Gross investment, as a proportion of GDP,

Gross investment, as a proportion of GDP, fell from 21 to 16 percent, in part as a result of the fiscal crisis and the loss of public-sector investment capacity. The decline also reflected growing uncertainties regarding the future of the economy. The 1980s became known as the "lost decade," and its problems spilled over into the 1990s. Despite thestagnation of the 1981-92 period, inflation remained a major problem (see stagflation). SONY Vaio VPC-EE3WFX/WI CPU Fan It stayed in the 100% level until the mid-80's and then grew to more than 1000% a year, reaching a record 5000% in 1993. In 1979 a second oil shock nearly doubled the price of imported oil to Brazil and lowered the terms of trade further. The rise in world interest rates sharply increased Brazil's balance of payments problem and the size of the foreign debt. HP G56-126NR CPU Fan HP 3MLX8TATP20 CPU Fan Nevertheless, the government continued borrowing, mainly to face an increasing debt burden, while it tried vainly to maintain the high-growth strategy. At the beginning of the 1980s, however, the foreign-debt problem became acute, leading to the introduction of a program to generate growing trade surpluses in order to service the foreign debt. The program was achieved by reducing growth and, with it, imports, and by expanding exports. SONY Vaio VGN-NW240F/S CPU Fan As a result, in 1981 real GDP declined by 4.4 percent. The 1982 Mexican debt crisis ended Brazil's access to international financial markets, increasing the pressure for economic adjustment. Some unorthodox economists like Stephen Kanitz attribute the debt crisis not to the high Brazilian level of indebtedness nor to the disorganization of the country's economy. SONY Vaio VPC-EB1Z0E/B CPU Fan They say that the cause of the crisis was rather a minor error in the U.S. government banking regulations which forbids its banks from lending over ten times the amount of their capital, a regulation that, when the inflation eroded their lending limits, forced them to cut the access of underdeveloped countries to international savings.^[1] The austerity program imposed by the International Monetary Fund in late 1979 continued until 1984, Compaq Presario CQ60-514NR CPU Fan but substantial trade surpluses were obtained only from 1983 on, largely as a delayed result of the import substitution industrialization programs of the 1970s and the reduction in imports brought about by economic decline. The austerity program enabled Brazil to meet interest payments on the debt, but at the price of economic decline and increasing inflation. Toshiba Satellite X205-S9800 CPU Fan Inflation accelerated as a result of a combination of factors: the exchange-rate devaluations of the austerity program, a growing public deficit, and an increasing indexation of financial balances, wages, and other values for inflation. The first two factors are classical causes of inflation; the last became an important mechanism for propagating hyperinflation and in preventing the usual instruments of inflation control from operating. ASUS G2P CPU Fan By the mid-1980s, domestic debt nearly displaced foreign debt as Brazil's main economic problem. During the high-growth 1970s, a significant portion of foreign borrowing had been by state enterprises, which were the main actors in the import substitution industrialization strategy. Initially, they borrowed to finance their investments. However, toward the end of the decade, with the acute shortage of foreign exchange, Compaq Presario CQ60-430SA CPU Fan the government forced state enterprises to borrow unnecessarily, increasing their indebtedness markedly. Their situation worsened with the sharp rise in international interest rates in the late 1970s, the devaluations of the austerity program, and the decreasing real prices of goods and services provided by the public enterprises stemming from price controls. DELL BFB0505HA CPU Fan Because the state enterprises were not allowed to go bankrupt, their debt burden was transferred gradually to the government, further increasing the public debt. This, and a growing disorganization of the public sector, transformed the public debt into a major economic problem. By the mid-1980s, the financial burden stemming from the debt was contributing decisively to its rapid expansion. HP Pavilion dv5-1272et CPU Fan During the second half of the 1980s, it became increasingly clear that a large-scale fiscal reform, one that enabled noninflationary financing of the public sector, was needed not only to control inflation but also to restore the public sector's capacity to invest. Both were essential for an economic recovery. However, political obstacles prevented the reform from materializing. Toshiba AB7005HX-SB3 CPU Fan And, because inflation had become the most visible symptom of the public-sector disequilibrium, there were several attempts to bring inflation under control through what came to be known as "heterodox economic shocks". The period saw three such shocks: the Cruzado Plan (1986), the Bresser Plan (1987), and the Summer Plan (1989). The objective of the Cruzado Plan was to eliminate inflation with a dramatic blow. Toshiba Satellite A500-18T CPU Fan Between 1980 and 1985, the rise in the CPI had escalated from 86.3% to 248.5% annually. Early in 1986, the situation became desperate, prodding the implementation of the plan. Its main measures were a general price freeze, a wage readjustment and freeze, readjustment and freeze on rents and mortgage payments, a ban on indexation, and a freeze on the exchange rate. HP Pavilion dv5-2135dx CPU Fan The plan's immediate results were spectacular: the monthly rate of inflation fell close to zero, economic growth surged upward, and the foreign accounts remained under control. However, by the end of 1986 the plan was in trouble. The wage adjustments were too large, increasing aggregate demand excessively and creating inflationary pressures. ASUS EEE PC 1201NL CPU Fan Moreover, the price freeze was