Some economists claim that selective restrictions on imports are necessary to protect infant industries and enable them to grow. Many countries have implemented such policies. In most cases, the results have been negative. For example, from the 1950s Brazil imposed restrictions on imports of industrial goods, while giving preferential treatment to imports of inputs and machinery. Initially, industrial output grew, as Brazilians chose less expensive domestic products over now more expensive imports. However, over time, the lack of international competition meant domestic products fell behind. Producers became gradually less competitive internationally and even in domestic markets.

During the late 1960s, Brazil briefly shifted to a more free trade policy and as a result experienced rapid growth. But this was followed after 1973 by a return to protectionism, which led to economic and social decay. During the initial wave of industrialisation, millions of people had moved to the cities. This was made worse when, later on, the government raised taxes on farms in order to subsidise the failing industries. When even these taxes were not enough, the government printed money to pay off its debts, leading to hyperinflation and further economic collapse. Many of those who had moved to the cities were now unemployed, living in very basic conditions in shanties without the social safety net they had had in the countryside.