Was it the local labor culture or the cost of capital? Performance of the Brazilian textile industry, 1870–1970: a global perspective

Abstract The article analyses the development of the Brazilian textile industry from the late 19th to the mid-20th century, focusing on the impact of the relative costs of capital and labor on efficiency and manufacturing costs globally. It argues that England’s early 20th-century dominance in textile production was attributable to the relatively low cost of capital, despite the high wages. The escalating costs of machinery following World War I contributed to the industry’s relocation to regions with lower labor costs, such as Asia and Latin America. In these regions, the increased utilization of machinery and the increased number of machines per worker became economically feasible. In the context of Brazil, the rise in capital costs during the 1910s and 1920s resulted in diminished efficiency. The challenges associated with importing machinery during the 1930s led to the utilization of outdated equipment, thereby contributing to diminished productivity over an extended period.