The domestic market was small, due to lack of credit and the almost complete self-sustainability of the cities, villages and farms that dedicated themselves to food production and cattle herding.

[5][6] During the first half of the 19th century, the Imperial Government invested heavily in the improvement of roads while retaining an excellent system of ports.

Until its end, the monarchy continued the notable economic growth that began with the arrival of Prince Regent John of Braganza in 1808.

In this period of only twenty years, according to the historian Boris Fausto, "Brazilian exports had doubled in volume and had tripled in nominal value", while its value in pounds sterling increased by over 40%.

[21] The absolute value of the exports of the Empire in 1850 was the highest in Latin America (triple that of Argentina, which was in fourth place); Brazil would keep this position in this respect and in general economic terms until the end of the monarchy.

[28] That is, at the beginning of the second half of the 20th century, the country would not only be richer, and the Brazilian people would have had a far higher standard of living than actually prevailed at that time.

According to João de Scantimburgo, what "hindered the political, social and economical progress of Brazil was the First Republic [that began at the end of 1889], and its consequences stretched to the future".

[31] By 1913, Argentina had the fourth greatest economy in the world,[32] a GDP per capita equal to Germany and the Netherlands and higher than Spain, Italy, Sweden and Switzerland.

[37] The great distances raised the cost of the transport, coupled with the taxes for interprovincial transit of goods, considerably restricted the capacity of distribution by the producers of the sectors related to the domestic market.

[22] In the southeastern region the coffee production that at the beginning of independent Brazil amounted to only 3% of exports started to become more important for the Brazilian economy with each decade that passed, mainly because of extraordinary increase of consumers in the international market.

[38] To remain competitive in the international market, agricultural producers modernized the production with governmental aid, adopting technical and technological innovations.

In the north and northeast of the country, great centers called engenhos centrais ("central engines") were established for the processing of sugar cane, which revolutionized the traditional economy.

[22][39][40] At the coffee plantation regions the producers made the transition from the enslaved man power to the paid one, with the absorption of foreign immigrants who arrived at the thousands each year and of former slaves.

The benefits were many, but the main one was the reduction of the production cost, as the sustenance of slaves revealed that were more onerous than the payment of wages of free workers.

However, most, about 56 establishments, would be considered workshops by today's standards, directed toward the production of soap and candles of tallow, snuff tobacco, spinning and weaving, foods, melting of iron and metals, wool and silk, amongst others.

Still, the manufactured goods were quite diverse: hats, combs, farriery and sawmills, spinning and weaving, soap and candles, glasses, carpets, oil, etc.

[48] With unprecedented industrial growth, multiple manufacturing establishments appeared, dedicated to such diverse products as melting of iron and metal, machinery, soap and candles, glasses, beer, vinegar, gallons of gold and silver, shoes, hats and cotton fabric.

[49] One of the main establishments created at this period was the metallurgical factory Ponta da Areia (In English: Sand Tip), in the city of Niterói, that also constructed steamships.

Various modernizations occurred, principally between 1840 and 1860, when factories with a high level of technological capability were created, able to compete with other major international centers.

[citation needed] The concentration of industry that emerged in the province of Bahia considerably expanded its economic scope, reaching the south of Ceará, Piauí and even Minas Gerais.

in 1857, seven factories benefited from this practice of incentives, among them, the Ponta da Areia mentioned above and that was owned by Irineu Evangelista de Sousa (later Viscount of Mauá).

Other incentives arose, such as the decree of 8 August 1846 that exempted manufactured products from certain transport taxes (internally as well as externally), shielded from military recruitment a determinate number of employees of industrial establishments and eliminated tariffs on parts and machinery imported for textile factories.

The following year in June, a new decree stated that all industrial establishments on national soil would be free of taxes on imported raw materials.

[59][41] Later, under the Rio Branco cabinet at the beginning of the 1870s, the tariff on foreign products was newly raised to 40%, and new raw materials were exempted from import taxes.

This resulted in a great stimulus not only for the textile industry, but also for other sector, such as chemicals, cigars, glass, paper, leather, and optical and nautical instruments.

[54] During the 1870s, thanks to the decline of the coffee region of the Paraíba Valley and some areas of sugar production, many owners of plantations invested not only in the cotton textile industry, but also in other manufacturing sectors.