Industrial Finance

The period 1974–86 is the subject of the next several sections. We focus on this period for a number of reasons. First, it is a period which follows the economic miracle of 1968–73, when economic growth was maintained at double digit levels for a number of years. Second, it is a period in which numerous external shocks beset the Brazilian economy. Third, it is a period in which the macroeconomic environment of Brazil underwent many changes. From the point of view of corporate financial activity, it was a dynamic and changing period, when inflation rates accelerated and the international terms of trade of Brazil deteriorated as basic commodity prices (exports) declined below prices of manufactured goods and equipment (imports). Aggravating these tendencies was a rapid increase in external debt, rising interest rates, a slowdown in domestic investment, and an increase in the relative role and importance of the public sector compared with the private sector. Towards the end of this period Brazil moved quickly in the direction of participative democracy, with the election in 1984 of Tancredo Neves to the Presidency. Neves was not in good health and died before he could be placed in office. His successor, President Sarney, took office. According to the Constitutional Convention that was operative in Brazil in 1987–8, there will be a presidential election in 1989.