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CONFIDENTIAL

INTERNATIONAL BANX FOR :R:HCONSTRUCTION AND DEVELOPMmr

A REVI:EW OF THE ABBINK IlI.m?ORr UPON BRAZIL

ECONOMI C DEPARl"MJiNT Prepared by: Dr. Harold Larsen April 26, 1949

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of teehni~:l~l

it i"" not tH~

1''111<1 !C(lvice ot\.

d()~ent ~ the

:,;a.:mJ.n:;tion ("l the :c4;l' 'ort rfu~:,'E',~t'l'\ th,t, thl'S! mny h'Y~ Ilul')

to tyO m~, in :f"ct\):r:~. 1n the f 1 rs t 7,1~c~. r::Tuc.h cnY!:!::'lromlse in

,~V!:,11,t'blf~)(~ra('tnE eOhl­

eco110,d,c

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to i.;en. tify •

polley

II 'l'h"!l"" 115, of' cour!$e.ihetH~i';1('tfl both of thFt ,;;,;'l1t 'f J'nd ,11"ntit;r lro"bor. :~'1vtnt: rhe to S"'\.\gi?;ution~ 1llt'c, 0,'111;;:· tlon

~n<l Mi!':t"~Uon. ther~ 1", Hhf.' ,"; i;lv~n u""tion.al ineome. 8n\~ ~n est1Jn,:"h !rv,ir.!o of n"",t. dome~Uc r'lru~ncl.'",l '!'j'v1n(~'g. l!ut the t'(~lev0r,,,~ 01: th rI'i'! fmltor~ for eeonoroic 1aV'elOPln~nt 1 not Dl"OW:,ht

out.

one of

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11 th", 'i'l'f.n~as in ,,,hieh. they }·i~j'le' l" to 'he, "ficonol'ilios "mule} b~ unl)nl;'lllJ~d. ?or ex., ..... m'pl,~. tlll'" fol1o'1ll#~ "'m~llefl\ (.L to UnHe1 'Jtt,\.ee: 'II!d~ v~:r1:' t.'ton.~" of pt"OhJ.cUrt t:' "':rt f1 of lncom~' ill d lff~l:"'i1 t ri"~iDn~ ~n(l in Ii 1ff~1"'rnt ~ct:l '11'1 UCl!. tl; '~;hit'h "If!! !r.r-?ve ref'~l'r'e(l,

fJ;,r~ in thE:f~!!!e1ve~ th~ t.ru.8St <wirlence of <" 1"014:: of economic 1n !b:'dl'l. \7>. 2) AnothtSr con~1{ternUon t:'dVHnee~ h "th", fiifficulty hj\lilJ o(,en e'X~Jer1I!"neeil in the y)"C'"'t tw" Y!':'·t' '" in ~!~~e1:;lns~ • i'I brrnorts

h~)rd currency ,,,r~~~1>'l \~1th1n th,.,. 11rll!h of f'.r."dl t cOlrv~:rUble ctU"­rene;,' r",~ource,,\.1f b~ .• :d 1'.rl't?l.l1 iiJ cfJrt.:',:l.nly not "lone in !'ritieri~11eln?, t!lt of «~hort ... tel"Ul:) unblii.li~nee.

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'::1truet,1l'f of c:'t"Ch1uc­

exoent for o;rqort""

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In",ofhil'' {iii; th~l st1mtl;,t~ thh 11ct} ~l'(,!\~th. It not

~lli' ' inim'tt tt'r r~ov('!rnJll!'Htt'?; to ~"nCt)"!'tl.r;~f~~ (1 <Iljrt,',in p.ctb/i s fisc:"l

"Hl'tMilll on ()f:c."sion 140, '.nil {FK' kilo~"1!!th il!li14 y'<gr,r. 'I'll€!. 'l)ropo~.l tic, tnnr~~E'l 1n1}t'!'ill~ t~,' :~tJO. kilO'jn~tt~ ,nl?t' yt~n,l" (foJ{ ~1,' Y!:1 f )l'S) 1s 1:1-0\, t.herr~ror€t out of line ",lth )~~dl '1J l,tUst eT;1r.lrlMc~. ptll"ticl.l.lft rly in "1",,,,, ~t the i".t;ct th' t ~n;v of th!:'l en-g\.lng,"}ower !l'cilltic!. ",1"0 overloaded $nd tr"t :w')l"~ p~re~nt t?"" t.h"" !lIN CJ)'H"elty h t" f'l ex­tanl';1I:'tlltl.l "1'.: :'H.Uon!.'i to 'l):.l:1;;iilV 'ry t~ms."

