Economy

Historically, Brazil has been an agricultural nation with a boom-and-bust economy based on world demand for such crops as sugarcane, rubber, cotton, and coffee. Large-scale industrialization and development of resources, however, have brought profound change. Today, although agriculture remains important, Brazil is a world industrial power with a diversified economy.

Brazil's rapid economic growth has been accompanied by several problems, including rampant inflation and a mounting foreign debt. Brazil's lack of sufficient mineral fuels, especially petroleum, has required huge expenditures on imports. Much effort has been directed at developing hydroelectric power, nuclear energy, and alcohol fuel for motor vehicles. In developed hydroelectric power Brazil is one of the world leaders. The giant Itaipu dam and power project, a joint Brazilian-Paraguayan undertaking on the Paraná River, is the world's largest water-power project.

Brazil's economy is based mainly on private enterprise, but there is substantial government ownership and operation, particularly in basic industries such as steel manufacturing, mining, electric power generation, transportation, and communication. Heavy foreign investment in manufacturing helped double industrial output during the latter half of the 20th Century. Brazil has one of the highest GDP's in South America.

Economic production in Brazil
Economic activities% of GDP producedNumber of workers% of all workers
Community, government, & personal services2629,564,00039
Manufacturing229,300,00012
Finance, insurance, real estate, & business services181,341,0002
Agriculture, forestry, & fishing815,534,00021
Construction84,922,0007
Wholesale & retail trade710,785,00014
Transportation & communication53,168,0004
Mining3844,0001
Utilities3
Total10075,458,000100
Agriculture

Brazil is a world leader in the production of livestock. Nearly one-fifth of its workforce is employed on farms. Nearly one-third of the land is presently used for farming and ranching. The opening of frontier lands for farming during the last few decades has been largely responsible for increases in total farm output, as the modernization of farming methods and equipment has been slow.

Brazil is the world's leading producer of coffee, oranges, papayas, sugarcane, and sisal, and is a major producer of bananas, cacao beans, cassava, castor beans, pineapples, cocoa, palm kernels, cotton, tobacco, soybeans, corn, and dry beans. In addition, a great variety of other crops are produced. Except for wheat, which is imported in large amounts, Brazil is virtually self-sufficient in food.

Commercial plantations, called fazendas, are responsible for most of the production of export crops. Other production is mainly by subsistence farmers, who grow such crops as rice, beans, corn, and cassava for their own use. Much of the farming is of the slash-and-burn type—trees are cut and burned and the land is then cultivated as long as good crops can be produced. When the plot becomes unproductive the process is repeated elsewhere.

Although crops are highly important in Brazil, most of the farmland is used for grazing. Cattle are raised extensively south of the Amazon lowlands and are one of the nation's chief sources of wealth. The best grazing land is in the far south, in the states of Rio Grande do Sul and Santa Catarina. Brazil ranks among the top five nations in the number of cattle raised for meat. Large numbers of chickens and hogs are also produced. Of less significance is the raising of sheep and goats.

Manufacturing

Brazil's economy has a large and increasingly sophisticated manufacturing sector. Virtually all consumer goods and much of the industrial equipment needed within the country are domestically produced. The manufacturing sector is second only to the service sector in terms of value contributed to the national economy. Roughly a sixth of the labor force is engaged in manufacturing.

The principal manufacturing areas of Brazil are in the southeast in São Paulo, Rio de Janeiro, Minas Gerais, Paraná, and Rio Grande do Sul states. Especially important are the manufacturing industries in the triangular area formed by São Paulo, Rio de Janeiro, and Belo Horizonte—the largest cities in Brazil. São Paulo has the largest and most modern industrial complex in Latin America. In contrast, the northeast, which is also heavily populated and one of the oldest settled parts of Brazil, has long been economically depressed.

