ABSTRACT
Brazilian industrialization started in the nineteenth century, mainly in the Sao Paulo area. The initiation of this industrialization process, fostered by the accumulation of coffee wealth and large-scale European immigration, was rendered viable by tariffs which were already high by world standards. From the late 1940s until the early 1960s Brazil experienced a very substantial process of industrialization through the implementation of an import-substitution strategy which was pursued more vigourously with trade and exchange-rate policies, resulting in the heavy protection of domestic industrial activities. The 1973 oil price shock led to events which, in the mid-1970s, culminated in a reversal of the cautious tendency to open up the economy. There were several significant policy changes which indicated a return to an active import-substituting policy in the 1970s, such as the departure from the purchasing power parity and the subsequent overvaluation of the currency.
