ustrial power resulted in price inflexibility."4 The prices were high above costs. "Due to the protection, foreign trade remained a small percentage of the GDP."5 In 1973 the first oil shock caused some problems for Brazil.6 Even though Brazil is very rich in natural resources, it depends on imported oil. The government had to borrow money, but 50% of foreign debt was done by state owned enterprises.7 By the end of 1970's inflation had risen to an average of 40% a year. Private sector began to show their discontentment with the "favoritism received by state owned enterprises."8 In 1979 the second oil shock caused interest rates to rise on foreign debt. In 1981 Brazil had recession, devaluation of the currency, rising interest rates, real wage reduction and a widening federal deficit.9 At this point Brazil was not very attractive for foreign investors.From 1985 through 1990 the government "focused on foreign debt, inflation, and exchange rate policies."10 Over the 1980s, Real per capita income fell 6% over the 1980s. Brazil is known for having one of the highest inflation, but the rate it achieved in the 1980s was incredible, it was 39,043,765%.11 Fernando Henrique Cardoso ended up creating a "new economic plan" and he was able to slow down inflation and to stabilize the exchange rate.12 On the other hand Brazil continued to face serious social and economic problems. There is a big gap between classes and there is big problems regarding "housing, clean water, and good sewage systems."13 However, Brazil decided to expand their economy. As a result there was less trade restrictions, which allowed foreign investment, both direct and portfolio.14Brazil had a lot of potential of becoming an important market for Pizza Hut. The group's "ten year plan would put Brazil as the second largest market in the world."15 Brazil has many advantages. One advantage is that Brazil is a big Country. According to 1993 data, Brazil's population was the fifth ...
