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3While dissident movements taking place throughout the 1920s weakened the political alliancebetween Sao Paulo and Minas Gerais
and the stranglehold of the agricultural oligarchies eased,the U.S. market crash of 1929 pushed the country into financial collapse when the price anddemand for coffee stumbled and foreign credit, together with Brazilian gold and sterling reservesevaporated.In 1930, important structural changes aimed at transforming the country into a modernindustrialized economy began to take place when Getulio Vargas, a presidential candidate for theliberal opposition with nationalist and populist tendencies led a second coup d’état and assumedthe presidency of Brazil (aka: The Revolution of 1930).Somewhat like Franklin Roosevelt, Vargas sought to bring Brazil out of the Great Depressionwith an economic stimulus focused on infrastructure and statist-interventionist policies focusedon expanding the domestic industrial base while reducing foreign dependency. State and mixedpublic-private companies dominated infrastructure industries, while private Brazilian capitaldominated manufacturing. In 1937, rumors of a possible communist plan to control the countrytriggered a full dictatorship by Vargas; creating the New State, which lasted until 1945 when amilitary movement overthrew him and reestablished democratic rule.As a dictator who dissolved congress, curtailed presidential elections and established a newconstitution, Vargas gave continuity to the formation of structure and professionalism in the state.He oriented the state to intervene in the economy, promote economic nationalism, invest ininfrastructure and industrialization
, and establish labor rights and laws. After leaving behind aneconomic surplus and a growing industry, Vargas returned to politics in 1950 as thedemocratically elected president with almost 50% of the votes, but could not handle thepressures of a democratic government and committed suicide in 1954.While the “Vargas Era” laid the infrastructure, industrial and labor rights
foundations of Brazil,Juscelino Kubitschek (JK), a democratic president elected in 1955 using the slogan “50 years of progress in 5 years”, focused on the industrial development of the country through generousincentives to foreign direct investments and large infrastructure projects including theconstruction of Brasilia, the current capital of Brazil. Despite the tremendous economic boom, bythe end of his term in 1961, the strategy had left a legacy of problems and distortions since thegrowth it promoted resulted in a substantial increase in imports while exchange rate controlscurtailed exports. In addition, to finance the negative balance of payment and the construction of Brasilia, the Federal Government relied heavily on domestic and foreign debt.Rampant inflation, political and social reforms that were clearly not addressing the economicproblems of the country, together with fears of a revolutionary leftism by then current presidentJoao Goulart, triggered the military coup d’état of 1964, instituting a military regime for the next21 years. At first, there was intense economic growth due to neoliberal economic reforms (aka:“Economic Miracle of Brazil”), but in the later years of the dictatorship, the reforms had left the
As before mentioned, the Café au lait politics.
Industrial and infrastructure concerns created: National Oil Advisor, Rio Doce Valley Company, Sao FranciscoHydroelectric Company, National Iron Smelting Company, Petrobras and others.
Although, argued by some economists and politics as not capitalist friendly.