Brazil’s Backstop: The Modernization of Brazilian Agriculture and its Contributions to National Development / by Mark Langevin

Brazilian agriculture is a fundamental pillar of national economic development in the 21st century. Baer reminds that agriculture has been the “engine of economic growth” since the colonial era (2014:281) and Barros reports that “Agriculture was the foundation upon which Brazil’s economic system functioned up to the beginning of the twentieth century (2009:83).” Agriculture was exclipsed by manufacturing and services during the twentieth century, but the onset and deepening of Brazil’s import substitution industrialization (ISI) model and the rapid pace of urbanization required signficant income redistribution from agriculture and mining to finance mounting fiscal demands placed upon the state. Today, Brazilian economic and fiscal stability continues to be anchored to agriculture and agricultural commodity exports. Agriculture is Brazil’s backstop.[1] 

Read the entire Brazil Initiative Working Paper here.

[1] The term “backstop” is used in finance and refers to “the act of providing last-resort support or security in a securities offering for the unsubscribed portion of shares. A company will try and raise capital through an issuance and to guarantee the amount received through the issue, the company will get a back stop from an underwriter or major shareholder to buy any of the unsubscribed shares.” Investopedia. Accessed at: http://www.investopedia.com/terms/b/backstop.asp.