maintained for too long, creating distortions and leading to shortages of a growing number of products. The plan could have been rescued if adjustments had been made at crucial moments. Instead, inflation accelerated again, and there was a return of indexation. The country imposed a moratorium on its foreign debt service on 20 February 1987. SONY Vaio VGN-NW240D/T CPU Fan The two other stabilization plans amounted to renewed attempts at bringing inflation down from very high levels. It was soon clear that without a thorough reform of the public sector, controlling inflation would be impossible. Both plans introduced a price freeze and eliminated indexation, but there were differences between them, and with the Cruzado Plan. Neither was able to address the public-sector disequilibrium effectively. Compaq Presario CQ60-418DX CPU Fan The objective of the Summer Plan, for instance, was mainly to avoid hyperinflation in an election year. In fact, the public-sector disequilibrium became virtually locked in as a result of the 1988 constitution, which created advantages for various segments of society without indicating how these advantages would be paid for. Moreover, it transferred large portions of the tax revenues from the federal government to state and municipal governments, SONY Vaio VGN-NW240D CPU Fan without requiring them to provide additional public services. With less revenue and more responsibility, the federal accounts experienced growing deficits. In addition, several subsidies were locked into the legislation. These factors and the financial burden of the public debt meant growing problems of public finance. The 1980s ended with high and accelerating inflation and a stagnant economy, which never recovered after the demise of the Cruzado Plan. SONY VGN-BX197XP CPU Fan The public debt was enormous, and the government was required to pay very high interest rates to persuade the public to continue to buy government debt instruments. The first post-military-regime president elected by popular suffrage, Fernando Collor de Mello (1990–92), was sworn into office in March 1990. Facing imminenthyperinflation and a virtually bankrupt public sector, Toshiba Satellite L645D-S4056 CPU Fan the new administration introduced a stabilization plan, together with a set of reforms, aimed at removing restrictions on free enterprise, increasing competition, privatizing public enterprises, and boosting productivity. Heralded as a definitive blow to inflation, the stabilization plan was drastic. It imposed an eighteen-month freeze on all but a small portion of the private sector's financial assets, froze prices, and again abolished indexation. Toshiba AB7805HX-GB3 CPU Fan The new administration also introduced provisional taxes to deal with the fiscal crisis, and took steps to reform the public sector by closing several public agencies and dismissing public servants.Collor also implemented a radical liquidity freeze, reducing the money stock by 80% by freezing bank accounts in excess of $1000.^[2] These measures were expected not only to swiftly reduce inflation but also to lower inflationary expectations. Toshiba Satellite L500-208 CPU Fan However, few of the new administration's programs succeeded. Major difficulties with the stabilization and reform programs were caused in part by the superficial nature of many of the administration's actions and by its inability to secure political support. Moreover, the stabilization plan failed because of management errors coupled with defensive actions by segments of society that would be most directly hurt by the plan. HP 535441-001 CPU Fan Confidence in the government was also eroded as a result of the liquidity freeze combined with an alienated industrial sector who had not been consulted in the plan.^[2] === 1990-93 period === After falling more than 80 percent in March 1990, the GPI's monthly rate of growth began increasing again. The best that could be achieved was to stabilize theGPI at a high and slowly rising level. Toshiba Satellite P100-444 CPU Fan In January 1991, it rose by 19.9%, reaching 32% a month by July 1993. Simultaneously, political instability increased sharply, with negative impacts on the economy. The real GDP declined 4.0% in 1990, increased only 1.1% in 1991, and again declined 0.9% in 1992. President Collor de Mello was impeached in September 1992 on charges of corruption. HP Pavilion dv7-3114eo CPU Fan Vice President Itamar Franco was sworn in as president (1992–94), but he had to grapple to form a stable cabinet and to gather political support. The weakness of the interim administration prevented it from tackling inflation effectively. In 1993 the economy grew again, but with inflation rates higher than 30 percent a month, the chances of a durable recovery appeared to be very slim. HP Mini 110-1125SA CPU Fan At the end of the year, it was widely acknowledged that without serious fiscal reform, inflation would remain high and the economy would not sustain growth. This acknowledgment and the pressure of rapidly accelerating inflation finally jolted the government into action. The president appointed a determined minister of finance, Fernando Henrique Cardoso, and a high-level team was put in place to develop a new stabilization plan. HP KSB06105HA CPU Fan Implemented early in 1994, the plan met little public resistance because it was discussed widely and it avoided price freezes.The stabilization program, called Plano Real had three stages: the introduction of an equilibrium budget mandated by the National Congress a process of general indexation (prices, wages, taxes, contracts, and financial assets); and the introduction of a new currency, the Brazilian real, pegged to the dollar. Compaq Presario CQ60-210eo CPU Fan The legally enforced balanced budget would remove expectations regarding inflationary behavior by the public sector. By allowing a realignment of relative prices, general indexation would pave the way for monetary reform. Once this realignment was achieved, the new currency