New Internationalist

Plantations And Planes

February 1990

new internationalist
issue 204 - February 1990

Plantations and planes
Brazil has everything. It is one of the most industrialized countries
in the Third World - yet also its largest exporter of primary commodities.
Its urban rich are fantastically wealthy; its rural poor utterly desperate. The choices
in front of Brazil are those facing the whole of the developing world.

Ozires Silva was born in 1930 into a poor family in the interior of Saõ Paulo state. By chance, there was an air club in the town and Ozires as a young boy helped out with odd jobs, developing what was to be a lifelong passion for planes. He admits that he flew his first plane, quite illegally, when he was only 14 years old.

Ozires joined the Air Force Academy, largely because it was one of the few ways to get a good education free. And, eventually, he set up, almost on his own, the air force's only venture into commercial plane manufacturing - Embraer.

Embraer became one of Brazil's great success stories, ending up exporting planes to the US and the UK. Ozires, who became an astute businessperson in the process, says that things worked out very differently from how he had imagined. 'When we designed our first plane, a small, simple model, I thought that we should obviously try to sell it to other Third World countries. But I learnt that the First World likes simple planes, whereas the Third World only imports sophisticated models.'

Ozires' story is hardly the kind of thing we are used to hearing from the Third World. But he is just as representative of the character of modern Brazil as the poor farmers and sugar-cane workers we might more normally come across in the pages of the NI.

Ozires says that in the 1970s the sky seemed the limit for Brazil, which was riding confidently on the wave of an economic boom. 'Brazil imagined that it could produce everything', he says. 'We tried to do the impossible, and the world moved in quite another direction. Large capital became international, while we dreamed of being self-sufficient. It was a serious mistake'.

In 1986, in the government of President Jose Sarney, Ozires was appointed head of the country's largest state company, the oil giant, Petrobras. Ozires thought that he could take it over, shake it up and turn it into an efficient, market-orientated business. He failed. The huge state bureaucracy, with its allies in the federal capital of Brasilia, blocked all his attempts at reform. In the end, after a public row with the Minister of Mines and Energy, Ozires was sacked.

The experience turned Ozires into a fervent - but intelligent - advocate of privatization and market-orientated policies. He believes that Brazil is today one of the most closed economies in the world, 'surpassed only perhaps by the Soviet bloc'.

Brazil has to take the plunge and open up its economy, he argues. 'We cannot go on doing everything, and doing it badly. For a hundred years, we have been the largest producer of coffee. But the Americans invented soluble coffee, the English invented freeze-dried coffee, the Italians espresso coffee and the Germans paper filters. We got left behind'.

This is a critical moment for Brazil. For the whole post-war period, it has adopted a protectionist model of economic development, with heavy state involvement. That model is now showing signs of breaking down.

Throughout most of the 1970s, Brazil was Latin America's economic success story. Government planners, who promoted Brazil's 'economic miracle', had in their sights those few Brazilians who could afford to buy sophisticated consumer goods, such as cars, washing machines, hi-fi equipment and so on. Brazil would grow rich by making these things for them. In a country with a population of over 100 million, even a small percentage of the total makes a fairly large market.

When foreign debts began to snowball in the late 1970s, the Government finally encouraged manufacturers to sell abroad. A form of protectionism allowed companies to import goods at a preferential tariff rate if they used them to produce manufactured exports.

Patriotic generals, ambitious to match Japan or the US, wanted Brazil to become a world economic power. To achieve this, they argued, Brazil must have its own computer industry. Despite considerable US opposition, they set it up in 1973. By 1977, once it was firmly established, they reserved a part of the Brazilian computer market for the new local companies via the 'informatics' law.

They ran straight into a trade war with the United States. IBM, the US computer giant, immediately launched a vigorous campaign against the 'informatics' law. The US Government backed up IBM and began an investigation into Brazil's 'unfair' trading practices. At one stage, reprisals were taken against Brazilian products on sale in the US.

Then, a couple of years ago, the whole model started to disintegrate. Key manufacturing sectors complained bitterly that they could not import crucial components. Local manufacturers could not supply their needs. In 1988 and 1989 Brazil began to dismantle its protectionist schemes. It relaxed its restrictions on computers and allowed foreign companies to set up assembly plants in the Manaus Free Zone. In October 1989, Carla Hills, the US Trade Representative, terminated the investigation and praised Brazil for its 'willingness to work constructively with us'.

Through all this, little changed for most Brazilians. New manufacturing technologies were capital-intensive, requiring little labour. Few unskilled workers were employed. And even those who managed to get jobs were not well paid. In agriculture, large tracts of land were mechanized. Some farmers grew rich, cashing in on the new developments. But many rural labourers were sacked from their jobs. Tens of thousands of small farmers lost their plots of land with the move to large, mechanized estates using modern methods along with vast quantities of chemical fertilizer and pesticides.

Maria Costa Ferreira has felt the effects. She is a 22-year-old worker on a cocoa plantation near Ilheus in the northeast of Brazil. For several months of the year she plants cocoa saplings under shade trees on hillsides, taking her children with her. She is paid piece rates, earning one-tenth of a Brazilian cruzado (a few cents) for each sapling she plants. This is such a tiny sum that she would need to plant about 50 saplings to buy a 40-gramme bar of chocolate. Not surprisingly, she has never tasted chocolate.

Maria lives on the estate in a primitive shack. She and her children often go hungry. They are used to this. What is relatively new for them is the recurrent sickness that many suffer from, particularly those who are applying pesticides. According to local doctors, the number of sick workers has grown enormously. That is about the only tangible achievement of the Brazilian 'economic miracle' for the cocoa workers of Bahia.

Faced with this situation, with the inheritance of years of military dictatorship, which way will the Brazilian President Fernando Collor de Mello jump? Probably he'll seek some kind of compromise. Further dismantling of the old protectionist model seems inevitable - but a coherent, positive development policy, which takes into full account the needs of the excluded groups, is even more essential. The divisions in Brazilian society are already alarmingly deep. A further exacerbation of the gap between rich and poor could lead to a complete breakdown in social order.

Formerly based in Brazil, Sue Branford now works for the BBC World Service. She is author of The Debt Squads (Zed Press 1987).

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This feature was published in the February 1990 issue of New Internationalist. To read more, buy this issue or subscribe.

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