Fernando Alcoforado*
The coronavirus crisis finds Brazil devastated as a country threatened with having collapsed its health system and unable to produce inputs for the manufacture of drugs, respirators and even masks to protect health professionals and the population. Even the United States today is a good example of the scarcity that many countries face because it transferred many of its industries to China. In New York, where the situation of the epidemic is dramatic, everything from personal protective equipment to respirators is lacking. Today, as in much of the world, many governments lament the lack of development projects that make the country self-sufficient because they have left the free market to make decisions such as closing factories in the country and taking them to places where profit margins would be higher, such as China, India and Southeast Asian countries. This stance was dictated by the vision that started to prevail in the world from 1990 onwards, that of globalization and the opening of markets according to the neoliberal ideology.
The decision by governments not to produce locally by transferring it to places where profit margins would be higher was a determinant of the decision by governments not to invest in the production of medical materials and equipment in their countries by transferring it to countries with lower production costs as is the case in China. The result is catastrophic because there is a lack of supplies for the manufacture of drugs, respirators and even masks to protect health professionals and the population. In Brazil, the situation is deplorable because industry, science and national technology have been scrapped since 1990 with the adoption by different governments of neoliberal policies that have contributed to increasing technological and industrial dependence on the outside. The current downturn in the industry reveals the sector’s inability to react and the prospect of a reversal of the situation is very difficult in the current economic downturn aggravated by the coronavirus crisis. This retraction of the Brazilian industry comes since the 1980s, when the participation of the manufacturing industry in the Gross Domestic Product (GDP) was 33% and, in 2019, it did not exceed 11.3%. It is the lowest level in 80 years. Stagnant, the industry has the lowest share of GDP since the late 1940s.
In Brazil, government action has been very weak in the development of science, technology and innovation due to the fact that there has been no industrial policy since 1980 that points out effective solutions aiming at the permanent reduction of industry production costs in Brazil vis-à-vis Asian countries , especially China, which can only occur in four ways: (1) reducing the the tax burden and improving the logistics infrastructure in Brazil; (2) increased productivity in the industry by raising its levels of efficiency and effectiveness and strengthening its production chains; (3) devaluation of the real with restrictions on the entry of dollars or the adoption of fixed exchange rates; and (4) selective and permanent exemption from industry with the reduction of the tax burden on it.
These solutions should be complemented by the adoption of measures aimed at: 1) overcoming the gigantic problems of education in Brazil at all levels with the objective of increasing the country’s “critical mass”; 2) the development of knowledge resources by adopting programs to implement R&D centers, strengthen universities, acquire technology and attract brains from abroad; 3) the adequate provision of infrastructure resources, establishing effective programs to eliminate existing logistical bottlenecks; 4) encouraging links between the production chains of companies and their suppliers, eliminating existing gaps; and, 5) combating predatory competition from imported products by restricting or limiting their entry into the national market. None of this is being adopted, a fact that is contributing to Brazil being entirely at the mercy of the Coronavirus because the scrapped industry and science and technology system are not in a position to offer a prompt response to current problems.
The United States, for example, has 1 million scientists working in research and development, of which 79% are in business, 8% in government and 13% in higher education institutions. In Brazil, which has 123 thousand scientists, 72% of the researchers are in universities, 23% in companies and 5% in the government. South Korea, which has invested heavily in applied research over the past 25 years, has 100,000 scientists and engineers working at the companies. These figures show that, unlike the United States and South Korea, the contribution of companies in R&D in Brazil is very small. This fact explains why Brazil remains one of the least innovative countries in the world. This deficiency causes profound damages to the Brazilian company’s ability to compete, since technological innovation is created much more in the company than in the university, whose specific mission is to educate professionals and generate fundamental knowledge.