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be u:::c:plel"ed of o'btfiinin,\; ~'ort ,')'X' !"l"!dlM-term ere,Ii h to fiu,n,nae ');~rt of Ii,->:,;.!:!l' 3 ear,en H:d tm;?Ort~ ;1'tlt'!J¥l' 19I1r9. '!.hili'! Vli';Y !l!C't'Ctfl of th~ tund!!l obt~'line~i from currfflli; export:~, llhich ",,)'\.111] ,o,therwille h:~ve to ba U15&rl for e~U;f~nt1fil 1m-"ort t1 • tCH' UfiJ8 In. l"&p,",ylll('" overdue trade • :tnl;l lIl~v6ri oftn'lJ 1~ol't reg1ir1cUon$ neoedad t{) oleilr Un the !!'b.9cklof;'· would thu~ be Ni ti.!tHtf'!!l, nl t.hn~h t.he"e :re1'lt:rictio'U$ wOtU ~ h;:ive to retNin"Jtt lonr, +mO'O€'h to ~fla"ble Brr!z'l.l to 'reYll'l1

the er~(lHe obtl:nOtl'l.lt qbl~.t p. .}

.s.

'l't.ha :3.AVr:: ?b.n {'.:iv~~ !en aT.h:~.U~.~tive !".n'\ly~h ()t~h·~'··1.l'g

{!lf~rlc'll tul',,,l pl'obl!~nli; ith :\$~'eeif1e $U{';,:~'.!l tlon~ $.'l(l to;:rof!:rl!lm~ of flolution. 'J.'h1a ·;:rr(');·Jos~d. t,lt~' i<:; :c, iiot1::worthy cont::-H:ution ;',l'Hl

'pl"OTi(\e~ lit: b$.9h for t:.h~ 11evelo;;!"!I?:T1t or ::~l9.n.15 for : j\\1r,~.du1'lly '!1'.f.­

T):7(nI11l'l-~ e"eonomy t.h,!t \<fill ~N.n:1 ~m fI.n,h .. 'lrin~~ u,tion of h!'!T'T'Y. ;Iro\l­'t.H~rou~ 1l'Elo"11t1'f. H01ll!'~Ver. it 11' f el t i,h- t J'tlUCh mort-! ''It til i ~ needi\<d

11 11;{igCl"OUl! I>u!millistrt·tion of ex.ch· n{~e (m''l Im~ort control", d:u:ring.:: thtl eomint: ¥(!)""r i~ f.ll blperattvEI nee(!J~~ity. if th!': orEiflit or Jh'l'1zil 1'l- t·:) 1)e",L"ced on H flrfJ bf"l1it. '"r().Lre~'% h ti:;l be '1i!!:::.lie :11'1 th", economic d~velo')m~nt of the cmmt1'7. 'the fTI<"'Olu.tiou of n dt'tl,\tion in w'h1(!h ir)l~;ort 'nd sxc;"'w;e controls arm 1}'t; "'(1.$00 ~!.M,

1'H';.\rlv",''J ~11rnin~·(t~r!t 'tn(m.lrI bE' on~ of t,h:". ;xt:hl'l of n b~.l,:me.ed, ·1evalo~)!1I'~nt;.l:ro{l"nm. ''iu,ch cl'm1;rol,,; m13t 'h~ SU};f,lleil.fmte,{ by stronr ef.tort~ (l) tobrmtden ',nd im'.l:!"ove l'rlldl'f[ e>t!::orts, (2) to ,leve1 O'!' efficl~nt1t~ment1e vr(}t!uc,~t.1on o:f " mmber of in .. (luutrb.l 'prod.u.ch i'J1d ~M1 UOI'Wl ,1~Hl'H,:\1ttiC. ~ou.:rees of ftl-els. the iIlt;:;.ort,', of ,."h1e'h nO~1 weit,'h he;f!.vUy (,n .Ilrridl.~ 1nt~:rnd1cMl b,>!'>,l!2ne~ of '~)£1:ym~nt'-!. ,~\n:' ()) to attr~et !ol"'~1f.:;n ~(l{Jl k,l~nd tech.. .. tlc1nn% 1;" iI\!!I~1,~t in tht'll!~e "~Telo')ml-';nb. :~'it,h~t nn inflow of ~ueh c r:'lt,l t';d. thlB .:~moltnh Clf :tm'e1f~n e.z(ib.".nt,~e whtch ~1Ul !)e ~:¥d.l<hl~ fot' th!' '\ureh:'!\$~ of l'l"teent,t:<l. '!ul)'111iH~ tn,d e(uiiJIn~:nt are 1i>::"l17 to 'Of!' tlO lilnitflA duri.tij: thfl' ne:tt *H~vq!'£'l y4!?~r. (I.e ~~r1oudy to r;")t~.rd lira.dl t s 1nr!'U~tri.".1 l!ln<1 ,~en~ri'l.l economic (ll'!"I)'f'lo:·,)11!;mt." 'l',lJ.f\. .:)'n. ''.4-?S; ()rlf:1n~1 tm(~ltr.l tn~iJ.)

