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The Economies of Argentina and Brazil

The Economies of Argentina and Brazil

A Comparative Perspective

Edited by Werner Baer and David Fleischer

This book compares the successes and failures of the development and growth processes of Argentina and Brazil. It provides important insights into the different performances of these economies through a series of comparative essays written by Argentinian and Brazilian economists.

Chapter 15: Comments on Part V

Werner Baer

Subjects: development studies, development economics, economics and finance, development economics


Werner Baer The growth of the state in Argentina’s and Brazil’s economies was an important part of these countries’ industrialization processes. Public firms were established either in fields where the private domestic or foreign sectors were not capable of or interested in making investments, or else in fields which for political reasons were closed to them. Public utilities, which previously had been dominated by private foreign groups, were nationalized; heavy industries, such as steel, were public from their beginning; exploitation of natural resources, especially oil and certain minerals, were declared a monopoly of the state; and for various reasons state financial institutions were created to help finance the industrialization process or provide credit where the private financial sector had no interest. Of course, the specific history of the growth of the state differs between the two countries. In Argentina the state sector grew rapidly with the appearance of Perón, who nationalized the railroads and who confiscated German firms, after the country had joined the Allies in the last week of World War II, and established the state-owned conglomerate Fabricaciones Militares. In Brazil, the railroad system was nationalized at an earlier period, and, as Armando Castelar shows, the growth of the state in such sectors as steel, public utilities and finance was part of the determination of the country’s policy-makers to lead the country through a period of import-substitution industrialization. In both countries the state had an important role in contributing to the latter. Some have claimed that for a...

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