The absence of these measures contributed to the occurrence, from 1990 until the moment, of the bankruptcy of large industrial sectors, the deindustrialization and denationalization of the Brazilian economy. The denationalization of the Brazilian economy is evident when one observes that, of the 50 largest Brazilian companies, 26 are foreign, according to the Census of Foreign Capital in Brazil. More than half of Brazilian companies in cutting-edge sectors (automotive, aeronautics, electronics, computers, pharmaceuticals, telecommunications, agribusiness and minerals) are in the hands of foreign capital. Foreign capital is present in 17,605 Brazilian companies that account for 63% of the Gross Domestic Product (GDP), and controls 36% of the banking sector and holds 25% of Bradesco shares and 20% of Banco do Brasil shares. Brazil’s subordination to international capital in the industrial sector and other sectors of the Brazilian economy explains why it is among the last countries placed in terms of innovation and why the companies installed here contribute little to the development of Research and Development (R&D).
From the above, it can be concluded that the countries of the world must pursue their self-sufficiency by abandoning the current, neoliberal and economic and financial globalization policy, responsible for global economic weaknesses and dependence on the outside, with its replacement by the development model that prioritize production in the interior of the country of essential products and services for its economic and social progress. Brazil and all the backward countries of the world will only promote their development if they put an end to their external dependence (economic and technological) in relation to the central capitalist countries. Realizing the economic and technological rupture in relation to the central capitalist countries does not mean autarkic development, but rather to promote the country’s internal development with selective economic opening in relation to the outside as Japan, South Korea and China did in the 1970s , 1980 and 1990, respectively. The rupture of dependence means active participation of the State in the planning of the national economy aiming at the development of the productive forces of the country and the domestic market, domestic production in substitution for imported products and, also, export products, the development of its own technology and the formation of internal savings in the amount necessary to not depend on foreign capital for investment. This strategy would provide for the expansion of the national economy with the generation of sufficient business and jobs to meet the country’s needs, in addition to mitigating the impact of the crises that occur in the world economy as a result of the trade war unleashed by the United States against China, possible explosion of the world debt bubble and problems like the coronavirus pandemic.
Only then will it be possible to make Brazil grow economically at high rates and eliminate the underutilization of the workforce that reaches the record level of 27.7 million workers, according to the PNAD survey by IBGE. In the article by Nicola Pamplona published in Folha de S. Paulo on 5/17/2018, under the title Falta trabalho para 27,7 milhões de pessoas, diz IBGE, (Without work for 27.7 million people, says IBGE), available on the website <https: // www1-Folha-uol-com -br.cdn.ampproject.org/c/s/www1.folha.uol.com.br/amp/mercado/2018/05/falta-trabalho-para-277-milhoes-de-pessoas-diz-ibge.shtml >, there is information that the underutilization rate of the workforce, which includes the unemployed, people who would like to work more and those who gave up looking for a job, broke a record in the first quarter, reaching 24.7%. Altogether, there are 27.7 million people in these conditions, the largest contingent since the beginning of the historical series, in 2012. Of these, 13.7 million sought employment, but did not find it. The rest are under-occupied due to insufficient hours worked, people who would like to work, but did not look for a job or gave up looking for a job. This situation was further aggravated by the coronavirus crisis.
* Fernando Alcoforado, 80, awarded the medal of Engineering Merit of the CONFEA / CREA System, member of the Bahia Academy of Education, engineer and doctor in Territorial Planning and Regional Development by the University of Barcelona, university professor and consultant in the areas of strategic planning, business planning, regional planning and planning of energy systems, is author of the books Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova (Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado. Universidade de Barcelona,http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of the Economic and Social Development- The Case of the State of Bahia (VDM Verlag Dr. Müller Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe Planetária (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2010), Amazônia Sustentável- Para o progresso do Brasil e combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011), Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012), Energia no Mundo e no Brasil- Energia e Mudança Climática Catastrófica no Século XXI (Editora CRV, Curitiba, 2015), As Grandes Revoluções Científicas, Econômicas e Sociais que Mudaram o Mundo (Editora CRV, Curitiba, 2016), A Invenção de um novo Brasil (Editora CRV, Curitiba, 2017), Esquerda x Direita e a sua convergência (Associação Baiana de Imprensa, Salvador, 2018, em co-autoria) and Como inventar o futuro para mudar o mundo (Editora CRV, Curitiba, 2019).
Site Title 