Fernando Alcoforado*
This article aims to demonstrate that Brazil needs to overcome its great economic and technological external dependence, whether in the industrial, trade, services and financial sectors, in order to promote its economic and social development. The article Capital Estrangeiro no Brasil: poder e controle sobre a riqueza in Capital estrangeiro no Brasil (Foreign Capital in Brazil: power and control over wealth in Foreign capital in Brazil) by Regina Camargos et alli [1] informs that Brazil is enormously dependent on foreign capital that has a large share in the Brazilian economy, whether in the industrial, trade and services. Based on 2016 data from the 200 largest economic groups, which involve more than 5,000 companies, one can have a base of the presence of transnational foreign capital in Brazil. The 200 groups add up to R$ 3.9 trillion in revenue, equivalent to 64% of GDP, of which 27% come from foreign groups. When Petrobras, Bradesco, Itaú and Banco do Brasil are removed, the participation of foreigners reaches 37%. Without the financial sector, considering only the sectors of commerce, industry and services, the participation of transnational groups is 36%. The Brazilian economy is transnationalized and is in the productive circuit of large transnational capital. In the industrial sector, transnational companies account for 28% of revenue (37% excluding Petrobras) and are in dynamic segments with the highest technological standard: transportation material (vehicles and parts), metallurgy, electronics, chemicals and food and beverages. They are at the heart of the value chain in each segment. In the services sector, the participation of foreign capital companies that acquired companies in the telecommunications and energy segments has been growing. These corporations are responsible for 44% of the sector’s revenue (48% without Telebras).
In the commerce sector, transnational corporations focus on the commodities and large retailers, the central control links in these chains. Within the groups, transnational corporations account for 47% of turnover. Thus, the presence of large transnational corporations in the Brazilian economy is clear. They occupy segments that are at the heart of value chains, allowing them to strategically control production and marketing (forward and backward) in each sector. This fact guarantees them the appropriation of the value created in various links in the chain. In the transportation material segment, for example, automakers are at the control center of the chain. It has the power to determine the prices of its suppliers and, with that, they appropriate part of their profits by the power of oligopsony. It holds power over the chain forward, the marketing and services of its concessionaires, also appropriating the value that would be added there. Another example is the commodity chain. On one side are the large corporations that control seeds and inputs; on the other, the big traders. The agricultural producer has his profit margin squeezed between two giants that appropriate the value created by him.
Brazil’s external dependence in the financial sector is demonstrated in the article A participação do capital estrangeiro no setor financeiro brasileiro in Capital estrangeiro no Brasil (The participation of foreign capital in the Brazilian financial sector in Foreign capital in Brazil) by Regina Camargos et alli [2]. According to recent data from the Central Bank, foreign banks account for 14% of total assets and 31% of the balance of credit operations in the country’s financial sector. In terms of participation in credit, the current situation is a little better than in 2005, and even so because, since then, there has been a vigorous expansion in the volume of credit operations in the country for all financial institutions. In the years in which the Brazilian economy grew the most – 2010 and 2011 –, the share of foreign banks in total credit offered to society reached a level of 40%, almost equal to that of public banks. As the economy slowed, participation fell to the current level of 31%.
Table 1 characterizes Brazil’s great external dependence on imports of inputs for the manufacturing industry.
Table 1- Brazil’s external dependence on inputs
Table 1 emphasizes the dependence of the Brazilian industry on the importation of more elaborate and sophisticated inputs and components, according to Marta Watanabe’s statement in the article Cresce dependência da indústria de alta tecnologia por importado (Increasing dependence of the high technology industry on imported products) [6]. In the 2003/2004 biennium, the share of imported inputs in relation to the total applied in Brazilian production was 16.5%, a share that increased to 24.4% ten years later. The biggest advance was concentrated in the most technology-intensive sectors. While the import coefficient for low and medium-low technology production grew from 10.8% to 13.6% in the period, that for high and medium-high technology increased by more than twelve percentage points, from 26.3% to 38 .7%. The sectors that have very high coefficients of imported intermediate inputs are information technology, electronics and optics, pharmaceuticals, other transport equipment and chemistry. The computer, electronics and optical sectors have an extremely high level of imports. Several classes in this sector imported more than 70% of tradable inputs and components. In 2016, a total of 60 industrial classes imported at least a third of the inputs and components used in their production process. The group represents less than a quarter of the total of 258 industrial classes existing in the country, but includes 48 segments responsible for about two thirds of the Brazilian industrial production of high and medium-high technology.
