Nowadays Brazil is open to international market, but it has not always been like that. During the Brazilian Dictatorship, the country passed through a period of opening market and through a period of almost completely closure.
After the New York crash in 1929 and the global economic crisis, Brazil adopted an import substitution policy in order to develop the national industry and to encourage the national production of goods that were imported from other countries. However this policy was still preponderant, since the industrial investment was practically financed by exports of primary products.
The Brazilian Military Coup
The Opening Phase (1964 to 1974)
The Brazilian military coup occurred in 1964. The new government main priority was to reverse the high inflation rate to reduce the public deficit. The first years of military dictatorship embrace foreign investments and loans in order to expand the Brazilian economy. Imports were allowed in the country, because the national production was not developed enough and neither had all the products necessary to supply the domestic demand.
With Emilio Medici in the presidency of Brazil (1969 to 1974), the regime projected the first PND, the National Development Program, which established an equilibrium between the private sector and public sector. Between 1969 and 1973 economic growth in Brazil reached exceptional levels. This period became known as the "Economic Miracle".
The Closure Phase (1974 to 1979)
Due to the first oil crisis in 1973, Ernesto Geisel's government launched the second PND in 1974, in order to help the Brazilian economy. The new program established the development of Brazilian national industry, the maintenance of the first PND, new foreign loans, search for new export markets and the attempt to substitute imports.
The national alcohol program also known as “Pró Alcool” was launched in 1975, with the purposes of substituting fuel derived from oil. The use of biofuels produced in Brazil diminished the Brazilian dependence on imported oil.
The Petrobrás discovery of new oil fields in Rio de Janeiro, and the government authorization to explore it, pushed even more the closure of the military regime to foreign imports. In 1976 the import of automobiles to Brazil was prohibited by the government.
The Lost Decade
The international context in the end 70s and the beginning of the 80s was extremely unfavorable for Brazil. The exorbitant oil prices in the global market, promoted by the second oil crisis, in 1979, increased the Brazilian oil import prices as well and, in consequence, the inflation raised too.
João Figueiredo's government (1979 to 1985) introduced import restrictions and price controls. The foreign and domestic investments declined significantly, compromising the pace of progress of the economy compared to previous levels.
The End of Dictatorship
In 1985, Figueiredo's government was deposed and the democratic period of Brazil politics began. In 1988 there were already moves to open the Brazilian market. The most luxurious cars came first, since the import tax rate of 85% was unfavorable for cheaper models, which would not be able to compete with nationals automobiles prices.
Accumulated inflation remained in 1782.90% in 1989, year in which 760,000 cars were in Brazilian market. The Autolatina (an union of Volkswagen and Ford) had 55% market share, followed by GM (28%) and Fiat (10%).
It was only in 1990 that car imports were finally allowed during the government of Fernando Collor (1990 to 1992), which has initiated the Brazilian market opening process to imports. The main goal was preparing national companies for global competition.
The Real Plan, launched in 1994 in order to stabilize the national currency, promoted a policy of a valued Brazilian Real against the American dollar. This allowed great momentum in imports. From 1995 to 2000, the imports resulted on a deficit of USD 24.1 billion in the Brazilian trade balance, against a surplus of USD 60.4 billion, from 1990 to 1994.
Brazil needed, from 1995 to 2000, new foreign loans and investments, to cover the trade balance deficit. The external dependency was always increasing and this situation only reverted due to the pressure of the international market. The adjustment in the Real value in 1999 and in 2002 invigorated exports. In 2000, according to the World Trade Organization, Brazil participated in world trade, with 0.9% of imports.
Imports in recent years
In 2010 the total value of imports in Brazil was USD 187.7 billion. The main products were machinery, electrical and transport equipment, chemical products, oil, automotive parts and electronics. The import partners were mostly the US (16.12% of total imports), China (12.61%), Argentina (8.77%), Germany (7.65%) and Japan (4.3%).
From 1959 until 2013, Brazil imports averaged USD 3402.64 million reaching an all time high of USD 22262.66 million in August of 2011 and a record low of USD 67 million in March of 1965.
Raw materials and intermediate goods (45% of total exports), capital goods (22%), consumption durables (10%), oil (6%) and motor vehicles (4%) are the Brazilian main import products. While the main import partners are: China (15%), United States (14.6%) and Argentina (7%), and other countries such as Netherlands, Japan, Germany and India.