ABSTRACT
In the case of Brazil, the exogenous factor pointed to was the oil crisis that began in the second half of 1973. The external disequilibrium became a cause of the crisis, to the extent that it forced the government to adopt recessionary measures to reduce importations. Given increasing inflationary pressures caused by the second oil crisis, and the finance crisis characterized by increased international interest rates, 1979 should have been a year of economic contraction. In the first years of the 1970s, the strategy was reasonable to the extent that the domestic rate of return was higher than foreign interest rates. The most serious consequence of the domestic debt, which, in real terms, increased 105 percent from 1970 to 1980, was that it facilitated extraordinary financial speculation, raising interest rates. The slowdown that began in 1974 was not only a financial crisis involving foreign and domestic debt and inflation, but also, and more importantly, a distributive crisis.