Table 2 shows the economic segments in Brazil that most import inputs and components.
Table 2- Economic segments in Brazil that most import inputs and components
Marta Watanabe states in the article Cresce dependência da indústria de alta tecnologia por importado (Increasing dependence of the high technology industry on imported products) [6] that transnational companies that are in dynamic segments and with the highest technological standard are at the heart of the value chain of each of the above mentioned segments. The national company, due to its size, the lower cost of imported technology, and the scarce state support for private research, tends to invest little in scientific and technological research, while the Brazilian government invests a small part of the resources at its disposal in science and technology programs. Undoubtedly, large multinational companies are the largest private investors in science and technology programs, from which innovations arise that reduce their costs, create new products, generate extraordinary profits and allow their accelerated expansion worldwide.
The activities and investments of large multinational companies are, however, concentrated in research units in their countries of origin, or in other developed countries, for business reasons, including achieving economies of scale in research, having access to a greater supply of highly skilled workforce and locate in larger markets. The scarcity of investments in research in peripheral areas, such as Brazil, is evidenced by the small registration of patents, as a result of research carried out here. However, even when the research is carried out in Brazil, in the case of the foreign company, the patent will be registered in the name of the company and its use in Brazil, or in any country, will generate payments and remittances to the headquarters of the company, which owns the patent. On the other hand, the foreign company’s subsidiary in the periphery sends resources to its headquarters in the form of payments for the provision of technical assistance and for the use of trademarks and patents.
Whenever its presence dampens and discourages the effort of technological development in the local economic system, the foreign company discourages the formation of a local industry of capital goods, which is essential to autonomous technological progress, the only one capable of making the local company competitive permanently in the international market. In addition, the foreign capital company tends to reserve management positions in its branches abroad to foreign executives and employees, including as a way of preserving industrial secrets and preventing technology from leaking, that is, actually being transferred and becoming used by competing local or foreign companies. The myth that foreign capital necessarily transfers technology reflects a naive view of the role of foreign capital in peripheral countries. This myth contributes to hampering Brazil’s own scientific and technological development efforts, keeping the country at a permanently inferior technological level and, therefore, contributing to a constant flow of payments abroad and a permanent deficit in the technology item of the balance of transactions chains.
It is this situation of external economic and technological dependence that explains Brazil’s inability to promote its economic and social development throughout history. Taking into account the trajectory of Brazil throughout its history, it can be said that its political, economic and social progress was aborted by the imperialist powers, counting on the subservience of several rulers of the country who acted in a subordinate way in relation to Portugal during the colonial period from 1500 to 1822, in relation to England during the Empire from 1822 to 1889 and the First Republic from 1889 to 1930 and in relation to the United States from 1945 to the contemporary era, with the exception of the Getúlio Vargas governments from 1930 to 1945 and 1950 to 1954 and the João Goulart government from 1961 to 1964 that tried to break the national dependence on the great imperialist powers and because of this they were removed from power.
