ABSTRACT
This chapter focuses on the complexities of adjustment of the Brazilian economy in the face of globalization and the pressures toward regionalization. The industrial dynamics of Rio Grande do Sul will be examined as an example of sub-regional responses to world economic processes. Trade liberalization and regional integration may be put on hold in the light of the needed fiscal and budgetary reforms that are generally seen as the conditions for Brazil's long-term economic stability. The growing trade deficit forced the Brazilian economic policy makers to reintroduce import restrictions and to raise tariffs, also with respect to products from the other Mercosur countries. "Deepening" the import substitution industrialization strategy rather than entering into an export-led industrialization strategy made sense economically as well as politically in the mid-1950s. Brazil's participation in supranational economic integration schemes has been part of the overall agenda of crisis management and adjustment followed since the mid-1980s.