to provide ."l,daqu.:;\tl'iJ coorflinr':tion of v.rioll!!\ relf',.U~ to ;f!tgrieul \WA.. Such ~t"!l.dY!l~~imt hirJ11;r ..

~;looh.l t.~.l~H·~:ry tf"Ch"'li{~1tl Gon:'l1"1"ionll! of 'Mel! itut,11-fled~:l":r~OM.l. t..aoluH.ll{'t. if d~flItllI!i.!d necetu;,;I,l'Y. (JIlHJC1~)lhh irm:l other caunt.rl~$, ~e t:-:- deh.'M1h'F' thR 1'!lO!Jt vr~',ctie'11 ;k,.nd r8~il1$t1~:: nolut.il.'ms."

o th..,

11 Vi~\--l of tllv: C'Wi'l:Ul:.'ti ve r"clproc~%l l'lt; tur"" ej" oUt;1I1t of deml'ln'l fot' tlU"tll nn f : in1.u!"!,tl'i f l?ro'u,,t?:!. 'i.'he itl'l!'tlf ;~.()es not u.n;h;l:r"~j"'!t1l""' .. t~ .'-'G'd.cultural for ex"',i1pl~, "the 1mprovet1t'!nt of !i~r1eult\lral protlucUon and tlv; trml~~orti1t1!H'1 ;011. eo-mi~IE\J'ehl

d:!..etri1!U.ti(.tll of foo~",t'J.ff".l h on~ of :g1"'''f'11'~ l::rad.e!l1t ;)f.'oblr;'m1')." (!bi-flu n. ,5.)

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a:t'ii! t H;) l1I11t te'l 'urine" th" ne:'!t ~ev~r(,l ':/ t:, '" r~, :1 "I !C1:t'iou;"ly 4", ",'

r@t~t:N'. 'ry. i,n'~'ll'!itri ~ 111 '~n t":"l (10 II ':1b-25) J, • •

for

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interaat Of instttQtlo~sf 0~C\!& th~ Inte

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C;:";i L tl<ll' -J.. !r{)d-~ t ~ •. d 1 :~i\.. v t th,: in t(-!:rf.>l"unce- of

!.',,;"·t~J ih(',rr 'tt,'-,,; ,i~l

'tinn '~pnnt on food.

for increJ·.l".ud 'K{f:.:'.

LiJ"~t'o CFi!lti. r:,.

tiCrtlf'.

- 15 -

I.J'n.der aucb cirCW<l$tp.-nce~. t~~3 pre$~nt !'$l tUJ~t1on in Af~ricuJ.­htr,;.l ,;;nd c::~.,tt.ll:'; urodu.ct1on ?'fOuld fJiilf·hf:$.l.J1a tna' ,riGa incr'liM'i •· .... nn ... ".""

ir~ cms\~ of Il ;ievelor.~nt expiinsion loovefl:;~nt ~bich not tGke :nrl 'tiOX"E~ clifficul t Ilny ste1jti t,qken to combat

It i~ fllrtil!~r C.lenrl'l i>.:J\)lfl'l in the :NOOn COUtlt.ry t g d!"'velo)~''V-lnt 1 to in f.". lp;r~ar

tl,Jndency of ilr,id 1 '8 internr.,t.ion;.d tr:¥i,e n.:! :...n tl.<' ilrst J-'::l"t of the rt1poTt t shows the necessity of con-

s hal!:irlCe Q.!ii\yai,,;nl;.iJ dlfflc.:ultlf:HI t"lxint. '.::00 Int,nntll" 1.u roplnce tilt,!lIt it by producing COullilOdiUea whioh eM b~ ol)t:

t~l~d tory tiS suhs1ii1.ut'S's for blportl ttlat increase ;:.'t b

rut<-: ' :ro:port.,ion to th£' inGr")i':I.!:)('~ !lrob~l"lt;1 E-~xpol'ta.

for :.