All this is explained by the theory of world systems developed by Immanuel Wallerstein and Fernand Braudel. According to this theory, the world is economically organized in the form of “world-economies”, which would be, in the latter’s language, “a fragment of the universe, a piece of the economically autonomous planet” , capable of, essentially, self-sufficient and to which its internal connections and exchanges confer a certain organic unity” [3]. According to Wallerstein, the formation of the world-system took place in the 16th century – the beginning of the capitalist system – and its transformations to the present day, considering the capitalist system as a world system. In the 19th century, practically all regions of the planet had been incorporated into the capitalist world-system [4]. Since 1990, the capitalist world-system has integrated all the imperialisms of the great powers that have become the new imperialism of globalized capital.
For Wallerstein, the capitalist world-system is composed of a division between center, periphery and semiperiphery, due to the division of labor between the regions of the planet. The center is the area of great technological development that produces complex products; the periphery is the area that supplies raw materials, agricultural products, and cheap labor to the center. The economic exchange between periphery and center is unequal: the periphery has to sell its products cheaply while buying products from the center dearly, and this situation tends to reproduce itself automatically, almost deterministically, although it is also dynamic and changes historically. As for the semiperiphery, it is a region of intermediate development that functions as a center for the periphery and a periphery for the center, as is the case in Brazil. Some central countries have assumed the condition of imperialists by exercising their dominion over peripheral and semiperiphery countries that have been the object of secular spoliation.
Giovanni Arrighi [5] states that the center of the world-system is composed of the most developed countries in the world, which are those that are part of the organic nucleus of the world capitalist economy, that is, the countries of Western Europe (Benelux, Scandinavia, West Germany, Austria , Switzerland, France and the United Kingdom), North America (United States and Canada), Australia and New Zealand. After the Second World War, Japan and Italy, which were semiperipheral countries, joined this nucleus. The thesis that prevailed after the Second World War that it would be possible for all peripheral and semi-peripheral nations to reach the stage of high level of development enjoyed by the central capitalist countries similar to the United States was not realized. From the second half of the 20th century onwards, there were several attempts to promote economic and social development in several countries of the world that failed, either those within the framework of capitalism with national developmentalism initiated, for example, in Brazil, and those with the implementation of the socialism like the Soviet Union and East European socialist countries, among others. There were several partial and temporary successes. But just at the moment when all the indicators seemed to be heading in an upward direction, almost all peripheral and semi-peripheral capitalist countries collapsed during the 1990s.
One fact is evident: the transformation from a peripheral or semi-peripheral capitalist country to a developed condition is quite difficult to accomplish, as demonstrated by Arrighi [5] in his work The illusion of development. In the second half of the 20th century, Japan and Italy were the only ones that moved from being semi-peripheral countries to being part of the core of developed countries. Due to the geopolitical importance during the Cold War, Japan and South Korea were able to climb to a higher level of development due to the financial support they obtained from the United States after World War II and, above all, the role played by the national state in promoting of development. South Korea was the only country on the periphery of the capitalist world-system that evolved into semi-peripheral status in the second half of the 20th century. Italy managed to reach the level of a developed country thanks to the Marshall Plan after the Second World War and the developmental role played by the Italian State.
China, which was a semiperipheral country in the world economy, abandoned the construction of Maoist socialism and integrated itself into the capitalist world-system taking advantage of its comparative economic advantages (gigantic market size, very low cost of labor, large existing infrastructure , etc.) thanks to the centralizing and developmental role played by the Chinese government. With the end of the Soviet Union, Russia, which is classified as a semiperipheral country in the world economy, was integrated into the capitalist world-system without becoming subordinate to the great capitalist powers like the others, thanks to the independent developmentalist role played by the Russian government that, due to this and the comparative economic advantages (large market, large natural resources and large industrial structure) have the possibility of achieving the status of a developed country. Brazil, which was a peripheral country until 1930 when it reached the condition of a semiperipheral country until 1980, thanks to the role played by the national state in promoting development, is threatened with retroacting to the condition of a peripheral country with the adoption of the neoliberal model since 1990.
