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Shvoong Home>Business & Finance>Disarticulation of the Brasilian sugar market in the Colonial Era Review

Disarticulation of the Brasilian sugar market in the Colonial Era

Book Review   by:Krygstem     Original Author: Celso Furtado
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The superproduction crisis in the sugar international market was provoked by the implementation of a new industry in the Caribean Islands. This new enterprise aggravated the international competitiveness. This industry come to light due to the apprenticeship that the dutches have had in brazilian lands in relation to thecniques and organizational methods practiced by colonial Portugueses.
The monopoly, which in the preceding three quarters of century passed had seat in the identity of interests between Portuguese producers and Dutch financial groups that controlled the European commerce, had finished. The result of the breaking of the alliance was the reduction of sugar prices to half, something that persisted at this lower level during all the following century. Thereby, the production crisis, that had lowered prices and, thereof, the sector´s profitability, collaborated to the final disarticulation of the system.
The depreciation, regarding gold, of the Portuguese currency, analised in this period, was practically of the same proportions. This shows how great was the importance of sugar to the balance of payments of Portugal. Therefore, the scenery was very critical: fall int he prices of sugar, of income, exportation and profitability. What make possible a minor negative impact in the colonial economy of the period was exactly the devaluation of the Portugueses currency in relation to gold. Such devaluation benefit the exportation sector, because allowed exportations and helped to control the influx of goods in the colony. However, as the Portugueses where the ones that export most to the colony, the final results of this policy was left in hands of Portuguese exporters. If the exporting enterprises belonged to the colonists, the income would stay in the country and would be invested in therein.
The most gainful stage of the agricultural-colonial undertaking had, wherefore, collapsed. The average volume of annual exportations in the secound half of the XVII century didn´t was capable to reach fifty percent of the highest points achieved around the 1650´s. Moreover, it´s prices didn´t surmount half of those that had prevailed in the preceeding stage. According to Celso Furtado, the real income generated by the sugar production was reduced to one quarter of what it has been in it´s zenith.
Published: June 09, 2008   
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