In his classic analysis of the colonial period, Caio Prado Júnior notes the following characteristics of the Brazilian economy:

He attributes the backwardness of Brazil to the colonial ties to Portugal and Europe. Portuguese administrative practices were oriented to enriching the trade of the mother country while repressing any colonialist effort to start up manufacturing industry or other enterprises. Thus, the colony's economic evolution was subject to a series of cycles resulting in “a successive development and decline of one after another of all the country's areas of concentrated settlement.” The economy, he believed, rested on uneasy foundations, and there was no “organized system of production and distribution of resources for the material subsistence of the population.” At times there was an illusory impression of wealth and prosperity: “As soon as the particular combination of circumstances changed or the available natural resources were exhausted, production declined and withered away, making it impossible to maintain the life it had sustained.”

One of these cycles affected the sugar industry of the Northeast, which prospered in response to the worldwide demand for sugar during the sixteenth and seventeenth centuries and declined thereafter.