From the above, it can be concluded that the failure to promote economic and social development in almost all peripheral and semi-peripheral countries in the world must be attributed to the fact that these countries are unable to free themselves from their shackles or their dependence of the capitalist world-system. This explains the failure of the vast majority of peripheral and semi-peripheral countries to break with dependence. Instead of breaking with the capitalist world-system, the peripheral and semi-peripheral countries maintained their economic and technological external dependence. Based on the analysis of the causes of dependence on peripheral and semi-peripheral countries, as is the case of Brazil, it appears that the autonomous national development of peripheral and semi-peripheral countries, whether capitalist or socialist, will not succeed if there is no rupture with the globalized capitalist world-system. This would explain the reasons why Brazil, as a semiperipheral country of the capitalist world-system, has been unsuccessful throughout history in promoting its economic and social development.
Brazil will never become an independent country without ending its economic and technological dependence on foreign countries. However, it cannot occur abruptly because it would lead to the collapse of its economic structure. This is an impasse of gigantic proportions. Given this fact, the country’s independence from abroad must occur in a gradual, planned and sustainable manner over time with the adoption of policies to strengthen scientific and technological research centers, public and private universities and national industry to promote the substitution of imports of imported products and inputs to ensure national self-sufficiency, and, consequently, the economic and social development of Brazil. Brazil, which celebrates 200 years of its independence from the Portuguese colonizer, will only conquer its true independence as a nation from abroad when it overcomes its economic and technological dependence.
REFERENCES
[1]. CAMARGOS, Regina; BRESSER-PEREIRA; SAWAYA, Rubens; STUDART, Rogerio; CAMPOS, Pedro Henrique; FUSER, Igor; METRI, Paulo e FÓRUM POPULAR DO ORÇAMENTO. Capital Estrangeiro no Brasil: poder e controle sobre a riqueza in Capital estrangeiro no Brasil. Available on the website <https://www.corecon-rj.org.br/anexos/E6C63BBDDAB6A3E26D95630A862E4FB0.pdf>.
[2]. CAMARGOS, Regina; BRESSER-PEREIRA; SAWAYA, Rubens; STUDART, Rogerio; CAMPOS, Pedro Henrique; FUSER, Igor; METRI, Paulo e FÓRUM POPULAR DO ORÇAMENTO. A participação do capital estrangeiro no setor financeiro brasileiro in Capital estrangeiro no Brasil. Available on the website <https://www.corecon-rj.org.br/anexos/E6C63BBDDAB6A3E26D95630A862E4FB0.pdf>.
[3]. BRAUDEL, F. Civilização material, economia e capitalismo. São Paulo: Martins Fontes, 1996.
[4]. WALLERSTEIN, Immanuel. Unthinking Social Science. Cambridge: Polity Press, 1991.
[5]. ARRIGHI, Giovanni. A ilusão do desenvolvimento. Petrópolis: Vozes, 1997.
[6] Watanabe, Marta. Cresce dependência da indústria de alta tecnologia por importado. Available on the website <https://portalclubedeengenharia.org.br/2019/03/07/cresce-dependencia-da-industria-de-alta-tecnologia-por-importado/>, 2019.
* Fernando Alcoforado, awarded the medal of Engineering Merit of the CONFEA / CREA System, member of the Bahia Academy of Education, of the SBPC- Brazilian Society for the Progress of Science and of IPB- Polytechnic Institute of Bahia, engineer and doctor in Territorial Planning and Regional Development from the University of Barcelona, university professor and consultant in the areas of strategic planning, business planning, regional planning, urban planning and energy systems, was Advisor to the Vice President of Engineering and Technology at LIGHT S.A. Electric power distribution company from Rio de Janeiro, Strategic Planning Coordinator of CEPED- Bahia Research and Development Center, Undersecretary of Energy of the State of Bahia, Secretary of Planning of Salvador, 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), Como inventar o futuro para mudar o mundo (Editora CRV, Curitiba, 2019) and A humanidade ameaçada e as estratégias para sua sobrevivência (Editora Dialética, São Paulo, 2021) .
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