Was Brazil's industrialization program under JK really effective?

Juscelino Kubitschek was the brazilian president from 1955 until 1960, and while Vargas set up the base for the industrialization of Brazil, it was during JK government that the industrial boom took place, with the % of industry in the total GDP growing from 13,75% under Vargas to 18,34% during JK. One thing that causes a lot of controversy however was a policy of JK to "Import" broken foreign industries. If you are a american, you probably know the Willys–Overland Motors jeep Willys of WWII, and know that the WO Motors closed in 1963... except that that is not really true, JK brought the machinery to Brazil a few years before and while the factory closed in the USA, they continued producing outdated cars in Brazil like the Willys Aero:
aero-willys.jpg


The same is valid for TV companies, like the Telefunken, for technology companies and many other sectors. JK travelled to Europe during his government (the first Brazilian leader to do that since Dom Pedro II) and bought a lot of near-bankrupt foreign companies and paid for their machinery to be installed in Brazil. My question is: That process was something good? Something feasibly? Most of these companies crashed here too during the military dictatorship that began with the 1964 coup, and because of that many people consider it wasted capital. On the other hand it really impulsionated the brazilian GDP for a while, and some people claims that if was not for the coup these companies might have endured (We had a DEEP recession after the coup all the way until 1969). What are your views on this policy?
 
Last edited:
Just a correction: the 'recession' had begun before the 1964 coup(PIB nearly stagnates in 1963, rises a little in '64 to around 2.5% growth, falls to about 2.0% in 1965), and ended by 1966-7(1968 is considered to be the beginning of the "miracle"). Biggest problem wasn't exactly (insufficient)economic growth, it was inflation.

Was the industrialization model adopted by JK effective? Yes, for a while. Also, at the time, the prevailing view was that it was better to have obsolete industries(which were the ones foreign investors were willing to give away) than no industries at all. You can even say the idle industrial capability resulting from the the JK years' industrial surge was one of the factors that enabled the "Brazilian Economic Miracle" of late-1960s. So, it was, in a sense, a good thing. JK failed to create conditions for replacing the obsolete industrial park he imported with a Brazilian-developed modern one(which would have been the next step), but that is a failure he shares with every government that came after(even those who tried to address this problem).

Was it sustainable? No, not at all. Short-term explosive growth never is, and the explosive growth of inflation in the JK years created a problem for future governments(I suspect JK saw that as a feature, not a bug - he did want to be president again).
 
In what way was Kubitschek looking to the Vargas era as an example of development plans for Brazil? Any economic history of modern Brazilian industry would probably have to start with Getulio Vargas
 
Just a correction: the 'recession' had begun before the 1964 coup(PIB nearly stagnates in 1963, rises a little in '64 to around 2.5% growth, falls to about 2.0% in 1965), and ended by 1966-7(1968 is considered to be the beginning of the "miracle"). Biggest problem wasn't exactly (insufficient)economic growth, it was inflation.

Was the industrialization model adopted by JK effective? Yes, for a while. Also, at the time, the prevailing view was that it was better to have obsolete industries(which were the ones foreign investors were willing to give away) than no industries at all. You can even say the idle industrial capability resulting from the the JK years' industrial surge was one of the factors that enabled the "Brazilian Economic Miracle" of late-1960s. So, it was, in a sense, a good thing. JK failed to create conditions for replacing the obsolete industrial park he imported with a Brazilian-developed modern one(which would have been the next step), but that is a failure he shares with every government that came after(even those who tried to address this problem).

Was it sustainable? No, not at all. Short-term explosive growth never is, and the explosive growth of inflation in the JK years created a problem for future governments(I suspect JK saw that as a feature, not a bug - he did want to be president again).

One of my teachers claim that this was a shot in the feet because some of these industries supported the 1964 coup, is that true?
 
One of my teachers claim that this was a shot in the feet because some of these industries supported the 1964 coup, is that true?

You mean, JK shot himself on the foot? It's possible. I think that, like João Goulart himself, he was paying too much attention to his desired outcome and how to achieve it to fully explore(and understand) the consequences of what he was ushering in.

EDIT:

In what way was Kubitschek looking to the Vargas era as an example of development plans for Brazil? Any economic history of modern Brazilian industry would probably have to start with Getulio Vargas

Ever since Vargas, there was a school of thought that industrialization was the way for develop Brazil. However, even though JK built on what Vargas had left, there were differences in method, mainly as a result of the circumstances of the time(for example, in the 30's it wouldn't have been possible for foreign industrial groups to create branches of their groups in Brazil and have those branches build industrial plants here).
 
Last edited:
Wow, thanks for bringing up this topic Gukpard. I have never heard of this issue. As a student of the US business sector, I wonder if Brazil wouldn't have been better off working deals with Ford, Chevy, Chrysler, and VW to make parts or for that matter in the TV world to work an arrangement with RCA to produce parts for their plants in the USA...the kickback is no/or low tariffs on their goods in Brazil.