1':"nd fur\;

i

III I of Part i. teutton 111; to fi:nfucii~:'" prt:lr~ruisito to eCOrtomiJ d&v~l()rJment.. IJ(mt1nu..~tiou.

crl~di t 1'0li.c;( is nl~lO recoL,;,ended, fOl', if on the OllJ:'>

~i t.u~ in 'f;rlcm; bet tUI' in t.ru .. l1 it. t\';t.H itl utf.lt::;r h~Dij the redu(:tion in ,,.vpj,lRbl~ bacuu.stl of l~e'i\lcti.m in L.ticlQrts in 1;14:;, trw !ncr-eft_eli> ill

cert.tlin rie1d1ty in credit controle. a.celi\. 1$ recC):;L.an.ual,

'c'ithout st.huL;.ting the of

the;' 1;m.d~r.~t,:;;J.·'y -,,1 tU!'lt.iml fot· hk-ert by the l"rt:£\i{ient of

rumlts ~,hicht to 1,. in

tecl'ul1c#;il f;spec:ts of th", vr ... t'iou,s eooooUllc \lecture ti.x:} c\:Jndtmsed in PfilJ"t n. Th if:; 'i\T(Jl'k WI:iS f.eu::iU htQlj hec~'\use Lh(~

1;no tbte wU'ious Stlbc()mwll?>don~ he,d helel'f; th!S'ftI the for the SiU;:"~: 1)lm1.

po ssibil1 ty of inerer~u1~:; 1ZJgrlCul. t.urt~l ;~~roa.u.ction ttu·Ol~.i )f fertilit,f!'l'S. c{m$t.1"'.~tion i.,r of ,,~eMU~~f,'Z ,::\ltti ai' tiICmiq,ues by ,. ~ider u",~ of equipment. str.,uds out. 1'1;.

l'eco:r.tJUen~\ed that the explot't1tion of pho}'lvh~,te ,iepo~li t~ produ.ct1on be etli1Ulktt:Ki 'l/1h~rover is tn'i:1 ponsihHi tit 0f

I"Jport recQi~ni ~£;s thl,t flU"t.her i g. tell ~~GnthJ. elcwmt in t~ $Collo!'£ic

[). nUllli>(:lI' of 111J.iu stri:J. cOd!'liOdl tl(j9 in the ~.:l:p~~fU'n t:J b~ 1-ilI::'.!sl')1~

i ron which mif',ht be J,rodllced.

to r: t..'1r;,; +,":~\::':l()l"::­• ;;nrl finMr,cii'~ in foroi;i1l Gl)l,.i.n-';'j.J.(;:~;I

l'P-»l u.i~, 'i,~n.t

r"'&r~ss uf ik,,%il. production (I f

t)no ::moh (;Oi:r

- 16-

In :respect to iron or(;, a~.rt!lil1 ditflo.11ties for Hll ex!X'rt':'J.1ol1 E~.t"'~ ).JO/Juibil1 tl of

ure'~sin,,; tiro quall~1tleQ 1'!:l:)r.rooif11,ly. onco ?tIt e.;>;port polioy 1i ·~)hl(:'{ t i '3

!~t~:~,:ng~n?1,:l~, ::jtt r 1T3J( ttl i Increl.:tse in tM '.1xport.l;rtion of tai~.i miner::'!

:cn1i thn dStllr,lhlllty of it .ll'vrr.

ltU'Pl'Ovfl<;l}ent of tr;:;'J1Eport~tiGn. fr(.dLi ti~s de'P~lds ext€nt tdn

Urtm I'ntroleu.l'l. alwUld it be gSti h;.~~. '!{ti thin :!, ahort ti,"l(,~, troh"lU.m lntlrl;zH. it \'IiOulct ~dv1sHbl.e to aooUnu.e

f iXl!lSt.ruct.ion of hi,ghwt.w- netl'lOrk. the 0Ver-.inCreRsing .-",·,!X·.~u~ ... :t.:linf:i$. to :pl~e hms i:l'l.!f"OI"t!dlCe on the aleotr1fic~t.ion ,;ih~Juld tile polley of intendfied pE~t:r(,)l~ reB~ArCh not bo , ~h~~ tl"~n~rt proHer2 mu,r,t b~ consVi.fi'retj frolii xenothel"

f;lec~l"1fleT:ltion of r~*11Yt\Ys t\9~u.n'linjg .9. decls1 Ve role.

