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Brazil, Economy

Before 1930 the Brazilian economy was dominated by a number of agricultural and mineral products for export. The world economic depression of the 1930s encouraged the government to diversify the economy, particularly through industrialization. The state has led much of this development, through economic plans and government participation in key sectors of public services, such as electricity, telephones, and postal services. In 1990 the government was directly involved in some of the countryís largest firms, particularly in the mining, steel, oil, and chemical industries. At the same time, it also encouraged foreign investment in areas such as automobile manufacturing, engineering, and the production of electrical goods. As a result, the importance of agriculture and mining in output and trade has fallen significantly.

During the 1990s the government has reduced its role in planning the economy and in financing the development of new industries. The government also has opened up a number of state-owned companies to private investors in areas such as steel, petroleum, electricity, and telecommunications. In 1995 Brazil ranked among the World Bankís Upper Middle-Income countries, along with Mexico, South Africa, Greece, and Portugal. However, the country has faced difficulties in its development strategy. Periodic world recessions, the oil crises of 1973 and 1979, the accumulation of high foreign debt, and periods of rapid inflation have all contributed to slow the progress of development in Brazil. In 1995 Brazilís foreign debt was over $159 billion, one of the highest in the world. Inflation increased rapidly in the late 1980s, reaching 5,000 percent in 1990. Government austerity measures reduced the rate to 20 percent by 1996.

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