Structural adjustment and Brazilian economic development

Abstract

This thesis is titled Structural Adjustment and Brazilian Economic Development. This study addresses the issue of structural adjustment in Brazil from a historical point of view, looking specifically at the fundamental impact of its policies on Brazil's dependency in the development process.

The Structural Adjustment Program (SAP) is a specific policy-lending program initiated by the World Bank and the International Monetary Fund (IMF) in early 1980s, which is designed to stabilize distressed economy and to readjust the world economy into a neo-classical economic structure.

Originally, Brazil was a typical classical dependent economy. Since the 1950s Brazil initiated its industrialization process under the import substitution strategy which was aimed at establishing a self-sustaining industrial system on the basis of "state control", and successfully transformed from a colonial agriculture-dominated economy into an industrial economy.

In the 1960s, under the constraints of capital accumulation rooted in a colonial economic structure, Brazil introduced neo-classical economic policies, combining them with an ISI strategy under a stabilization program, creating the economic miracle by taking advantages of favourable international conditions. However, over-reliance on foreign capital and the world market led Brazil economy towards a dependent form of development.

In the 1970s, the debt crisis caused by unfavourable international conditions after a series of oil shocks forced Brazil to borrow from the IMF and to adopt its SAP, which introduced a package of free market policies, distorting the leading role of the state in Brazil's development process, and creating a dependent peripheral economy.

This thesis concludes that the SAP is not an appropriate strategy for Brazil's development, and is a program designed for the benefit of the core countries.