Ct1)QA~tltlj on report of th{; Sl.lboot!.UIJ1.s1ol'l on i 5.;:.;f'ctu interest in tl.t.e }.'ro;~tl.ction rethi industrlf~li

l.'11e cl~1Pter re~J'di.i'l€: fO~$t:r1 is nlso worth;( of ~1Ot'::·. tl:';?t Li:,etufl /Ii.':;; gi vEIn to ttxPOlt~t1on of

'1.,41;'<$

of It lit.

tk\f.:/5 I:iD~. In th!il: ehF.;:!tur ".m:w>!l:;O"'ier. cel"t~kin recolflueJldn.tionE> ;;;: t~lc.h.t\lc~11 :.n .. ~d1et in 1n~t.H,>trb,:,;. ion to obse.rYl,ticiflS

""~)rt 1.1 h to JJOint out follo~in,'$.

. I', .' .;,'; r c: J .. n i ',Jll.C.. N tL"e .. f;t>t'J 11m. t~ to the ~:'l:tMt. to which ~~ on.e ~Qr seetor O;:"tl,

()thlt<Ta 0.!"d 1 £h::riou"~ly.. Jut;J. '-m.L r.b'Ydopment will oot be of th,) urge!lt requi.l'~-

.t. t 01ll 1kl.'2rOTed enlarge(l tr(:,nirJ(Jl. .. t,)t!OIl r£~ilitlf.4s. hr~l~ fu(':!l l1!\U:p'p11fj~ il.t re,)$Ouabl.f) price~. fd,.~q:.w,.to f'.Il~ ,lil}ll.;n.i.·"

~1,;,.:;y:}11~; ()f '11tlCtrt 1)o~l'\1lill CtuJ. ..,ery 1~"l"tl1;) l.nv~£;t-'a,.;;uts of oaplttU. th;:~ pro\litlifir1 of will pr1iU'Ient ~"1

in vi>Si'.li> of t1l0 POOl' firu.u(d.J',l (!o!.lJJi i:.lon 0.1 lrl<4JV of thf$ U.!.Jiteu O;')rlOit,l.;:iti,::!s rot' :;n'..)£H in iIl,QlAt! }:l.lhlic

r1~ . .l iniit;l"t>,llt in Vet.rolswl fU;:fJlol':;-rrodllction. ot.l!o .... c iei,n.t :'lld. vt.>

til!')' nrrtion' s ~"l"O~ing; food Nq.u1re~t! ~111l1 f;:.,)

export li.fQducl.:l is likely to O'~.;!.l· ct)n$ider~~ble

b~fJlCWl,JerlYiJll'~ !:'Ai r;:trc~')oMhle i~u,bs.t!<enti~'?;l .;Jro~rt,n~e: in tnt'" develo'PIne1'lt of

1J~!trii~nt'1}.1 b~tt.~r li oo(l.ration~ ii.1. vf ,:;\.}l.UliH~, incNn9t~dlf'Q!iuctivlt:t. ! .l1I.c;:Jur n~d

f

- 17 -

fli.:Lia to incX'$aae t.heprodur.:tlv1ty of' the ~orltel' is ndu.it ,::"')i t"l i n~r~!'\til'lent tn111 t hi!": qt rl!~ngth by the "'7'TiUc~,t i<~l"t of m~~~~.l po~r fln,i 1.0 nim ~ith nora efflcient tool~ .~·\fld :· .. ~~H.~til f'lBry' • (~ut ~~~ 'ttS~,i of $1l.ch C;)Tti t:'J~l 1'1-¥,~"I;~t.t akilled. iDan,illgelGimt. Eidequate education Rftd t:r1J!in-

in.: r(,;,~<'. :::v'il~\hij. ity e,f :',~.n~c·~~r thr:'1tl<;;h i;;Ld",.r~ tion arc Ji'lfllO nOOEH,~$J ,ry.

t,<w:'':JS /ihrutt{1 for t"o \:.~.~c fln:'Hci~j~ of

(o.1 sClJ.s!1liun

!' CJ'.i'(J!",:::h<J';f::Pli V'e

t h. fi nn<>::ini" 0 f 3upnlins, but i'l1S0 :~s

tUl·e~~. fu1.d ti1'l 1 ..... , ... ,,"' ... :tI'o in l)rU"t Ill) is not.i;;ne:

