Population growth has had both negative and positive effects on the development of Brazil. The fact is that Brazil’s high population growth has been the main factor in widening the gap between rich and poor. Population size is seen as a crucial instrument in achieving the national goal of integration of Brazil’s vast territory, as well as establishing Brazil as a world power (Merrick, 188). As in many developing countries, there is a robust harmful relationship between fertility rates and income in Brazil (ibid). Since poor families are more likely to have many children they also must provide for them as well. In fact poorer workers not only receive a smaller share of the national income, but they must also support a larger number of consumers with that income (Inequalities and Economic Development in Brazil, 37). Clearly the demographic characteristics of households have been an important factor in the widening gap between rich and poor. Because of the large differential in birth rates between different income groups, demographic factors are recognized as an important element in the dynamics of poverty and underdevelopment. Therefore government policy must cut across all of the critical elements in the poverty cycle such as living conditions, health, nutrition, family planning and child care, and education, as well as adequate employment and earnings opportunities (Merrick, 195). Essentially, the formation of the Brazilian economy would have been different with a different rate of population growth.
In the late part of the nineteenth century, Brazil entered into the world of international trade. Both government spending and foreign investment in Brazilian infrastructure projects quickened in the last decades of the nineteenth century and helped the wealthy get wealthier (Leff, 140). The growth of Brazil’s international trade was an important variable in this process since expanding exports enlarged each of these sources of infrastructure capital (ibid, 141). What is most important in these last decades of the nineteenth century was the size of Brazil’s foreign trade sector increased considerably. Export growth increased the capacity of the Brazilian government to invest in social overhead capital and government spending for development also rose because of internal changes to Brazil’s public sector (Willumsen, 23). Therefore the Brazilian experience attests to the possible usefulness of international trade as a source of income growth and economic development. However, if this remains to be true, then American involvement in Brazil’s economy must be a positive aspect.
After the First World War, the new industry of Brazil endured severe consequences from American economic incursion (Frank, 57). Moreover, Brazil’s industry became increasingly satellized and the increase in the growth rate of Gross National Product as well as industrialization was reversed after the recovery and expansion of the metropolis after the Second World War (ibid). As a result Brazil’s industrial sector has become more structurally underdeveloped and lees able to sustain development in the economy. “The process of Brazil’s insertion as a semiperipheral country in the capitalist world economy occurs in the midst of a profound crisis which will be overcome only with the restructuring of that world economy (Hewlett, 204).” Thus, it is essential that structural change occur in order to present a solution for this problem.
American involvement in Brazil has played a large role in both infusing as well as exploiting the country’s economy. In the years from 1947-1960, the total amount of new investment and loans that flowed into Brazil was 1,814,000,000 (Huberman, 2). On the other hand the amount that flowed out of Brazil in profits and interest payments was 2,459,000,000 (ibid). This means that 645,000,000 more was paid out by Brazil than came into Brazil (ibid). Although these figures only pertain to private investment, American aid or public capital is an important source of debate. According to the US Department of Commerce, United States aid, and loans to Latin America amount to close to 4 billion dollars in 1970, however, over 1.5 billion is noted as repayments by 1972 (ibid, 3). Although these aids and loans have produced some gains in Latin American countries like Brazil, there is a structural flaw that has hindered overall progress. The fact is that no matter how much aid is given to South American countries it will not propose a solution to underdevelopment. In addition, it will not work because it does not affect the imperialist relationship which is a fundamental cause of the conditions of underdevelopment. In many of these countries, especially Brazil, “the wealth flowing from their natural resources is appropriated by U.S. monopoly corporations which have distorted these economies in their concentration on the extraction of profitable raw materials. (Huberman, 4)”
Furthermore the land which is not in the hands of foreign interests is held by the native bourgeoisie. As a result, unless these two ruling groups, foreign and domestic capitalists, are forced to give up their power, property, and privilege, unless the economic and social structure of these underdeveloped countries is radically altered, then nothing fundamental will be changed (Odell, 215). Thus one possible solution to the problem of underdevelopment is the use of socialism. Socialism would not involve the dangers of imperialism and it is capable of producing economic independence which would establish their own control over their own economic surplus so they can apply it to productive capital investment (Huberman, 4). However, this is certainly not the only possible solution to the condition of underdevelopment and it also encompasses many drawbacks such as isolation and revolution.
