Always on Sundays: Development and Underdevelopment - Introducing Celso Furtado (Opinion)

The Brazilian economist Celso Furtado, Nobel Prize nomination (2004), has developed an economic study where argued that Brazil hindered by its elite's adoption of foreign cultural standards, and anemic economic strength skewed for the unfair distribution of income suffocating the Brazilian development. On his classic book, "Economic Formation of Brazil," published in 1959, Furtado appointed that Brazil and United States had a very similar start on the colonial period, but somehow Brazil failed on steep ahead fortifying his internal market, keeping itself as a plantation agricultural exporter while United States have passed from agricultural to a prevalent industrial economy, successfully incorporating his population on a strong internal consumer market.

The wealth of the United States in the first half of the 19th century was greatly enhanced by the labor of African Americans as well as Brazil. But with the Union victory in the American Civil War, the slave-labor system was abolished in the South. This led to the decline of the antebellum Southern economy. The large southern cotton plantations became much less profitable because of the loss of the efficiencies in the gang system of agriculture. Northern industry, which had expanded rapidly before and during the war, surged even further ahead of the South's agricultural economy. Industrialists from northeastern states came to dominate many aspects of the nation's life, including social and some aspects of political affairs. The planter class of the South lost power temporarily. The rapid economic development following the Civil War laid the groundwork for the modern U.S. industrial economy.

In South America, during the Brazilian colonial age and for over six decades after the 1822 independence, slavery was also mainstay of the economy, especially in mining and sugar cane production. Brazil never had a civil war and the abolition of the slavery on 1888 was in fact a steep to professionalize the plantations, the slaves were replaced for European immigrants that are more productive and abundant at that time.

Italy, Germany, Ukraine, Poland, Japan and other impoverished countries sent waves of unqualified workers to supply the needs of the plantations for cheap and better quality workforce.

Growing under a industrial model, US was upfront over a new model of economy based on global corporations, for Brazilian model, Furtado concluded: the time for that new super development model was missed for Brazil and maybe was to late for a classic economic models ignite the Brazilian economy. In other words, Brazil to develop would need a “visible hand” (in opposition to the Adam Smith concept on invisible hand) to help out.

In 1964, after the military coup in Brazil, Furtado was banned of public life for his connections with the leftist regime of João Goulart. Furtado was a minister of Goulart. Even banned of the public life in Brazil for more 20 years, his ideas hadn’t. The successive militaries presidents of Brazil have abandoned the classic view of economy and put the government to work as entrepreneur.

Brazil has enforced a weak ideological pre-existent line of thinking; Petrobras was founded in 1953, and transformed that in a network holding of strong government owned companies. The main idea behind that idea was, if no capitalist want to invest, the government will be the capitalist. The created companies (knew as BRAS companies – Brazil in Portuguese language is spelled Brasil) were responsible for making the needed infra-structure for the country development. Brazil has created the EmBRAtel, for telephony, PortoBRAS, for harbors, EletroBRAS, for energy, EmBRAer, for manufacture of airplanes, and the list goes on and on.

With strong government investment, Brazil has skipped from 40th GDP country ranked before 1964 to the 10th economy in the world nowadays.

The military regime in Brazil started shown his fatigue after the second Oil crisis in 1979, the government capitalism held by the militaries has lead Brazil over an enormous foreign debit, the world under recession close the taps for the cheap foreign money and suddenly the country was compromising his growth because of the high cost of its debit. The debit headed on inflation and the notion of economic stability that the militaries brought to Brazil ended. People started to react and fight for changes. The election of Tancredo Neves, the first civilian after 20 years marked the end of the military period in Brazil and also the start of a new economic era.

Toke other 10 years to Brazil understand and accept that the government entrepreneur model was good for ignite the economy but was unable to manage the development. All these government owned companies had become highly inefficient over the time. The BRAS network after comply with its initial mission got heavy and expensive.

The turnaround on that model came on the presidency of Fernando Henrique Cardoso. Cardoso made the sale off most of the Brazilian Government companies and on others considered strategic, Petrobras is a good example, kept the Government ownership but open the capital for foreign investors. After that, the conditions for the capitalist expansion of Brazil were created; the country has finally entered on the era of global corporations.

Lula da Silva, the actual president of Brazil kept the same model of his antecessor Fernando Henrique Cardoso and added a social welfare network to rescue the excluded parcel of the Brazilian population that could not yet participate on the development party.

In conclusion, the fact of United States had broke early on its history with the excluding plantation economic model  right after the defeat of the south and the advance of the industrial sectors on the north with its needs for a internal consumer market, headed for the strength of the middle class. In opposition Brazil keept the exportation agricultural model adopted, depending on foreign markets to succeed, that was one of the most important factors for the secular discrepancy on the outcome from both nations. 

Thanks to free-market reforms initiated by Brazil's president in the mid-1990s, Fernando Henrique Cardoso, the Brazilian energy firm Petrobras has been transformed from an inefficient state-owned company to a highly-regarded, publicly-traded energy firm over the past decade. (Are you listening, Mexico?) By investing in incredible new technologies that allow oil companies to find — and safely extract — oil from thousands of feet under the ocean, Brazil's domestic oil production has doubled, reserves have tripled, and Petrobras now has a market capitalization of more than $200 billion, with operations in 27 countries, including America.

No one loves their beaches (and the tourism dollars they bring) more than Brazilians and, as their example illustrates, modern deep-water oil drilling is not incompatible with a clean environment.