Before 1930 the Brazilian economy was dominated by a number of agricultural and mineral products for export. The world economic depression of the 1930s encouraged the government to diversify the economy, particularly through industrialization. The state has led much of this development, through economic plans and government participation in key sectors of public services, such as electricity, telephones, and postal services. In 1990 the government was directly involved in some of the country’s largest firms, particularly in the mining, steel, oil, and chemical industries. At the same time, it also encouraged foreign investment in areas such as automobile manufacturing, engineering, and the production of electrical goods. As a result, the importance of agriculture and mining in output and trade has fallen significantly.

The sheer extent of Brazil's primary resources has made its economy, despite its relative lack of development, one of broad international significance. It is one of the world's leading agricultural nations and is especially well-known as the world's most prominent coffee-producer. Brazil is also important for what it has not yet fully exploited—its vast mineral and hydroelectric potential, its hardwood forests, and millions of acres of soil, most of which could be fertile given adequate water and fertilizer. As its manufacturing sector develops, Brazil also has taken a significant place among the world's industrial producers, its iron ore production having grown to a high world ranking. The city of São Paulo has become one of the world's major industrial and commercial centres.

Possessing large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries and is expanding its presence in world markets. In the late eighties and early nineties, high inflation hindered economic activity and investment. "The Real Plan", instituted in the spring of 1994, sought to break inflationary expectations by pegging the real to the US dollar. Inflation was brought down to single digit annual figures, but not fast enough to avoid substantial real exchange rate appreciation during the transition phase of the "Real Plan". This appreciation meant that Brazilian goods were now more expensive relative to goods from other countries, which contributed to large current account deficits. However, no shortage of foreign currency ensued because of the financial community's renewed interest in Brazilian markets as inflation rates stabilized and the debt crisis of the eighties faded from memory. The maintenance of large current account deficits via capital account surpluses became problematic as investors became more risk averse to emerging market exposure as a consequence of the Asian financial crisis in 1997 and the Russian bond default in August 1998. After crafting a fiscal adjustment program and pledging progress on structural reform, Brazil received a $41.5 billion IMF-led international support program in November 1998. In January 1999, the Brazilian Central Bank announced that the real would no longer be pegged to the US dollar. This devaluation helped moderate the downturn in economic growth in 1999 that investors had expressed concerns about over the summer of 1998. Brazil's debt to GDP ratio for 1999 beat the IMF target and helped reassure investors that Brazil will maintain tight fiscal and monetary policy even with a floating currency. The economy continued to recover in 2000, with inflation remaining in the single digits and expected growth for 2001 of 4.5%. Foreign direct investment set a record of more than $30 billion in 2000.