Case Study - Brazil:The impact of colonialism on a developing economy

Case Study:

We will study how Brazil, a country in the developing world, has:

(a)been impacted by colonialism.

(b)adjusted to the global economy since independence.

Colonialism in Brazil

• In 1500, Portuguese explorer Pedro Alvaras Cabral was the first person to discover Brazil. Brazil then became colonised by Portuguese settlers.

• Slavery fueled the Brazilian economy and was essential in their sugar cane production and mining.

• Brazil remained a colony of Portugal until 1822 when Brazil declared it’s independence from Portugal.

Colonialism delayed economic development

During colonialism all profits from the export of Brazil’s natural resources went to Portugal. Brazil was unable to develop its own industries while it was colonised so the economic development of Brazil was hindered.

Colonialism affected exports• During colonialism Brazil’s main exports were

timber, sugar cane and coffee beans.• After independence, Brazil remained

dependent on the export of unprocessed raw materials for its wealth which meant that its manufacturing and service industries were underdeveloped.

Colonialism affected trading partners

• Colonialism badly affected the pattern of trade in Brazil. While it was a Portuguese colony most of its exports went to just three main markets: Portugal, other European countries and the U.S. This prevented economic growth in Brazil.

After Colonialism• For over 100 years after independence, Brazil

remained economically tied to Portugal, its former colonial power. This is called neo-colonialism.• By the 1950s Brazil began to trade with the

rest of the world. This was possible because of decisions made by the Brazilian government.

Brazilian Government decide to change exports and increase manufacturing

• In the 1950s the Brazilian Government began its Import Substitution Industrialisation (ISI) policy.

• Under this policy, Brazilian industries were set up to manufacture the goods Brazil used to import.

• MNCs such as Shell and Ford Motors were offered tax incentives and grants to locate their production plants in Brazil.

• Under its policy of protectionism, tariffs and bans were placed on imported goods so that Brazilian industries could grow rapidly.

Brazilian Government decide to change trading partners

Since the 1970s three events greatly increased the number of countries with which Brazil trades:• The oil crisis• The debt crisis• The formation of Mercosur

The Oil Crisis of the 1970s

The Oil Crisis of the 1970s• Between October 1973 and January 1974 world oil

prices quadrupled. When oil prices rose Brazil could not afford to pay for the oil it needed so a new drive to increase trade with Argentina and other South American countries began in order to increase exports.

• The Brazilian government also developed a biofuels programme which used sugar cane to make ethanol which could be used as a fuel instead of petrol.

The Debt Crisis in the 1980s• In the mid-1980s the new Brazilian president

managed to bring the economy and debt under control using a series of Structural Adjustment Programmes (SAPs). • SAPs are policies that a country must follow in

order to qualify for World Bank and IMF (International Monetary Fund) loans.• The SAPs encouraged greater exports of cash

crops, such as soya.

The Formation of Mercosur

• In 1991 the Mercosur (the Southern Common Market) was created. This allowed the free trade of goods and services between Brazil, Argentina, Paraguay and Uruguay. Later, Chile and Bolivia became associate members of Mercosur.