![Sample our Politics & International Relations journals, sign in here to start your FREE access for 14 days]({"type":"image" , "src" : "/sda/5947/TOC-Subject-Sample-2021-Politics-International-Relations.jpg"})
ABSTRACT
This article argues that economic growth relying on commodity-based exports – combined with domestic market expansion for consumption, an overvalued exchange rate and high interest rates – constrained national development as much as it did Brazil’s status as a regional power, particularly in the 2000s. The Brazilian ‘neo-developmentalist model’ – pursuing export surplus in the balance of trade and foreign investment – was based excessively on government incentives for the export of natural resources. With regard to agrarian issues, Brazil again played an uncertain role as a regional power during the governments of both Lula (2003–2010) and Rousseff (2011–2016), despite important differences between the two administrations. On the one hand, the country encouraged the transfer of family farming policies to other Latin American countries. On the other hand, the government’s ‘national champions policies’ were also paramount in forging the expansion of agribusinesses and other multinationals across the continent. The very nature of this ambiguity rests on the contradictions between the narrative of a national development project and the reality of deindustrialization and commodity-based economic surplus. By drawing on aggregate data and secondary sources, this article explores the limits and contradictions of the Brazilian development path in becoming a more influential regional power in the 2000s.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1. Jenkins and Barbosa (Citation2012, p. 68), however, in disagreeing with the ‘deindustrialisation’ thesis state that ‘even though Brazil is not deindustrialising, its manufacturing industry needs to adapt its structure to a new context of more dynamic internal growth and increasing Chinese competition’.
2. China overtook the United States as the top export destination in 2013 by purchasing 14% of South American exports, compared to the 12% purchased by the United States. The total of LAC exports to China grew to US$112 billion in 2013 (a record 2.0% of regional GDP), though the region still had a trade deficit of 0.5% of its GDP with the Asian country that year. In contrast, China bought only 2% of exports from Mexico, Central America, and the Caribbean, where the US still had a dominant market share of 69% (Brent, Citation2015).
3. The Complementary Law 87 – commonly known as the Kandir Act, named after Cardoso’s Ministry of Finance in 1996 – exempts taxes for exporting unprocessed or semi-processed primary products. All agricultural commodities and minerals are exported virtually tax free (Sauer & Mészarós, Citation2017), leading to estimated losses of more than R$718 billion (US$228.2 billion at the 2017 currency rate) since 1996.
4. From 2009 to 2013, 69% of Chinese mergers and acquisitions went to oil and gas investments (McKay et al., Citation2016); more FDI focused on energy, infrastructure, and communications and less on land and agriculture in LAC. However, China’s investments changed dramatically after 2013 because of one major project, the construction of the Nicaragua Canal (Brent, Citation2015).
5. Related to incomes, the minimum wage in Brazil increased by 81% between 2003 and 2010, after taking inflation into account. As for the development of the formal economy, employment grew by more than 15 million during the same period, and the unemployment rate was only 6.5% in 2013 (OECD, Citation2016b), which was considered a decisive factor in poverty reduction; however, the situation changed drastically after 2014, with unemployment rates increasing up to 13.7% in 2017 (Silveira & Cavallini, Citation2017).
6. There were other initiatives after 2003, like strengthening of – or, at least, the resumption of negotiations within – Mercosur, and the creation of the South American Defense Council and of the Union of South American Nations (UNASUR). According to Kellogg (Citation2007, p. 189), ‘The UNASUR, while a challenge to US hegemony in the region, is completely embedded in a very familiar logic of capital accumulation and corporate rule.’
7. According to Cervo and Lessa (Citation2014), the decline of Brazil as an emerging power under the Dilma Rousseff government after 2011 had not shaken South–South coalitions and strategic partnerships in the region, but it did result in a stronger role for BRICS, especially for its two larger countries, China and Russia.
8. According to a 2016 report, Globo Holding’s marketable securities accounted for 33.3% of the total current assets of the holding company in 2015. Total current assets from Globo Holding were 10.3 billion reals in 2015 and marketable securities were 3.4 billion reals. In 2016, marketable securities accounted for 40% (2.6 billion reals) of the total current assets (6.5 billion reals). Report available at https://globoir.globo.com/ (Accessed 30 August 2017).
