Top Revenue Generating Sectors in Brazil

 OMG, interest rates were sky high, and no one wanted to spend money, but inflation continued to rise. SMH. The orthodox stabilisation program was completely inadequate for the overall vibe of the Brazilian economy. The high volatility of exchange and interest rates completely disrupted the conventions that keep normal pricing in check in the Brazilian economy. For example, the costs of money and making things, particularly imported materials, could change at any time. According to Maria da Conceição Tavares and Luiz Gonzaga Belluzzo (1986, pp.52-53), inventory prices and asset/liability values fluctuate during the production period, making it difficult for capitalists to calculate.[Producers'] supply prices are completely extra and exaggerated in an attempt to predict a potential net worth devaluation...

As a result, the desired profit margin, rather than being a solid mark-up over prime costs, becomes an uncertain margin. 


Basically, past inflation was completely ignored when it came to forecasting what would happen with supply and demand prices in the future. The IMF's conclusion that excessive demand caused inflation was completely unjustified because the risk of companies underpricing and losing profits per unit of goods sold became far greater than the risk of losing sales.99 As a result, firms in Brazil used their market power to So, basically, the IMF program imposed severe restrictions on the Brazilian economy and completely hampered the government's ability to implement a planned, consistent, and calm structural adjustment. By completely discouraging investments, particularly public investments in infrastructure, the adjustment created a downward spiral that completely trapped the economy in a low-level investment and productivity vibe. OMG, it's as if public investments were cut for no reason - either due to financial constraints or because of the neoliberal vibe. And private investment was totally not cool because demand was extremely slow or even declining. OMG, like a lack of investment and productivity completely destroyed exports and economic growth. To make matters worse, price corrections exacerbated the already chaotic and unpredictable situation. To be honest, it's a complete mess. The new configuration of relative prices and incentives introduced by the IMF's programs has significantly increased financial instability, family. The next section will provide a much more detailed analysis of this process, fam.

Financial instability and fragility as a result of adjustment policies, like, totally sucks, fam.


Price "corrections" (or switching policies) aimed at flexing those net exports, combined with restrictive fiscal and monetary policies aimed at reducing domestic spending (expenditure-reducing policies), resulted in major financial chaos, as evidenced by the rising craziness of inflation, exchange rates, and interest rates.
A devalued exchange rate was chosen as the primary lever to boost exports and adjust the economy to the regime of resource transfers, ya know? The first consequence of the devaluation policy was to introduce a great deal of uncertainty about exchange rates, which became extremely volatile throughout the 1980s. Yo, like, the inflation vibes from devaluation were completely boosted by the widespread indexation of the Brazilian economy, which only added to the overall instability and uncertainty of exchange rates, you know? For example, following a 30% devaluation in 1979, Brazil's wholesale price index skyrocketed from approximately 40% per year in 1978 to around 120% in 1980. It was wild! OMG, inflation has completely messed up the exchange rate goals, you know? In February 1983, when the adjustment package became more stringent under IMF rules, there was another 30% devaluation. That was crazy! To prevent another person from receiving the full value of the real exchange rate due to inflation, the government linked the nominal exchange rate to domestic inflation rates. OMG, integrating manufacturing into international trade was insufficient to increase manufacturing output. It was extremely unstable because it fluctuated with domestic cycles rather than following a consistent growth strategy. And it was extremely regressive, relying on low-skilled labor and resource-based manufacturing. They simply used wage repression and sharp depreciation instead of investing in productivity and making structural changes. Ugh, so not cool!

The second and final leg of the adjustment policies was the maintenance of high real interest rates, do you get it? 


The goals of monetary policies were twofold: to keep inflation under control and to reduce domestic demand so that we could maintain a trade surplus. The IMF completely stressed out the 1970s' ridiculously low negative interest rates and the insane amount of subsidized credit provided by public financial institutions as earmarked funds in 1983. The IMF technical note from its staff mission to Brazil in 1983 said, "OMG, the main problem with Brazil's economic policy is their official stance on interest rates." It's time to get rid of those massive interest rate subsidies for specific sectors and completely liberalize interest rates across the entire financial system, you know?It's totally legit for the producer to pass on the extra cash to the people who buy their products, you know? OMG, like real interest rates on public securities (Selic), began rising in 1980, turned positive in 1982, and had reached 10% to 15% per year by 1985. That was crazy! OMG, the interest rates on firm loans for working capital were completely insane. They were reaching rates of 25% to 45% per year. Check out Table 33, fam. So, unlike East Asian countries that completely upgraded their technology and productivity to boost exports and light up their economies, Brazil attempted to fix prices in the 1980s but it failed, and they were unable to integrate internationally as East Asia did. 

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