Juscelino Kubitschek’s Plan: Brazil’s Industrialization 1955-1960
Period: 1955-1960
Plan Targets
- Five-Year Plan: Designed to accelerate industrialization.
- Government investment in infrastructure.
- Facilitate and promote private investment.
Targets
- Stimulate a 2% growth rate of income per capita.
- Control inflation at 13.5% per year.
- Achieve 6.2% annual revenue growth for non-coffee products.
- Reduce the import coefficient from 14% to 10%, replacing 30% of imports by 1962.
Priority Areas
- Energy
- Transportation
- Food
- Industry
- Education
Priority Sectors
- Energy
- Coal
- Oil
- Roads
- Steel
- Cement
- Automobile
- Meta-autonomic: Construction of Brasilia
Important Phase of the PSI
The logic of the Target Plan goes beyond the PSI (Import Substitution Industrialization), as the industrialization it promoted is not just a reaction to external constraints.
Some sector investments were used to address bottlenecks, while other sectors were taken as points of germination.
Relevant Points to be Served
Bottlenecks: Areas of unmet demand due to unbalanced economic development.
Points of Germination: Areas that generate derived demand.
Structure of the Plan
The plan can be divided into three key points:
- Investments in infrastructure (transport and energy).
- Stimulus to increased production of intermediate goods (steel, coal, cement, zinc).
- Incentives for the introduction of consumer goods and capital sectors.
The completion of targets was strong.
Instruments
The main instruments of government action to achieve the goals were:
- Investment by state enterprises.
- Credit with low interest rates and long grace periods through the Bank of Brazil and BNDE.
- A policy of market reserve.
- Guarantees for obtaining foreign loans.
- Incentives for foreign capital.
Plan Goals: Problems
- The main problem was funding.
- Public investments, in the absence of consistent tax reform, had to be financed partly by issuing money.
- There was some acceleration in inflation.
- From an external perspective, there was a deterioration of current account and external debt.
ECLAC Theory
Criticism
- Central countries specialize in exporting manufactured goods and importing raw materials, while peripheral countries do the opposite.
- Central countries are characterized by strong unions and oligopolies, and peripheral countries (exporters of raw materials) by competitive markets for goods and factors of production.
ECLAC Theory
- There is a trend towards deteriorating terms of trade for developing countries, with the benefits of international trade and productivity gains tending to focus entirely on central countries.
ECLAC Solution
- Manufacture – Process of Import Substitution.
- Monetary-financial limits: the existence of domestic savings to shift resources to investors, and foreign savings to finance the acquisition of technology abroad.
- Physical limits refer to the materialization of the investment. This includes technological issues, balance between productive sectors, adequate infrastructure, and social factors.