Development StrategiesDevelopment Strategies

BrazilBrazilKerala (India)Kerala (India)

TaiwanTaiwanVietnamVietnamSenegalSenegal

Top Down or Bottom up Top Down or Bottom up DevelopmentDevelopment

Usually large scaleUsually large scale Carried out by Carried out by

governments, internat governments, internat organisations.organisations.

Done by people outside Done by people outside the area.the area.

Often well funded.Often well funded. Local people not Local people not

involved.involved. Imposed on the area & its Imposed on the area & its

people.people.

Small scaleSmall scale Labour intensiveLabour intensive Involves local Involves local

communities.communities. Run by locals for loacls.Run by locals for loacls. Limited funds available.Limited funds available.

See p33 Development BookSee p33 Development Book

Top Down Plan – Polonoroeste Top Down Plan – Polonoroeste ProjectProject

The WB lent Brazil $443mn.The WB lent Brazil $443mn. Located Rondonia State ( Rainforest).Located Rondonia State ( Rainforest). Designated resettlement area for people form Designated resettlement area for people form

the NE and urban south.the NE and urban south. Involved building 1500km highways, buying Involved building 1500km highways, buying

deforested land to be converted into commercial deforested land to be converted into commercial agriculture, mining resources.agriculture, mining resources.

Problems: Land poor; no supply outposts; no Problems: Land poor; no supply outposts; no water supply or electricity; new migrants forced water supply or electricity; new migrants forced to sell new land and return home; many forced to sell new land and return home; many forced to find poorly paid work on cattle ranches; 34 to find poorly paid work on cattle ranches; 34 indigenous tribes threatened; habitats indigenous tribes threatened; habitats destroyed.destroyed.

Bottom up - Rural farmers Union Bottom up - Rural farmers Union (FATA)(FATA)

FATA -formed 1988, in Northern province of FATA -formed 1988, in Northern province of Para. Supported by Christian Aid (NGO).Para. Supported by Christian Aid (NGO).

FATA funding sustainable development for the FATA funding sustainable development for the 65,000 small scale farmers devoted to growing 65,000 small scale farmers devoted to growing rice and sugar cane in the area.rice and sugar cane in the area.

15,000 families benefit from the programme.15,000 families benefit from the programme. Together they decide which crops they will grow Together they decide which crops they will grow

and how much they will produce. Together they and how much they will produce. Together they plan how to market the rice ( no middle man plan how to market the rice ( no middle man involved).involved).

FATA has built research & training centre FATA has built research & training centre complex which holds courses on relevant topics complex which holds courses on relevant topics for small scale farmers.for small scale farmers.

Sustainable DevelopmentSustainable Development

Meets the needs of the present generation Meets the needs of the present generation without compromising the needs of future without compromising the needs of future generations.generations.

Takes into account environmental Takes into account environmental conditionsconditions..

Brazil – 1st Stage (1880-1930)Brazil – 1st Stage (1880-1930)

At first Brazil based it development on At first Brazil based it development on commodity exportscommodity exports.It usually focused on .It usually focused on one raw material at a time. See economic one raw material at a time. See economic cycles from last lesson.cycles from last lesson.

Brazil wood cycle, Sugar Cane cycle, Brazil wood cycle, Sugar Cane cycle, Mineral cycle, Coffee Cycle.Mineral cycle, Coffee Cycle.

Luckiest Nut in the world video (Senegal & Luckiest Nut in the world video (Senegal & Ground Nuts) see -Media that matters film Ground Nuts) see -Media that matters film festfest

Brazil 2Brazil 2ndnd Stage – Import Stage – Import Substitution (ISIs) (1930-1955)Substitution (ISIs) (1930-1955)

1930s- Brazil began to industrialise1930s- Brazil began to industrialise.. Import substitution industries aim to reduce Import substitution industries aim to reduce

dependence upon expensive foreign imports.dependence upon expensive foreign imports. Shift Shift to local manufacture of basic consumer to local manufacture of basic consumer

goods ( textiles, clothing, footwear, food goods ( textiles, clothing, footwear, food processing).processing).

This was made possible as coffee barons began This was made possible as coffee barons began to invest in other industries in the SE.to invest in other industries in the SE.

Benefits of industrialisationBenefits of industrialisation

Manufacturing adds value to products.Manufacturing adds value to products. The added value from converting the raw The added value from converting the raw

materials into finished goods is crucial for materials into finished goods is crucial for countries that wish to earn foreign currency.countries that wish to earn foreign currency.

Can increase export earnings and reduce import Can increase export earnings and reduce import costs, allowing greater self reliance.costs, allowing greater self reliance.