9. According to Moraes (Citation2017), the BNDES loaned around R$12.8 billion (US$3.87 billion in 2017 currency rates) to the JBS group between 2002 and 2013, allowing it to purchase of several companies in the meat sector, including refrigeration facilities in Argentina, Uruguay, Paraguay, the United States, Canada, and Australia. The JBS group raised its revenues from R$4 billion (US$1.2 billion) in 2006 to R$170 billion (US$51.4 billion) in 2016, transforming it in the world largest meat processor.
10. Seeking to respond to criticisms of waste of public resources by the PT administrations, the new president of BNDES, appointed by the current government, released a report – a so-called Livro verde or Green Book, probably alluding to ‘green card’ or sustainability – on financial operations between 2001 and 2016. Defending these operations, the report concludes that they generated significant profit for the bank (see BNDES, Citation2017).
11. After a meeting in Fortaleza, in 2014, the five BRICS heads of state met with 11 South American presidents in order to extend regional co-operation via the BRICS Bank, especially for infrastructure projects (Cervo & Lessa, Citation2014). Along the same path, China accounted for over half of all new FDI (known as greenfield FDI, or GFDI) in LAC in 2013, especially because of the project of the Nicaragua Canal (Brent, Citation2015; McKay et al., Citation2016).
12. As mentioned above, such perspective changed radically in 2016 with the Temer government and its neoliberal economic programme of austerity and the reform of labour and social security policies and laws. This neo-extractivism model already unstable after 2011 (see ), deepening with the economic crisis after 2014 and the ‘need’ for cutting down on public expenditure and investment (Sauer & Mészarós, Citation2017).
13. The governmental support to family farming is clearly seen in its increasing budget, which rose from R$2.3billion (US$640 million), in 2003, to R$28.9 billion (US$7.2 billion) in 2016. However, this family farming’s budget represented only 15.5% of the R$187.7 billion (US$ 46.6 billion) available for agribusiness in 2016, showing the disparity in governmental allocation of resources (Sauer, Citation2015, Citation2017).
14. ‘This is a new process that started in the mid-1990s in Brazil, which evolved and, from the 2000s onward, was disseminated to other countries in the region’ (Craviotti, Citation2014, p. 47).
15. Even with such an increase in foreign investments, the sugar/ethanol sector championed the BNDES loans, since it received around R$55 billion (US$17.5 billion in 2017 currency exchange rates) between 2004 and 2010, allowing for the implementation of more than 120 projects, which practically doubled the productive capacity of the sector (BNDES, Citation2017), as part of the government’s national plan for energy (see Sauer et al., Citation2017).
16. According to Mackey (Citation2015, p. 3), ‘a small number of vertically-integrated groups drive uneven and multi-scalar processes that principally operate in sectors that are downstream of livestock production in subnational regions of the Southern Cone’. Mackey’s (Citation2015, p. 3) main argument is:
that agro-industrial production by firms from Brazil in Latin America is an uneven and multi-scalar process by a small number of firms that specialize in downstream sectors and livestock and grains commodity network rather than a Brazilian agri-food globalization across Latin America.
17. See China’s Second White Paper on Foreign Aid Signals Key Shift in Aid Delivery Strategy at http://asiafoundation.org/in-asia/2014/07/23/chinas-second-white-paper-on-foreign-aid-signals-key-shift-in-aid-delivery-strategy/. Accessed 9 January 2016.
Additional information
Funding
Notes on contributors
Sérgio Sauer
Sérgio Sauer is a Professor in the Post Graduate Program of Environment and Rural Development (PPG-Mader) of the University of Brasilia’s Planaltina campus and holds a research scholarship from the Conselho Nacional de Desenvolvimento Científico e Tecnológico (CNPq). His research interests include struggles for land, agrarian social movements, and public policies for family farming. Email: [email protected]; [email protected].
Moisés V. Balestro
Moisés V. Balestro is Associate Professor in Social Sciences at the Research Center and Graduate Program on the Americas at the University of Brasilia and leads a research group on Comparative Studies in Economic Sociology. His research interests include rural development, state and development, diversity of capitalism and sociology of markets. He was visiting scholar at Goethe University in 2014. Email: [email protected].
Sergio Schneider
Sergio Schneider is a Professor of Rural Sociology and Development in the Rural Development (PGDR) and Sociology (PPGS) Graduate Programmes of the Federal University of Rio Grande do Sul, Porto Alegre, Brazil. His research interests include the agri-food system, family farming, rural development, rural sociology, sociology of food, and development sociology. Email: [email protected].