In the decades following the Second World War, Brazil experienced two prolonged periods of rapid industrialization, both followed by stagnation and even decline. The first of these periods began right after the war and lasted until the early 1960s. Industry during this period grew at an annual rate of more than 9 percent. A nominally democratic state pursued import substitution vigorously and was largely responsible not only for facilitating rapid industrialization, but also for bringing about considerable diversification and deepening of industry. After several slow years associated with inflation, deficits, and balance-of-payment problems, industry again grew rapidly, from 1968 to 1980. This time a harsh authoritarian regime continued the interventionist strategy but modified it to be more outward-looking. Import substitution was now combined with deliberate export promotion, and the role of foreign capital, especially of foreign borrowing, increased dramatically. This economic expansion again came to an end as external shocks combined with policy-related problems propelled Brazil into the “lost decade” of the 1980s. The era of state-led development essentially came to an end in the early 1990s, when pressed Brazilian leaders embraced a more neoliberal model of development.

This chapter analyzes the role of the Brazilian state in promoting industrialization in the era of state-led development, from about 1950 into the 1980s. As noted in the last chapter, Brazil by the end of the Second World War had already undergone significant industrialization.