Being a large country like Brazil should have Being a large country like Brazil should have been an advantage – large domestic market!!been an advantage – large domestic market!!

3rd Phase: Secondary Import 3rd Phase: Secondary Import Substitution (1955-68Substitution (1955-68))

Substitution of domestic production for Substitution of domestic production for imports such as consumer durables (E.g. imports such as consumer durables (E.g. autos), intermediate goods (e.g. autos), intermediate goods (e.g. petrochemicals, steel), capital goods (e.g. petrochemicals, steel), capital goods (e.g. heavy machinery).heavy machinery).

Shortage goods during WW2 had given Shortage goods during WW2 had given added impetus to the government’s policy added impetus to the government’s policy of ISIs.of ISIs.

The Car IndustryThe Car Industry

In 1956 foreign companies were invited by the In 1956 foreign companies were invited by the government to establish branch plants and then government to establish branch plants and then pressed to manufacture more and more parts for pressed to manufacture more and more parts for their vehicles in Brazil.their vehicles in Brazil.

Most branch plants were located around Sao Most branch plants were located around Sao Paulo. Sao Paulo had: good regional raw Paulo. Sao Paulo had: good regional raw materials; skilled labour; close to Santos (large materials; skilled labour; close to Santos (large port); welcoming government; hub of port); welcoming government; hub of communications in the citycommunications in the city..

Other plants were then set in Belo Horizonte & Other plants were then set in Belo Horizonte & Rio.Rio.

Car Industry – A successCar Industry – A success In 1995 Brazil produced 1.6mn motor vehicles, making it the 7th In 1995 Brazil produced 1.6mn motor vehicles, making it the 7th

largest manufacturer in the world.largest manufacturer in the world. Vehicle sales 65% S. American market.Vehicle sales 65% S. American market. Strong domestic demand & Mercosul contributing to rapid growth.Strong domestic demand & Mercosul contributing to rapid growth. The growth potential is very high, compared to mature markets like The growth potential is very high, compared to mature markets like

the US & Europe.the US & Europe. In 1992, the government helped kick start the industry’s growth by In 1992, the government helped kick start the industry’s growth by

cutting taxes on small vehicles, which now account for 57% cutting taxes on small vehicles, which now account for 57% Brazilian market.Brazilian market.

Investment has taken place to modernise the factories in the 90s – Investment has taken place to modernise the factories in the 90s – many robots have been installed, to cut employee number slightly & many robots have been installed, to cut employee number slightly & thus costs. Brazil needs to ensure it remains a competitive location.thus costs. Brazil needs to ensure it remains a competitive location.

Government grants and cheap labour cost are now making the NE a Government grants and cheap labour cost are now making the NE a attractive location for vehicle manufacturers.attractive location for vehicle manufacturers.

Problems -80s & Early 90sProblems -80s & Early 90sAid - LoansAid - Loans

Mid/late 1970s – after the first oil crisis in Mid/late 1970s – after the first oil crisis in 1973/74 growth was achieved in capital goods 1973/74 growth was achieved in capital goods and basic immediate goods at the expense of a and basic immediate goods at the expense of a sharp rise in external debt. Second oil price rise sharp rise in external debt. Second oil price rise in 1979 created more problems.in 1979 created more problems.

Large importer of oil + all related industries Large importer of oil + all related industries affected.affected.

Rise in global interests meant firms did not want Rise in global interests meant firms did not want to invest.to invest.

World recession led to a fall in demand for World recession led to a fall in demand for goods & MNCs reduced their production.goods & MNCs reduced their production.

Brazil chooses alcohol to replace Brazil chooses alcohol to replace Petrol – 1975Petrol – 1975

Plan to use sugar based alcohol as an alternative to petrol.Plan to use sugar based alcohol as an alternative to petrol. Half of country’s exports go to pay for its imports of crude oil..Half of country’s exports go to pay for its imports of crude oil.. Already provided foreign exchange savings, created jobs in the Already provided foreign exchange savings, created jobs in the

poorer NE region.poorer NE region. The government has provided incentives for those who have set up The government has provided incentives for those who have set up

alcohol plants.alcohol plants. Brazil's carmakers sold more vehicles adapted to run on Brazil's carmakers sold more vehicles adapted to run on

alcohol last year than conventional petrol-driven models.alcohol last year than conventional petrol-driven models. "Flex-fuel" cars, which run on any combination of ethanol and petrol, "Flex-fuel" cars, which run on any combination of ethanol and petrol,

took 53.6% of the Brazilian market in 2005. took 53.6% of the Brazilian market in 2005. "Flex-fuel" cars attract a purchase tax of 14%, while buyers of their "Flex-fuel" cars attract a purchase tax of 14%, while buyers of their

exclusively petrol-powered counterparts are charged 16%. exclusively petrol-powered counterparts are charged 16%.