On the other hand, American aid has produced large improvements in many sectors of Brazil’s economy. First it has provided additional essential imports (Tuthill, 200). In general these have consisted of raw materials and capital goods required in the industrial sector. Second, the large U.S. involvement in the Brazilian development efforts has given us the opportunity to influence a variety of basic economic policies (ibid). Third, aid has contributed to the log-range development of basic economic and social institutions in the fields of education, public health, agriculture, and public administration (ibid). However, it is impossible for the United States to change the basic national goals, priorities, or political philosophy of a foreign country. Thus it would be a disastrous mistake to try to use the aid program as a direct instrument for achieving such changes. Essentially, the cornerstone of our foreign assistance to Brazil, as well as many other countries, is a commitment by the Brazilian people and their government to self-help (ibid, 202). Thus, in Brazil, as elsewhere in the world, we have asked that the people tax themselves more equitably, fight inflation, put more money into education, and do many other difficult things, which left undone would render our aid program ineffective (Odell, 208).
One main dilemma in the aid program is that as Americans we expect to see quick results, however, the process of transforming an underdeveloped country into one that resembles those of the West is not a quick or easy task (Tuthill, 204). It seems that if government policies designed to effect vast social and political changes has the ability to reverse unequal distribution of income and insufficient effective demand (ibid). Moreover, it is crucial that the Brazilian government understand that only through policy alterations is change possible.
Democratization serves as a key solution to the problem of underdevelopment in the world. If Brazil is to evolve along democratic lines, it will need to develop and strengthen democratic institutions. A solid starting point for this process would be with the strengthening of the existing labor unions. It is essential that the government will follow policies that, while safeguarding the stabilization of the program, will also offer the union leadership freedom from undemocratic policies so they will not hinder this democratic evolution (Robock, 72). The current situation of unions is summarized on their dependency on the good will of the government in order to obtain adequate wages and decent working conditions. However, if these trade unions want to be effective they must retain their ability to control their own destiny. The key to reducing inequality is in institutional reform.
Furthermore, regionalism has had major effects on the development of Brazil in both negative and positive arenas. As democratization swept every corner of the South American continent in the 1990s, Brazil entered into subregional common market mechanism known as the Southern Cone Common Market (Mercosur). This alliance called for all of its members to eliminate tariff and non-tariff barriers to trade (Cassel, 2). Brazil and Argentina pushed for its formation and have been its principal beneficiaries (ibid). Moreover Brazil’s exports have grown significantly since its implementation, and now it is by far the largest exporter in the group (ibid). However, the financial and political crisis of Argentina has had profound effects upon Brazil. Moreover, this shows that one drawback of regional organizations is that the weakness of one country can affect partners and neighbors. On the other hand, “regionalism means more than just free trade or military confidence-building measures; it refers to the hemispheric wide convergence of values promoted by the development of multilateral institutions, the development of a common community (Hewlett, 110).” Moreover these regional groups, especially Mercosur, have solidified common principles and priorities in areas such as strengthening democracy, education, promoting free trade and the development of science and technology, and reducing corruption and crime (Cassel, 4). All of these areas are essential in transforming an underdeveloped country into one that can thrive in the world economy.
The root of the Underdevelopment crisis is at a national level, above all residing with social and political structure of the Underdeveloped country. Since Brazil’s government has been transformed into an entity that is based on its responsibility to negotiate the debt of its nation, it is rendered almost useless in transforming the country into a developed one. Moreover as a semiperipheral country, Brazil is an example of the distinct social contradictions of historic capitalism, which has contributed to political instability (Leff, 177). Furthermore the solution is not a financial one but rather a political one. The inability in creating a full Latin American pact able to negotiate and participate into the world economy is at the root of the Underdevelopment crisis. In addition, the path to democratization has been a battle between the minority of property owners and the mass of the dispossessed that has damaged the fragile institutions attempting to maintain social cohesion. The legitimacy of the Brazilian government was destroyed by its inability to distribute resources and capital in an equal manner, and thus has rendered the government ineffective. Essentially, rescuing politics is crucial to the development of a nation, since governability depends on the affirmation of democratic institutions subject to social control and oriented toward the interests of the nation (Woods, 171). In order for Brazil and other underdeveloped countries to break this destructive pattern they must create coalitions and concentrate on building more open political and social institutions. Moreover they must ensure that economic institutions and policies seek greater equity, increase access by the poor to high-quality public services, and reform income transfer programs so that they reach the poorest families (Inequalities and Economic Development in Brazil, 215-216).
Brazil is an integral and inseparable part of the construction of the world economy and its position as a semiperiphal country has shown the profound instability of capitalism. Furthermore, its condition as a regional power portrays the challenges of restructuring in the world capitalist system. The causes and conditions of underdevelopment are numerous; however, the solutions to these problems are also abundant. It will be in the world economy’s best interest to help Brazil, and other underdeveloped countries, create the right conditions so they can grow into a developed nation. In defeating underdevelopment all nations will have the opportunity to provide equal resources to their inhabitants as well as break the cycle of structural poverty. It is essential to the existence of our world that underdevelopment be reversed and a world of equality and contentment is able to thrive.