The Case of Brazil
Edited by Werner Baer
6. The impact of privatization on Brazil’s regions Edmund Amann and Werner Baer 6.1 INTRODUCTION The regional concentration of economic activities has been a constant in Brazil’s economic history. The first great export cycle was concentrated in the Northeast; this was followed by the gold export boom which moved major economic activities to the Center-South (especially Minas Gerais); and the coffee export cycle, which began in the nineteenth century, concentrated economic activities at first in Rio de Janeiro and surroundings, moving to the state of São Paulo in the middle of the nineteenth century, where the concentration remained, though spreading to some of the areas close to São Paulo.1 The regional concentration established during the coffee export cycle would remain as the country began a process of industrial growth based on immigrant labor demand. By the mid-twentieth century, as the country switched from an open to a closed economy, pursuing a policy of import substitution industrialization (ISI), the geographical concentration of economic activity centered still further on the South and Southeast where much of the Brazil’s productive capacity and wealth were located. In the twentieth century the dynamics of market forces tended to reinforce this regional concentration, as both domestic and foreign investors were interested in locating their activities in the region with the highest per capita income, the best infrastructure, the best human capital, and so on. Only special government actions through incentives, various types of transfer payments, and investments of state enterprises were able to bring...
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