ABSTRACT

Throughout the 1970s and through 1981, Brazil's development strategy emphasized maximum public and private investment, with little thought for the economic and financial costs:

Massive infrastructure, import-substitution, and natural resource projects were carried out by a swelling number of large private and government-owned corporations. The investments were underwritten by a complex web of subsidized bank credit lines, tax concessions, import tariffs, and guarantees on domestic and foreign borrowing. The enormous costs were borne through higher taxes, compulsory savings, and heavy domestic and external borrowing. 1