The Development of the AmazonThe Development of the Amazon

The ‘last frontier’; an area to be brought into the national The ‘last frontier’; an area to be brought into the national economy ‘ to change the face of Brazil’. Since 1945 economy ‘ to change the face of Brazil’. Since 1945 governments tried to develop this area through RDAs.governments tried to develop this area through RDAs.

Resettlement programme (slide 2) & the Trans Resettlement programme (slide 2) & the Trans Amazonian highway.Amazonian highway.

Mining – Grand Carajas Project ( Video)Mining – Grand Carajas Project ( Video) Improve agriculture –assistance grants to farmers given; Improve agriculture –assistance grants to farmers given;

Cattle ranching encouraged; loans given to buy land.Cattle ranching encouraged; loans given to buy land. Manaus – made a free trade area – (1966) Belem & Manaus – made a free trade area – (1966) Belem &

Manaus were to encourage and cause development Manaus were to encourage and cause development effects to spread throughout the region.effects to spread throughout the region.

HEP – Dams HEP – Dams p109/p110 Dev Bookp109/p110 Dev Book

Carajas factsCarajas facts Covers 8,000kmCovers 8,000km² - Size of France +Germany.² - Size of France +Germany. 150 tonnes of gold deposits, as well as silver, 150 tonnes of gold deposits, as well as silver,

manganese, copper, nickel & bauxite deposits.manganese, copper, nickel & bauxite deposits. World’s largest iron ore mine – produces 40mn tonnes World’s largest iron ore mine – produces 40mn tonnes

each year fro export.each year fro export. Owners – Companhia Vale de Rio Doce Owners – Companhia Vale de Rio Doce Growth pole – around lumbering, ranching, oil palm Growth pole – around lumbering, ranching, oil palm

plantations.plantations. Railway line (890km) to the coast, HEP & aluminium Railway line (890km) to the coast, HEP & aluminium

factories developed.factories developed. Trans Amazonian highway nearby.Trans Amazonian highway nearby. Township houses 7,000 people.Township houses 7,000 people.

Diversified export promotion & continued Diversified export promotion & continued secondary ISIs (1968-Present)secondary ISIs (1968-Present)

Diversified export promotion – prodcuing Diversified export promotion – prodcuing goods with high global demand.goods with high global demand.

Examples – car manufacturing, iron Examples – car manufacturing, iron mining, steel, commercial agriculture.mining, steel, commercial agriculture.

Differences – in stage 3, Asian industrialisation was Differences – in stage 3, Asian industrialisation was mainly export orientated (primary & secondary), while in mainly export orientated (primary & secondary), while in Latin America the focus was mainly on import Latin America the focus was mainly on import substitution.substitution.

The Asian Tigers, perhaps because of their decisions to The Asian Tigers, perhaps because of their decisions to go for export-orientated industrialisation, have certainly go for export-orientated industrialisation, have certainly been the ones to capitalise most on the opportunities been the ones to capitalise most on the opportunities created by globalisation. They were in the right place at created by globalisation. They were in the right place at the right time.the right time.

If Brazil had undergone land reform like Taiwan it may If Brazil had undergone land reform like Taiwan it may have been more successful, as it would have widened its have been more successful, as it would have widened its domestic market – more people with capital to spend. domestic market – more people with capital to spend. This is still a problem today leading to wide inequalities This is still a problem today leading to wide inequalities in the country.in the country.

Problems have been further added through debt Problems have been further added through debt payments & SAPspayments & SAPs

See Globalisation video notes for Taiwan case study & See Globalisation video notes for Taiwan case study & Vietnam case study + p86 in Dev book for Vietnam.Vietnam case study + p86 in Dev book for Vietnam.

Recap – Real PlanRecap – Real Plan 1985 – The military handed back power & a ruined economy.1985 – The military handed back power & a ruined economy. *A roller coaster ride of hyper inflation & recession began.*A roller coaster ride of hyper inflation & recession began. 1986-94 – There were 8 finance ministers, 7 stability plans & 6 different currencies.1986-94 – There were 8 finance ministers, 7 stability plans & 6 different currencies. *1994 – Inflation was running at 80% a month. The Real Plan was announced.*1994 – Inflation was running at 80% a month. The Real Plan was announced. *they lost inflation was introducing a transitional currency & then they began to *they lost inflation was introducing a transitional currency & then they began to

stabilise prices and wages. Prices were fixed at high levels and wages at low levels. stabilise prices and wages. Prices were fixed at high levels and wages at low levels. People accepted this in order to end inflation.People accepted this in order to end inflation.

