The short answer
It was the boom of 1968 to 1973, when Brazil’s economy grew more than 10% a year under military rule, reaching 14% in 1973. General Médici’s government called it a miracle and built showpieces like the Rio-Niterói bridge and the Transamazônica highway. The bill came too: sharper inequality, a falling minimum wage and foreign debt that more than tripled.
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The numbers
Between 1968 and 1973 Brazil’s economy grew by more than 10% a year. In 1973, the last full year of General Emílio Garrastazu Médici’s government, GDP rose 14%. The government spoke of a Brazilian miracle, and the name stuck. Work began on the bridge across Guanabara Bay from Rio to Niterói and on the Transamazônica highway through the rainforest, and in 1973 Brazil and Paraguay signed the treaty for the Itaipu dam on the Paraná River.
How was it possible? Foreign banks were lending freely, and the state borrowed abroad to pour money into roads, power and industry. Exports grew, and the middle class began buying cars and household appliances on credit.
The mood of 1970
On June 21, 1970, in Mexico City, Brazil beat Italy 4 to 1 and won its third World Cup. Days later, in Brasília, Médici lifted the trophy beside the players. The radio played the team’s anthem, “Pra frente, Brasil” (“Forward, Brazil”). On car windows, a sticker summed up the official mood: “Brazil, love it or leave it”. The government wanted the whole country to feel like champions.
The bill
The miracle had a price. Income became more concentrated: the Gini index, a common measure of inequality, rose from 0.50 in 1960 to 0.57 in 1970. The minimum wage lost value. Foreign debt went from about 3.8 billion to 12.6 billion dollars between 1968 and 1973. Médici himself is credited with a line from 1970 that became famous: “The economy is doing well, but the people are doing badly”.
Economists agreed on the numbers and argued over the cause. Albert Fishlow blamed mainly government policy, which held down wage increases. Carlos Langoni, in a 1973 study, put most of it down to a shortage of skilled workers in a fast-growing economy, which pushed up the pay of those with more schooling.
The showcase and the cellars
The miracle years were also the years of harshest repression. While the economy raced, the army’s DOI-Codi centers were arresting and torturing opponents, and the National Truth Commission later counted the dead of that period among its 434 political dead and disappeared. The miracle and the Years of Lead happened at the same time, under the same general-presidents.
How it ended
At the end of 1973 the oil shock made fuel far more expensive for a country that imported most of its oil, and growth lost its pace. The debt stayed. A decade later it exploded, and in 1983 prices rose 164%. The miracle had run on borrowed money, and the bill came due in the 1980s.
Sources
- IBGE, Estatísticas do Século XX (GDP series)
- Banco Central do Brasil, historical series on foreign debt
- Albert Fishlow, “Brazilian Size Distribution of Income,” American Economic Review (1972)
- Carlos Geraldo Langoni, Distribuição da renda e desenvolvimento econômico do Brasil (1973)
- Boris Fausto, História do Brasil (1994)