Volume 43, Number 171,
October-December 2012
Structural Limits on Economic Development:
Brazil (1950-2005)
Bibiana Medialdea
PRODUCTIVE WEAKNESS AND
LIMITED ACCUMULATION CAPACITY

As we foreshadowed in the previous section and as a point of departure, the indicator of gdp per capita provides relevant information about the Brazilian economy. In 1950, the average income of the population was equivalent to approximately one third of the per capita income in the most advanced European countries, such as France and Holland, but much closer to those of Portugal, Greece or Spain5, between 75% and 87%. Throughout the second half of the twentieth centuries, these differences only deepened, in such a way that by the end of the century, Brazilian per capita income was abysmally far away from all European countries. Not only was it equivalent to merely 25-30% of per capita income in the most powerful countries in the region, such as France, Germany, Holland and Italy, but it was also only about 35-45% of the average income of European countries to which Brazil was relatively “close” at the midpoint of the century. The evolution is unequivocal and a comparison with Spain is revealing: in the second half of the century, the proportion of Brazilian gdp per capita fell from 75% to 36% of the Spanish gdp per capita.

This difference has widened despite the fact that between 1950 and 1980 Brazil enjoyed powerful and lasting economic growth, which implies an important push for industrialization, and with it, extremely important structural changes. This dynamic was drastically interrupted starting in the 1980s. In any case, throughout the decades, the Brazilian productive structure brought along weaknesses that limited its accumulation dynamics. Specifically, Brazil is weak in the branches that produce capital goods and has scarce capital stock and clearly insufficient growth in working productivity. In other words, these are three characteristics that we defined in the previous section as part of the structural limits on development.

This scheme of economic functioning throughout three decades allowed Brazil not only to obtain elevated growth rates, but also drove a significant corresponding process of industrialization, on a large scale, with the strategy called Import Substitution Industrialization (isi), theorized at the time by the Economic Commission for Latin America and the Caribbean (eclac) and the Brazilian National Development Bank (bndes).6 This strategy is based on an accelerated and widespread process of industrialization directed and made dynamic by the State and concentrated in the internal market. Industry thus became a motor of growth and the center of economic and social transformations of great importance. In the words of Carlos Lessa, “[...] industrialization, understood as building an industrial system, is the backbone of the national-development process inaugurated in 1930, which would be the national Brazilian project for half a century” (Lessa, 2005: 18).

As a result, the structure of the sectors would be notably transformed. Agricultural and industrial activities, as seen in Figure 1, went from having approximately the same relative weight on production in 1950, around 24%, to losing and gaining, respectively, somewhere on the order of 15 percentage points. In 1980, the primary sector accounted for only 10.1% of total production, while industry contributed 40.9%. Services maintained approximately the same participation.7

5 The data provided in this paragraph have been calculated using Maddison (2002).

provided in this paragraph have been calculated using Maddison (2002).

6Regarding the isi strategy, see Tavares (1964), Rodríguez (1993) and eclac (1998).

ding the isi strategy, see Tavares (1964), Rodríguez (1993) and eclac (1998).

7 The structure of employment showed an analogous change: the active population in the primary sector went from 59.9% to 29.9%, for industry, 14.2% to 24.4% and for services, from 25.9% to 45.7% (ibge, 2003). We use the active population because there were no systematic employment records until 1967, when the ibge began to produce their Pesquisa Nacional por Amostra de Domicilios.

structure of employment showed an analogous change: the active population in the primary sector went from 59.9% to 29.9%, for industry, 14.2% to 24.4% and for services, from 25.9% to 45.7% (ibge, 2003). We use the active population because there were no systematic employment records until 1967, when the (ibge began to produce their Pesquisa Nacional por Amostra de Domicilios.

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 194 July-September 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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