would be introduced, accompanied by appropriate policies (especially the control of expenditures through high interest rates and the liberalization of trade to increase competition and thus prevent speculative behavior). HP Pavilion dv7-2250sf CPU Fan By the end of the first quarter of 1994, the second stage of the stabilization plan was being implemented. Economists of different schools of thought considered the plan sound and technically consistent. The Plano Real ("Real Plan"), instituted in the spring 1994, sought to break inflationary expectations by pegging the real to the U.S. dollar. Inflation was brought down to single digit annual figures, but not fast enough to avoid substantial real exchange rate appreciation during the transition phase of the Plano Real. HP 434678-001 CPU Fan This appreciation meant that Brazilian goods were now more expensive relative to goods from other countries, which contributed to large current account deficits. However, no shortage of foreign currency ensued because of the financial community's renewed interest in Brazilian markets as inflation rates stabilized and memories of the debt crisis of the 1980s faded. HP G60-230us CPU Fan The Real Plan successfully eliminated inflation, after many failed attempts to control it. Almost 25 million people turned into consumers. The maintenance of large current account deficits via capital account surpluses became problematic as investors became more risk averse to emerging market exposure as a consequence of the Asian financial crisis in 1997 and the Russian bond default in August 1998. HP Pavilion dv6365us CPU Fan After crafting a fiscal adjustment program and pledging progress on structural reform, Brazil received a $41.5 billion IMF-led international support program in November 1998. In January 1999, the Brazilian Central Bank announced that the real would no longer be pegged to the U.S. dollar. This devaluation helped moderate the downturn in economic growth in 1999 that investors had expressed concerns about over the summer of 1998. HP 535439-001 CPU Fan Brazil's debt to GDP ratio of 48% for 1999 beat the IMF target and helped reassure investors that Brazil will maintain tight fiscal and monetary policy even with a floating currency.The economy grew 4.4% in 2000, but problems in Argentina in 2001, and growing concerns that the presidential candidate considered most likely to win, leftistLuis Inácio Lula da Silva, would default on the debt, triggered a confidence crisis that caused the economy to decelerate. COMPAQ 6910c CPU Fan Poverty was down to near 16%. In 2002, Luis Inácio Lula da Silva won the presidential elections and was re-elected in 2006. During his government, the economy began to grow more rapidly. In 2004 Brazil saw a promising growth of 5.7% in GDP, following 2005 with a 3.2% growth, 2006 with a 4.0%, 2007 with a 6.1% and 2008 with a 5.1% growth. IBM Lenovo IdeaPad G510 CPU Fan Due the 2008-2010 world financial crisis, Brazil's economy was expected to slow down in 2009 between a decline of -0.5% and a growth of 0.0%. In reality, economic growth has continued at a high rate with economic growth hitting 7.5% in 2010. The service sector is the largest component of GDP at 67.0 percent, followed by the industrial sector at 27.5 percent. Agriculture represents 5.5 percent of GDP (2011). HP G62-110SO CPU Fan Brazilian labor force is estimated at 100.77 million of which 10 percent is occupied in agriculture, 19 percent in the industry sector and 71 percent in the service sector. A performance that puts agribusiness in a position of distinction in terms of Brazil’s trade balance, in spite of trade barriers and subsidizing policies adopted by the developed countries. DELL Precision M6400 CPU Fan In the space of fifty five years (1950 to 2005), the population of Brazil grew from 51 million to approximately 187 million inhabitants,^[24] an increase of over 2 percent per year. In order to meet this demand, it was necessary to take the development of cattle and crop raising activities a step further. Since then, an authentic green revolution has taken place, allowing the country to create and expand a complex agribusiness sector.^[23] SONY Vaio VPC-EB290X CPU Fan However, some of this is at the expense of the environment, including the Amazon. The importance given to the rural producer takes place in the shape of the agricultural and cattle-raising plan and through another specific program geared towards family agriculture (Pronaf), which guarantee financing for equipment and cultivation and encourage the use of new technology, as shown by the use of agricultural land zoning. HP Envy 17-1090eo CPU Fan With regards to family agriculture, over 800 thousand rural inhabitants are assisted by credit, research and extension programs. The special line of credit for women and young farmers is an innovation worth mentioning, providing an incentive towards the entrepreneurial spirit.^[23] With The Land Reform Program, on the other hand, the country's objective is to provide suitable living and working conditions for over one million families who live in areas allotted by the State, Toshiba Satellite A210-1CF CPU Fan an initiative capable of generating two million jobs. Through partnerships, public policies and international partnerships, the government is working towards the guarantee of an infrastructure for the settlements, following the examples of schools and health outlets. The idea is that access to land represents just the first step towards the implementation of a quality land reform program.^[23] Dell Vostro 3450 CPU Fan Over 600,000 km² of land are divided into approximately five thousand areas of rural property; an agricultural area currently with three borders: the Central-western region (savanna), the Northern region (area of transition) and parts of the Northeastern region (semi-arid). At the forefront of grain crops, which produce over 110 million tonnes/year, is the soybean, yielding 50 million tonnes.^[23] Toshiba Satellite A10-103 CPU Fan