Among the major manufacturing industries are food processing and the making of textiles, iron and steel, transportation equipment, and chemicals. Almost all the steel needed by Brazil is domestically produced. Automobile assembly and shipbuilding are large and expanding industrial operations. Other important manufacturing activities include the making of machinery, electrical and electronic equipment, aircraft, cement, wood and paper products, rubber goods, leather products, pharmaceuticals, plastic items, and transportation equipment.

Forestry and Fishing

Industries using the resources provided by Brazil's vast forests have enormous potential, but are not highly developed. Its chief forest product is timber from a tree called the Parana Pine. A lot of timber is made into charcoal— a major fuel in Brazil. Other forestry products include timber, pulpwood, firewood, fruits, oil-bearing seeds, gums, resins, waxes, fibers, and nuts. The rubber tree is native to equatorial Brazil, and sizable amounts of natural rubber are produced. Forests also provide wood for making charcoal, a major fuel in Brazil. Some of the forest products, including lumber, castor beans, and Brazil nuts, are exported.

Large-scale clearing of the Amazon rain forest began in the 1960's. Worldwide environmental concern over the destruction of this diverse habitat led to a decrease in clearing during the 1990's.

Commercial fishing is practiced only to a small extent, though fish are abundant off the coast and in the Amazon River. The richest fishing grounds are in the south off the coast of Rio Grande do Sul state. Bonito, mackerel, hake, porgy, red snapper, swordfish, tarpon, and tuna are among the fish caught. Lobster and shrimp are taken commercially near the mouth of the Amazon River. Virtually all the catch is domestically consumed.

Mining

Though a comprehensive geological survey has yet to be completed, Brazil is known to have enormous mineral resources. The chief mining areas are in the state of Minas Gerais (whose name is Portuguese for "general mines") and in the Amazon Basin, particularly Pará state. In value of production, petroleum is the leading product. Production, however, is too small to meet domestic needs. Brazil is the world's leading exporter of iron ore. The country is also one of the world's leading producers of tin. Other minerals produced in large amounts include coal, copper, limestone and marble, phosphate rock, natural gas, bauxite, magnesium, manganese, and gold.

Transportation

is generally inadequate, but facilities are gradually being extended and improved. Numerous obstacles, including mountainous terrain and dense Amazon forests, have hindered construction of a nationwide transportation network.

Most of the railway trackage is in the southeast and serves the densely settled areas of São Paulo, Rio de Janeiro, and Minais Gerais states. Trackage is also substantial in the northeast. Most of the railways are owned and operated by the federal government.

Highways and motor vehicles provide the chief means of overland freight and passenger transportation. Major intercity roads are paved; most other roads are dirt and sometimes hazardous to travel. Brasília, with roads to virtually every region, is the hub of the expanding highway network. New highways across the Amazon Basin, including the Trans-Amazon Highway from Recife to the Peruvian border, have been gigantic construction projects of the federal government.

Brazil's rivers provide the longest inland waterway system in the world. The great bulk of the river traffic is carried on the Paraná-Paraguay and on the Amazon. Manaus, at the junction of the Rio Negro with the Amazon, is the leading river port. Coastal shipping is well developed, especially in the areas where road and railway facilities are limited. Major seaports include Santos, the port for São Paulo; Rio de Janeiro; Paranaguá; Recife; and Vitória.

The airplane is the only practical means of transportation throughout much of Brazil, and extensive domestic air service is available. VARIG, the national airline, flies domestic and international routes. Chief of the international airports are those at São Paulo and Rio de Janeiro.

Trade

Historically, Brazil has run a deficit in its foreign trade, importing more by value than it exports. Since the mid-1980's, however, the country has generally enjoyed a surplus in its foreign trade. Coffee is the principal export. Sugar, soybeans, cocoa, vegetable oils, beef, and iron ore are also important. After the United States, Brazil is the world's largest exporter of agricultural products. Manufactured goods, particularly machinery, chemicals, aircraft, motor vehicles, and textiles, are becoming increasingly significant among the nation's exports. Imports consist mostly of petroleum and petroleum products, machinery, and chemicals. The chief trading partners are the United States, Germany, and Japan.