Between 1989 and 1994, Brazil faced the dual challenge of adjusting its institutional framework to participate in the advancement of globalization while simultaneously taming the hyperinflation that had turned the preceding years into a "lost decade." From the anxious market opening promoted by Fernando Collor to the successful Real Plan by the Itamar-FHC duo, the country was preparing to enter the post-Berlin Wall world, whose parameters were set by the neoliberalization of the Washington Consensus.

Certain institutional changes embedded in and enabled by the Real Plan, alongside a degree of democratic normalcy, were then sufficient for the country to offer and gain something within the new global economic arrangement. The restructuring of the banking system and trade liberalization, coupled with stability, were celebrated as the best possible outcomes at that juncture.

In parallel, the opening tied to globalization triggered a reorganization of productive sectors, exposing the fragility of an industry that, since the 1930s, had received privileged treatment from the State and Brazilian society through protectionism and maximum emphasis in economic development theories. On the other hand, Brazilian agribusiness, which had been moving away from some historical anchors since 1964, proved to be the sector best prepared to capitalize on trade liberalization and the rise of Asian capitalism.

The dilemma faced at the time was the same one the country had encountered on previous occasions. The opportunity created by shifts in the international economy was partially seized through minor institutional adjustments. Industry, services, and agribusiness responded differently based on what they had accumulated in prior periods. The first two, protected for so long, immediately felt the sting of competition. The latter, catalyzed by the new agricultural and technological frontier of the Brazilian Center-West, became the main driver of economic development over the last four decades. However, just as in other historical moments, such arrangements and outcomes were sustainable only in the relatively short term, lacking the elements that would ensure their health over longer horizons.

Recent balances released over the past few weeks indicate a repetition of this historical pattern in the Brazilian economy. In a report produced by the think tank Conference Board, Brazilian productivity, which used to be just under half of U.S. productivity, has regressed to one-quarter. Another survey, conducted by economist Sérgio Vale, pointed out that Brazilian per capita income has grown less over the last four decades than that of countries like Botswana and Romania. The most illustrative case is South Korea, whose per capita income in 1970 was approximately 40% of Brazil's and today is about three and a half times larger.

In other words, Brazil was capable of partially adjusting its institutional framework and production factors to face changes in the economic scenario, even if unevenly across sectors. This did not mean, however, that the institutional framework and production factors supporting long-term development were properly adjusted. In the 1950s, the country witnessed an industry so heavily protected that—with a few honorable exceptions—it failed to withstand the global opening at the end of the last century. Now, agribusiness, despite being well-prepared to play a leading role in the Brazilian and global economies amid globalization and the Chinese rise of the last forty years, finds itself in trouble facing the shifts brought about by deglobalization movements and ongoing wars.

The issues currently lacking are not related to short-term responses to global economic shifts. Brazil has already shown the strength to address these, albeit in an unbalanced manner. What has yet to be demonstrated is how to allocate the resources and factors that, regardless of any short-term fluctuations, remain the bedrock of long-term growth: education, infrastructure, institutional predictability, inclusion, and productivity gains—elements that transform growth into sustained health, rather than just temporary performance.

Prospectively, Brazilian agribusiness has the opportunity to change this destiny. Three of the most critical conditions for the smooth functioning of the global economy in the coming years find a relevant player in Brazil: food security, the energy transition, and the technological revolution dependent on rare earths. The country possesses food, alternative energy sources to oil, and mineral reserves. The current situation, which discourages integration and market opening, will pass at some point. Sooner or later, a new wave of globalization will arrive, and the global market will once again reorganize its suppliers and consumers based on what countries have best to offer. The country will once again have the opportunity to leverage its immediate advantages tied to minor institutional adjustments, just as it did in the early 1990s.

It remains to be seen whether the country is preparing itself and who will lead so that, alongside short-term opportunities (which, as is known, will be represented by agribusiness), there is also an adjustment of the elements that sustain long-term growth. This means combating a patrimonialist institutional framework that encourages rent-seekers, prioritizing education, improving infrastructure, and sustainably increasing productivity—a path entirely different from Brazil's historical and persistent archaism. Otherwise, the country will once again be bypassed by nations like South Korea, India, Chile, and even Botswana and Romania.

Vinicius Müller is a professor at Faculdade Belavista, holding a PhD in Economic History and a Master’s in Economics. He specializes in Brazil's economic formation, macroeconomic analysis, and leadership themes.