The external vulnerability arising from the international investment position and the flow of income: an analysis of the Brazilian economy in the period 1953-1963

The objective of this paper is to show how the external vulnerability, in the financial sphere, is affected by the hypothesis that one of the most important links of the interaction between flows and foreign stocks of Brazil is in its circularity, what means that the International Investment Position cause an outflow of income, and this flow is directly related to the increase in external liabilities. Thus, we analyzed the period 1953-1963 – marked by a significant industrialization with foreign investment (Plano de Metas) in a context of scarce foreign exchange – coming to results that most (around 67%) of the increase in net external liabilities of the period resulted from net income sent abroad and are presented several indicators of indebtedness which showed that the external vulnerability of the Brazilian economy, from the perspective of the present study, has deteriorated over the period.

External vulnerability; International Investment Position; Flow of income; Plano de Metas ; Brazilian economy