in 1940 and reached 62 years in 1980. Progress in relation to literacy rates was more evenly distributed over time as it increased in the same period from 43% of the population over 10 years of age to 74.5%. International comparisons show that Brazilian indicators have been consistently well below the levels which would be predicted by estimates based on the income per capita of other developing economies. Improvement in social indicators was unevenly distributed between different regions. The indicators for poorer regions improved less than those for the richest regions. Infant mortality in the Northeast stagnated in the 1940’s while there was progress in the South and the Southeast. In 1940, infant mortality was 1.4 times higher in the Northeast than in the South. This increased to 1.54 in 1950, 1.78 in 1960 and after improving very little in 1970, reached 1.96 in 1980. Literacy rates were also high in the Northeast. In 1940 they were much lower for women than for men (38% compared to 48.2%) but converged rapidly. In 1980 they were 73.5% for women and 75.6% for men. GDP structure changed dramatically between 1930 and 1980. The share of services in GDP fell from 52.9% to 48.9% with no clear long-term trend. The share of industrial output in GDP, however, rose continuously by 4-5 percentage points each decade, with the exception of the 1950’s when the share of industrial output in GDP increased from 24.1% to 32.2%. In 1980 it reached 40.9%. The share of agricultural output fell less steadily: contraction was particularly important in the 1930’s, 1950’s and 5 1960’s with decreases around 6 or 7 percentage points per decade but it was practically constant in the 1940’s and the 1970’s. To a certain extent this reflected long-term changes in relative prices, especially of coffee and affected more the 1940’s than the 1970’s. The textile sector combined with food processing answered for 53.7% of the aggregate value of industrial production in 1939 while the value of production of the more “modern” sectors – chemicals, metallurgical products, electrical, mechanical and transport equipment – was 16.8% of the total (and only 4.9% for the last three). By 1980 this had been radically reversed with the textile and food processing sectors answering for 20% of the total industrial sector and the five modern sectors for 52.9%. Agriculture employed 65.9% of the economically active population in 1939. In 1979 this had been reduced to 30.2%. During the same period industrial employment rose from 11.8% to 20.6% of the active population. Most of the relative contraction of agricultural employment was compensated by the significant expansion of employment or underemployment in the services sector whose share in total employment rose from 22.3% to 50.8%. The productivity of labour engaged in manufacturing industry was 5 times the productivity in agriculture in 1939. This ratio was roughly the same in 1979. Coffee physical increased only 30% in the half century. Some of the crops for domestic consumption as beans, corn and maize as well as beef increased below the average for the sector. Rice and sugar cane output increased at double the rate of this average. Consumption of wheat increased 9-fold compared to a population increase of 3.4-fold. The share of the heavily subsidized domestic production of wheat in consumption increased from 21% to 36%. The infrastructure in the end of the 1920’s was rather poor. The total length of roads in 1930 was 70,385 miles of which only 566 miles paved.