The Brazilian Economy: Its Growth and Development is a useful book. It draws on Professor Baer’s twenty years of experience studying Brazil’s contemporary scene. Baer is an economist who writes with great clarity; this short book reflects his background. Baer mainly refers to sources written by economists, rather than by historians; the book’s main focus is on the current scene. A brief synoposis of Brazilian economic history before World War II occupies the first fifty-six pages of the book. The postwar period to the present occupies the next fifty-nine pages.
Baer’s strong contribution is his presentation of very recent data and cogent arguments in his diapers on trade and foreign investment, the extended public sector, inflation and indexing, regional imbalances, and agricultural growth and stagnation. Baer argues that market forces have led to the improved relative income position of skilled workers, compared to workers who are unskilled or live in the Northeast, and that market forces have forced the government to abandon part of its “indexing program, which was a way of tying wages and other items to price indices, and, therefore, of determining income distribution. Government moves to gain long-term equality have not much softened short-term inequality. On the foreign trade scene, the rise in imported oil costs has led to the government’s huge foreign debt, and Brazil, therefore, has focused on import substitution once again, even more than on export promotion. The Brazilian government has joint ventures with private multinationals, somewhat defusing the explosive issue of the role of multinationals in dynamic growth sectors. The government accounts for 22.5 percent of gross product, and has 37 percent of the assets of the 5,113 largest firms in Brazil, while powerfully influencing money and credit. Baer stresses that Brazil is therefore an economy of ad hoc state capitalism whose operations are dictated by need, rather than by any one theory.