*High inflation hit the lowest classes hardest, as by the time they got paid at the end *High inflation hit the lowest classes hardest, as by the time they got paid at the end of the month, their wage had lost so much value. They were unable to save & make of the month, their wage had lost so much value. They were unable to save & make a profit out of the situation, unlike the rich.a profit out of the situation, unlike the rich.

Kept a lid on inflation & opened up the market to foreign imports – even though this Kept a lid on inflation & opened up the market to foreign imports – even though this led to the closure of many factories which could not compete. Thus many people lost led to the closure of many factories which could not compete. Thus many people lost their jobs.their jobs.

*1992-8 The Industrial base of Brazil was eroded. 1,300 capital goods companies *1992-8 The Industrial base of Brazil was eroded. 1,300 capital goods companies closed.closed.

*The flood of cheap imports led to a trade deficit. Also many rich left & spent their *The flood of cheap imports led to a trade deficit. Also many rich left & spent their money abroad – for them an over valued Real was good news.money abroad – for them an over valued Real was good news.

*Foreign investment which flooded in was for luxury consumer goods, especially cars.*Foreign investment which flooded in was for luxury consumer goods, especially cars. *Allowed TNCs to make decisions – gave tax breaks to car industry.*Allowed TNCs to make decisions – gave tax breaks to car industry. *Though short term policies were costly, they did maintain economic stability for 4 *Though short term policies were costly, they did maintain economic stability for 4

years. The immediate effects were good.years. The immediate effects were good.

Today & GlobalisationToday & Globalisation Tariff barriers on imports reduced from 40 to 7.5%Tariff barriers on imports reduced from 40 to 7.5% Exports increased by 20% in 2000.Exports increased by 20% in 2000. State owned companies being privatised.State owned companies being privatised. FDI flowing in - +£30bn in 2000.FDI flowing in - +£30bn in 2000. Lula has denounced US & EU agricultural subsidies and Lula has denounced US & EU agricultural subsidies and

protection as unfair and a cause of poverty in LEDCs. protection as unfair and a cause of poverty in LEDCs. Lodged complaints to the WTO.Lodged complaints to the WTO.

Head to head with US over cotton – US threatened to Head to head with US over cotton – US threatened to retaliate.retaliate.

More involvement in the UN.More involvement in the UN. Brazil has paid $15.5bn IMF debt of early.Brazil has paid $15.5bn IMF debt of early. Building relationships with ChinaBuilding relationships with China.. Advising African countries – Aids/HIVAdvising African countries – Aids/HIV

MercosulMercosul

1991 set up 1991 set up MercosulMercosul – Common Market – Common Market Trade since 1991 has tripled between Argentina, Brazil, Trade since 1991 has tripled between Argentina, Brazil,

Paraguay & Uruguay.Paraguay & Uruguay. Also countries are working together on Projects, which Also countries are working together on Projects, which

will boost their trade.will boost their trade. Hidrovia ProjectHidrovia Project – super waterway (3000km) – super waterway (3000km)*Will allow Ocean going ships to travel into the heart of *Will allow Ocean going ships to travel into the heart of

Latin America.Latin America.*Provide with landlocked countries – Bolivia & Paraguay *Provide with landlocked countries – Bolivia & Paraguay

with an outlet to the sea.with an outlet to the sea.*Create modern international port in Uruguay & boost *Create modern international port in Uruguay & boost

exports in NE Argentina & central plains of Brazil.exports in NE Argentina & central plains of Brazil.

The Future – Division of LabourThe Future – Division of Labour

If Brazil continues to develop & if the domestic If Brazil continues to develop & if the domestic economy expands – it may find as its heavy economy expands – it may find as its heavy industries become increasingly competitive and industries become increasingly competitive and their workers wages increase.their workers wages increase.

They have to locate their labour intensive They have to locate their labour intensive industries in Latin America countries which have industries in Latin America countries which have lower labour costs. (South Korean firms lower labour costs. (South Korean firms relocated in Thailand & Malaysia to cut labour relocated in Thailand & Malaysia to cut labour costs.)costs.)

Kerala - IndiaKerala - IndiaKeralaKerala India as a India as a

wholewholeBritainBritain

Life expectancy Life expectancy (women) in yrs(women) in yrs

7575 6161 8080

Infant mortalityInfant mortality 1414 7070 66

Female literacy rate %Female literacy rate % 8585 5757 9999

% of married women % of married women who use who use contraceptivescontraceptives

6464 4848 7272

Total fertility rateTotal fertility rate 1.81.8 3.23.2 1.71.7