I have always been wary of government-owned factories and their inability to transform with the market. So, maybe with the government providing "subsidies" to bring in foreign companies to have their parts made more inexpensively in Brazil, it would have made the idea of "baby steps" to industrialization rather than going "whole hog" into building an entire industry.

I'm not familiar with the US or European materials coming into Brazil in 1955-1965, was there an already established auto dealership system in which the US cars were available at a cheaper price than Willys–Overland Motors? The alternative would be for the Brazilian gov't to tariff the US dealerships so their autos were more expensive than the Brazilian made in order to force the Brazilian's to buy their own domestic products...or even give deals to other South American nations (to produce parts or something like that) to help establish the Willys–Overland Motors brand as the inexpensive & more reliable alternative to US companies.
 
Ever since Vargas, there was a school of thought that industrialization was the way for develop Brazil. However, even though JK built on what Vargas had left, there were differences in method, mainly as a result of the circumstances of the time(for example, in the 30's it wouldn't have been possible for foreign industrial groups to create branches of their groups in Brazil and have those branches build industrial plants here).

That school is called National Developmentalism (is the one I support). One example of a divergence between Vargas and JK is also that Vargas promoted "capitalist xenophoby", he didn't wanted certain sectors of the eonomy to be taken over by foreign industries, and so he kept these sectors non existent until someone from Brazil could take over them. (or in certain cases he created a state owned factory to produce these goods, trams for example).

I'm not familiar with the US or European materials coming into Brazil in 1955-1965, was there an already established auto dealership system in which the US cars were available at a cheaper price than Willys–Overland Motors?

Brazil received cars by the "Normal" importation method. According to the economist at the time, Caio Prado Junior, the Ford motor company took a extreme caution to prevent latim american countries in general from opening car plants to prevent them from raising the concorrence against them, in Brazil for example they only built repair shops, not even a single factory all the way until the 40s, so if you wanted a car you could only buy a imported one. The main thing that changed that was the creation of the National Motor Factory in 1943.
 
one thing that bothers me is that Kubitschek's plan gave far, far too much lobbying power to auto companies in the long run.
Brazil is the G20 power that depends the most on automobiles for their transportation network, and the imbalance is bad for infrstructure, nature and transportation prices, which make other prices rise quite a bit, and that makes efficience hard.

This kills the rail.
 
one thing that bothers me is that Kubitschek's plan gave far, far too much lobbying power to auto companies in the long run.
Brazil is the G20 power that depends the most on automobiles for their transportation network, and the imbalance is bad for infrstructure, nature and transportation prices, which make other prices rise quite a bit, and that makes efficience hard.

This kills the rail.

You must consider that he was used as a scapegoat when we are talking about automobile business. Who really screwed things up was the dictatorship when they began to oligopolize even more the automobile business, bankrupting all companies, including brazilian ones, to support a oligopoly of Fiat, Volks, Ford, GM and some others. Almost none of the automobile factories that Kubitschek brought in the 50s survived until 1970... even the Willys, sadly.
 
You must consider that he was used as a scapegoat when we are talking about automobile business. Who really screwed things up was the dictatorship when they began to oligopolize even more the automobile business, bankrupting all companies, including brazilian ones, to support a oligopoly of Fiat, Volks, Ford, GM and some others. Almost none of the automobile factories that Kubitschek brought in the 50s survived until 1970... even the Willys, sadly.

True, true.

The dictatorship did far too many dumb choices economics-wise (and education-wise, and fucking everything-wise...).
 
one thing that bothers me is that Kubitschek's plan gave far, far too much lobbying power to auto companies in the long run.
Brazil is the G20 power that depends the most on automobiles for their transportation network, and the imbalance is bad for infrstructure, nature and transportation prices, which make other prices rise quite a bit, and that makes efficience hard.

This kills the rail.

While JK was the president which started the reduction of the Brazilian railroad network, it was something which was on the making since Washington Luís began his "to govern is to build roads" policy 30 years before. Most of the Brazilian railroad network was obsolete, slow and inefficient, even for the standards of the 1930's; a São Paulo-Porto Alegre trip by train in 1935 took some 88 hours(by 1969, they had shaved 24 hours from that travel time), and in 1933 it was already faster to go from Curitiba to São Paulo by car than by train. Brazilian railroads needed to be entirely replaced, and Brazil couldn't afford doing it. It was cheaper to build a highway network, which was what the Brazilian governments from Vargas on did. What JK did was to acknowledge this reality. Yes, they should have tried to go beyond it and build a decent railroad network, but the only ones to have the money to do that since JK were the generals(who were trying to build a whole f***ton of infrastructure post-1974; they had railroad network plans, but those didn't progress before 1979), and Lula(who was also trying to do a s***load of other things at the same time).

True, true.

The dictatorship did far too many dumb choices economics-wise (and education-wise, and fucking everything-wise...).

A lot of the decisions done by most Brazilian governments can be explained if you remember they were either trying to solve a problem RIGHT NOW, AND DAMN THE CONSEQUENCES or were trying to keep a good thing going. Brazilian military government educational policy is an example of the first one; Brazilian military government economic policy post-1974 was largely driven by the second one(with elements of the first one as well).
 
Top