'\ .;iI"ili;;;l l,l::.llj L-.:)ort;,nt .. ;u,:';£t.iJn i~ t..twt .. \;..M:J l;:;,oor nni,l 9ilJ.lrllitH~ ::..attu:icla tr..:?t will

.,ir.:,~. In viv, v t:~\;., i nri.c~it:nll;; no ;.l"~:J.li; lJl Hrarl.l i"Jll.i 11 t tl~ surplus Ct.l{j,;..c,:i t3 for producing the ;:;L, '.('1. .1 ~ th. t .::T'. n,,('1cC:' • "bUtt ~i t!1f"

t~U v'rry out development projects pl'esumnbl¥ "'ill be . ~ • i ' Gri:'.l (_;

~,;."j.J,..L\~\.1i/; r;6 '1'I€Ill) tbl;:,t Cr:J;l ba d1v!:.!rted troID less 8!iU\wtisl .'1cuvi­", Hill

..:'0 v;c;lvl';ucut. ~

e.t·,;·rt ,;{ ·,:;:',ie;1, 'fill

"iil viaK of' t ': c , :;,1'(; 1i>:-,ly to nt:

0;" i~:>;; ;lt~ihH~t: i;Ulortn,nct~ :,~ '~n:-~:t ~ ir~

V;),·:,.O':;\' u.r~fmt

L:.'01"t l::r>\f..c ;1ml0unts h~ l;::r,; nut .;-~vr:il(1.blo. or ":'.",. .;: to

(~"\.. Ln· be;. .;.i;'u ip"., bl}~JBVt'H'. i "~ initial nX'Ogl'BlU be l'C'S11 .bpJ., n(.)t~l

on ::et'lin,; l"il'€It ",'1 r:cuJ..i bit of lit Uf';

'~\0L r:!l ef~p-.y ili~~l{. t ~~s " .. J.it"'fic:,tLtif;;:; Cr.~Il n.~~ t}V~;l"""

t.:;::t 1,n~H"'\ 1,'01.t(,' of bfjC::,· ... 8~; c!' t.bls ~;L

·,;:\~..unu..\.g·.;i(.,n

ploco ~ the flxpense of li. lower ~ti!jnd~'Il"d. of 11v.1ng for Pi wl,jo:r1ty of the poople. Social conditions no longx:;r peI"udt thl'!lt imX:H~les remf;in out 0/'\170-portion to l'ettll;)rl(.:t~'" nn:l h.()Udin;, coS!tu.

It, is of the utlOOst iInportt>l1ce. r..herefo.l.'I2I, th'l1:. economic lftoot Of'! p[:;)\ced by non-inflFlJionrry rowurces.

In t!1O m:;jorl try of c'COnomic deVt;;lopment progl'<'';:;ll.a consU~r(~;l l;y tl.e .Joiut whmss1ou, the :finaneinl problelU of l'asw.rcel$ in cru.,..eiros in f'H'dl[;l1 cu.rrency att·nd'S out. IIIf,ny tiiaes the itrm,s of finf1nc1r~f~ in (;r.1-

1<1'(, hl.ri~el' th~",tl 1'.hooo in :fore1~ cu.rrenc16s.

0'l the other l'lO.1'lllt reoou.rceg in n:'.tioru;l C'.lI'I't:Hl}, &-t'11 not fs0

smrlill [t~, is v~t*ln reported. InsuranCft and c~pitnliBatton CtlJU}lf;Jlias ,.;flU

sod S:'~':;'lri ty in12: titut tens nre fltle to 5,t'ovldl\; net l"eS(HJl"C€;H ffJr i UVf::i\1,-ment:;; av,;;;,r~).ng two bl1U.on crllzeiros yearly. l}rlvate corporat.ions aad ir.dl 81'8 gencl"[>lly in f;, position te, intlsE>t from ""ight to te;nhilllon cruzcil'oa j'Hr,rly. '!beso fliOOunt, (;\.N not very l;(rge. but t.Ml are sufficient to three or f,:".'x u!ld.~.rt of tti.8 of Yoltu:iedoOOp. S1; of' ii1l.1.ch 8.1'tV1n.2{B are now .invested in l.'1rge part in u.rban res! estate.

Joint Co;qU aslon ,~oes not invest!!lents in .re"d 1 ts l)()int out the dl~'roportl(m~ltQ rnte of such invtJstm~t. and ti£6 ne€'l~ct bq:>ort,~t sect.ors ot the econ::.')iii.V of cQ\l.lltry ~hich nrc" nant or in (ut:t:·icuLties.

