The history of Brazil begins with the arrival of the first Native Americans, over 8,000 years ago, into the present territory of that nation. By 1500, when the Portuguese explorer Pedro Álvares Cabral reached the Brazilian coast, all parts of those lands were inhabited by semi-nomadic tribes, who subsisted on a combination of fishing, hunting, gathering, and agriculture.
The first permanent Portuguese settlement — São Vicente, a coastal town just south of the Tropic of Capricorn — was founded in 1532. From the 16th to the 18th centuries, Brazil was a colony of Portugal, exploited mainly for brazilwood at first, and later for sugarcane agriculture. During this period most Indians were exterminated, pushed out of the way or assimilated, and large numbers of African slaves were brought in. On September 7, 1822, the country declared its independence of Portugal and became a constitututional monarchy, the Empire of Brazil. A military coup in 1889 established a republican government. The country has been nominally a democratic republic ever since, except for three periods of overt dictatorship (1930–1934, 1937–1945, and 1964–1985).
Through most of its independent history, the country’s politics was dominated by agrarian oligarchies, at all levels of government. Their influence was lessened (but by no means abolished) after the revolution of 1930, when the state began to assert itself as a power on its own, drawing support from the emerging industrial sector and through control of industrial worker unions. Nevertheless, in spite of all changes of regime, Brazilian politics has continued to be dominated by the same relatively small elite, and founded on the same conservative principles, which have resulted in one of the most unequal income distributions of the Western world.
Thanks to vast natural resources and cheap labor, Brazil is today South America’s leading economic power, the world’s ninth largest economy, and fifth most populous nation. The policies of Fernando Henrique Cardoso (1995–2002), directed at curbing inflation, led to a decline in industrial capacity and an increase the public debt (over 55% of the yearly GNP). Fallout from the Asian economic crisis led to a devaluation of the currency in 1999, even after the receipt of a $41.5 billion IMF bailout. Growth in real GDP remained at near-stagnation levels (2% p.a, for a demographic growth of 1,5%). The later Cardoso government was once again challenged by rising consumer inflation and interest rates, and taxation rose to a record of 40% of GDP.
These socio-economic problems helped in 2003 to elect former union leader Luiz Inácio Lula da Silva, Brazil’s first left-wing president, on the promise that he would put the country back on a path of economic development, while also adhering to an orthodox economic policy –and especially avoid default either on foreign or on public debt. Lula had some success in forging an assertive Brazilian foreign policy while grappling with the issues of inequality, public debt, comparatively high taxes, and the attraction of foreign investment at home. After one year and half of office, there was a marked improvement in Brazil’s current account, foreign reserves, and balance of trade, but economic growth has so far failed to take off for good.