Energy-Intensity Trends in Brazil

Abstract

Energy has had a substantial impact on the Brazilian economy during the past 20 years. Oil accounted for more than 40% of Brazil's total import bill, which was equivalent to nearly 50% of export revenues during the early 1980s (1). A negative balance of payments due in part to costly oil imports Jed to mounting foreign debt, which in tum severely limited economic growth and investment during the 1980s. At the beginning of the 1990s, the foreign debt stands at about $ 1 15 billion or one-third of Brazil's annual gross domestic product (GDP) , and threatens to continue to drain economic resources from the country. Investment in the energy sector also rose dramatically during the 1970s and early 1980s. At their peak, capital-intensive energy supply projects absorbed 5% of total GDP and 24% of total investment (2). Large investments in energy supply enabled industries and services to expand, but they increased foreign debt and limited spending for other purposes. Large investments in energy supply are of concern considering Brazil's debt-the lack of adequate housing, health care, educational facilities, and other social ser­ vices. For example, there is a shortage of at least 10 million housing units (around 30% of families are inadequately housed), illiteracy levels exceed 40% in some poorer states, 78% of children do not complete primary school, and total public spending on health care, nutrition, water, and sanitation is less than 3% of GDP (3, 4).