:t'he Joint Comrdssion beliavea tn""t • wi8e goTe:rnment budgetary polic.)' .. md. a vigilicnt credit policy, r6f'erredto in fart It Cftn pu.t M to t.lliG atortion of investments. 'rho reorgani zlltion ot the soouri t.i~tS

1 olao vit.::2·11y lIlportant. To accoUipli$h this end t tM diacontiru&.­tion forced l;j,'Owmroont lOf,lllo would eA.r to be necessary. CompuJ. sory purclmsf'ls of trsQsu1.')' billtt coul·:l be r(lplaced by issa.as of ordina17 trea­sllry bUls, [.,n:1 though i.n the beg1nrdng it might be nec.~SclTY to mtJke use certdn tJl.lpport !acil1tiEHl. it ":I"J()uld ll~ 'iJorthwhil.,. to m~~ke til(e sttOI, .... Pt in order contrirr.lt,! to the strengthening of the !JIElrket.

';.,']:;'(;1 nee(i for I'l Oentrr::l .sank: 1 s e'~~$Jl zerl. to provide for tha e.f'r~t.lv<~ n~l,t1on ot ered1 t.. r,8 well ~JS 1:.0 help too Govel'tti.lEmt in restorlrl{; tl.U} m.~i . ..rket tor its bonds. J. ilmu Dr,t.nk 13 also of groat impel'-'Ii nne,). Joint C'or..li.l:l, sslon bellows an increaAle in rerEel credit to be ur6en~. 1a of the opinion tb.at becaU2El the immediate eatabllsbment ~1 iJ:ur:'ll is .r~~hel' ooll.;plO~t •• 1 p:rovl~ionf!l st6'P ml.bht be t,~ by iner~;~,;'l;1rI.J." the facilities of the Indc.l.str:i.al Njricultur·nl Cl'edit.1.'·l..-mOillt of Brf:~zJ.l.

Joint UoJUI;;J. aden is iU.so of the opinion t~t t'J,S Ii mer-trl13

ttu:r:;r ',~,j the pOQf:i;ibili ty of public lODus. the ao1i'e.t"rAent :i. $ ill f;ii.

podtiun to loorefi~e ita; tiU: revemeA. It doe£ not su.r;;gest f1. ~~nifjr,:l tag i:iC~,'.~cc, but ratht,r !1iOl'e, ,'1ppropri collection met.houfr. ~p~ciill¥ of till) inCO",tl tax. Joint Oo::J1U sdon i IS f:l'Wrll'e of the difficulties of t.hel5s

iun but 1t bEli~yes tl~"'!.t it .... /111 he worthwhile to fooe

- 19 -

I!" l'eorgoo1.l:',ation Qr thtiJ sto("..k \;.;{Chart.ges will ~ ~ be vnlil.~hle to $t1uW.nt~ tbe 9tiJ.e of private ~ties. Tr10 foll~1n,:s: steps, "'1ith reg,.rd. to thi~ w"tter, are ~sted for cO!lsldQrfttloru

thi'\'! to

1) 'rhe establishment ot n oonalfJ81on to e.Y:1mill<$ tt..,,, bRlnnee l!o:aU'!HI"fl t)f OOlllpt,ninl prior to ie~nce ot their ~ecuri ties.

1.'0 w.low cOlllpJ?ftif':Fi to' i ljGtV~ l':orger flrounts of 11I:1b~nturE:st .... z- vl;.Lj\'~t' mortgf:~e secu.rit1cs, $baTt} their IJIJ.bscrib8U c.'lpitJ.:,l.

4) To r'1llo~ the use of rto-~:\r Sbti.nlll.

5) l.\!O faeili t&te tm aill.Sfi~UillYl1t t)f artiole'S ,j! 1noor-$'J{)r~t1(Jn ~;ii:'Q:n sIlflr9~ ar0 1;0 issuei:L.

,£ilr.i{:mcic~. rC90UECEUJ froUi '1hrt'H!ni are r:~lso ot' the utROst ilfl:POr-t s dfivelopment l)rogl"gm. :iQhcommitt'*'; for Genel'!'.l ,;i\;,u,ii :'i>

first-rf,tt.e invAst!llfJnt progrnl't for foreign cflPitHl. It. conditiml1~ ~,tlon of th~ trMtlfAr of f:Hmings flnd e:llptttria:ttlon of C,qlJitMl.

