Brazil’s big dilemma: between primary exports and industrialization

By Valdir da Silva Bezerra*

Brazil traditionally occupies a rather determined space in international trade, namely as an importer of manufactured goods (about 25% of total Brazilian imports in recent years was made up of machinery) and a supplier of commodities to world markets.

For example, about 20% of all Brazilian exports comprise primary products, concentrated mainly in oil and iron ore.

However, for some time now, the country’s economic profile has given rise to justifiable concern on the part of Brazilian leaders regarding its insertion into the world.

After all, Brazil has a continental size, a large population, and an economy that would enable it to play a more relevant role in global affairs.

Over time, however, Brazil’s historical role as a commodity exporter for the economically more advanced countries, whether the United States, Germany, or, more recently, China, ended up linking its economic growth to the performance of developed countries, in addition to discouraging domestic industrialization processes.

The relative bonanza in periods of booming commodity prices on the international market often culminated in a situation of dependence on the export of raw materials.

However, the State’s occasional disinterest (manifested mainly by its political class) in developing more dynamic – and technologically more modern – sectors of the economy made it difficult for Brazil to reimagine its role in the world.

It is worth remembering that the South American country’s economic growth since the early 2000s has been based – to a reasonable extent – on trade in raw materials with China.

With this, the country became susceptible to fluctuations in international oil and iron ore prices (as is often the case) and to the eventual decline in the growth rates of the Asian nation itself, its main trading partner.

This has been one of Brazil’s main dilemmas throughout its history: reconciling its position as a leading exporter with its desire for industrialization.

Indeed, the challenge is not something that only concerns Brazil but also affects several other countries in the international system since the second half of the 19th century and the beginning of the 20th century.

During this period, the emerging international division of labor shaped the world between industrialized and agro-exporting countries.

At the time of the Brazilian Empire (1822-1889), the national leadership was already concerned about the fact that the trade agreements and treaties signed with the United Kingdom were to some extent detrimental to the interests of the Latin American country, as they hindered the protection and development of its industry.

This was mainly explained by the demands for opening the Brazilian market to British manufactured products, while Brazilian coffee and sugar had limited access to the British market.

At the beginning of the 20th century, republican Brazil was once again questioning its traditional role as an exporter of raw materials, this time to the United States, which was emerging as the country’s main trading partner, surpassing England.

Meanwhile, the South American nation was consolidating its position as an importer of US manufactured goods, delaying its industrial development and greater economic independence.

In the first half of the 20th century, the Getúlio Vargas government proposed industrialization-based economic development.

This signaled that Brazil’s international insertion would no longer be subject only to the advantages of the agro-export sector in trade with the advanced countries.

However, the Americans were interested in Brazil maintaining its role as a supplier of raw materials and importer of their manufactured products in a clearly hierarchical relationship between the two countries.

In the post-war period, Juscelino Kubitschek’s government took advantage of the international competition for markets between the US, Europe (already economically recovered), and Japan to attract investments considered necessary for developing the national industry, especially the automobile industry.

A priori, Brazil would supply raw materials to countries such as Germany and Japan in exchange for industrial inputs and capital goods useful for its development project.

However, Brazil’s main hope at that time was to obtain US funds to accelerate this process, which ended up not happening, given the US disinterest in the economic development of Latin American countries.

Not by chance, in the decades of the Cold War (which involved the period of the Brazilian military dictatorship), patterns of the unequal relationship between the (developed) North and the Global South, composed of countries insufficiently industrialized and characterized (many of them) as mere exporters of raw materials to European and North American countries, were firmly established.

Be that as it may, Latin American countries continue to consider industrialization as an essential factor for gaining economic and political autonomy on the global stage.

Brazil, therefore, has tried several times throughout its history to rethink its role in the world to change its primary trade profile and become a more economically dynamic and advanced nation.

In this context, the South American giant could use today’s relations with China, which became a reference in the technology transfer process to the Global South, precisely to develop its infrastructures and give a new impulse to its industries, promoting the so much dreamed of economic diversification.

Who knows, maybe in this way, Brazil will solve its decades-long dilemma, expanding its autonomy in international relations and finally becoming the ‘country of the present’ and no longer the ‘country of the future’.

*The author’s opinion does not necessarily coincide with that of Sputnik.

With information from Sputnik