'PO sslbili ti~s.

"£11.).1 "foia1~ 00l00l1s!1l1on points nut. oo..ver. t too crer:tion iJf favol"[;tbie cokldi tiona b:; tb" flo~r of inVeQtlllf:!fits Il'Om one country to Ml'.oth~l" ~1llOt hone-sided underkJdng. It is not only Dmzil ths~t mst pave the for ,raeeh1.ng Ot:lpltal from abrorcid. but f~~ countries '1l'ith (!;,¥;1t.!l.!.l :reso;,:trces, 11ka the Unltad Sta.tas. l'Itdch mlebt -proaot'3 lilei;~,m.u:'aS It;hlch $ UlJuli;" t f~ the fl ow .0 f clt'lpi ti',l lnt 0 FJ1~U:;1l.

1~1n obstacle to thi"% flow of capitrl1 from t.oo United ;Jtatea to rl.r;:i,;dl b unaou.bteal,y that reh\~l the ~'YFtll!:!bllity ot torel~J::n ~-

If tha Lnited St~,tes Govemuent and tb(~ Dmtili~:.n C'JOwmment ~ze ~o enter int-(} :n 8Qeem;;;nt "'l"OviillOf' for the enc~emant ~

prot~c~ion oi in'ftstatents. it lJi,rJY be i'1XpectfMi th&t the ft!J"r of excMnge 1"1 $~~;;; h€ redaced .•

ll!11CHileI' ~LlgJEt'tstlon is th;~t of ;'1 tax ~;:re"''lI18nt bet~f::len }3:rt1.zil ~;:.ncl Stf",t.e~l, aimilll1 not only at, avoidini€ f!l. dupllc;;ltion of taxfls, hat

going to tJlt~ ene;n,t of reflJJ.Cing ttJt.xe~ lf~v1fld upon it'.i!O,}ij'~ u£ {;,~i 11 iuvt-3litell in certain und~rtp'Jdngs in Braldl.

~l:<b.e orgMi:la>t.ion of u(.ultmr1 tlEls'* hn$ p~ro be<;;!n ~ated 1ntat::: Joint :q:~:d.vn·)j! .ruTx,.rt.. ;:)u.ch fut,bodties 'f'IOuld be charge,l with tecl'lI"licrol finr:ncit,l plims in Vl~ioue fi'i111.ir,:, inclu.(l1n{~ those htrvl~~ it.

1 rli..tl1ibtllr of' ~ll entarpritles. to :f~;,ciJ.i.tate provision of capitl-il reCOH': (::~].{ .( or €l.;tp~!n.don. ":xc\tuple£ w01.u.ii be ~u.thori ties for eltt:ctric J)O~r proJ\!.Ct.s ow::!!' interior ot~ tnt': country. ~!ld for the ~ll-

in ,P',lr!iInA. B.'rl.t ~n.nt:\ C"·t::>:rin:t. M.ot;,er ,",'.IW~ ...... u

wouLl lH, of ;;0 Duthori t~ c:l1',zged "'i1th integ{ ... tintr~ 1'711

ele;:i:~'nts nooe91iUU"y for the grHater pl'CYJUCtiOIl of iron ore for export, incl"llil4:~ tr'~mlllOrta;.tlant 1JiIln1n.'S port ¥1)rielS. 0nl.1' t.hro'llt$ #In unir\-tarl'uL;ttXl flow of ore can ltrge eont>Wl1ini";, lll~crk~}tg bf! satisfied.

'.Luese are, Youri;":XCelleucy I !U1,in :m.ggestiou:l particular awpbE"si$ in th~ Joint Oo . .:r;iiHJiou.'s generiu, l<eport. peI'diil V~ (lOTi,]; to poinT. out tnfl vrlooble rmo plJ.nltltaking ~rk Vari()l;~:; :iub':;OI_Iii~ions.

?lith It is

by

deemed m.nt~:;.

to bility

In case thQ ~ugga3tlons iJ.~ the Joint CokLroittee report are m\.t1sfE£tory by both the Brtu:iliM Md the Unit ed 5tntes Govern-it l'"ould 00 f.ll)propririto to consider the estabUshment of a mncrulli~l

2·~cJ:d.ev~m'.il1t ·:Jf tnOFS'~reSt l'i141("j1 rill contribute at~."' fUld. half<I\C6d econDmic dovelopment to BrMU.