MODERNIZATION, DEPENDENCIA, AND IMPORT SUBSTITUTION INDUSTRIALIZATION

Brazil

100 Years of History

Latin American independence movements (1808-1824) relied on a new sense of nativism The revolts were started by the Creole elite Elites appealed to the masses’ identity based on

birthplace: American Continuing social, economic, and political

inequality would continue unchanged The "Progress" movement, popular in the industrializing

West, reached Latin America in the 1850s Liberals use promises of political and social reforms as

well as economic progress to come to power; largely unfulfilled

The ignored middle and lower classes turn to nationalism “That everybody belonged, that the benefits of Progress

should be shared, and that industrial development should be the priority”

Theory and Policy: Overlapping Concepts Economic Theory: Modernization v.

Dependency Economic Policy: Export-led Growth v.

Import Substitution Industrialization

Modernization Theory

Modernization is a revolutionary process Modernization is a complex process Modernization is a systemic process Modernization is a global process Modernization is a lengthy process Modernization is a phased process Modernization is a homogenizing process Modernization is a irreversible process Modernization is a progressive processSamuel Huntington. "The Change to Change: Modernization, Development, and Politics"

(1971)

Modernization in Brazil

Economic modernization led to mass urban migration in the early 1900s and, in turn, destabilized the rural political oligarchy

President Getúlio Vargas (1930-1945, Liberal Alliance): Vargas overcame a coup attempt by coffee elites, marking Brazil’s transition away from a traditional, rural economy established the modernizing – and Fascist - Estado Novo dictatorship

Juscelino Kubitschek (1956-61): populist president who promises Brazilians 'fifty years of progress in five‘; industrialization progressed quickly, but so did inflation and debt

Modernization in Brazil

From 1900 to 1980 the average annual rate of GDP growth was 5.7%, while industry grew by about 7.1% per year 1930: Vargas Elected 1932: Coffee coup defeated 1934: Fascist constitution adopted 1937: Estado Novo established, Vargas assumes dictatorial

powers 1942: Vargas sides with Allied forces in WWII 1945: Military coup overthrows Vargas 1951: Vargas elected to the presidency, again 1954: Facing a military coup, Vargas commits suicide 1956: Kubitschek elected to the presidency 1956: work on Brasília begins 1960: Brasília becomes the national capital 1964: Military coup

Brasília: the High-Modernist City Brasília was to be the city of the

future, of a modern Brazil Planned and developed in 1956,

Brasília became the capital in 1960

“Brasília made no reference to the habits, traditions, and practices of Brazil's past or of its great cities” functionalist principles: dispersion

and functional segregation “The death of the street”

Brasília: the High-Modernist City By1980, 75% of the population

of Brasília lived in settlements that had never been anticipated, while the planned city had reached less than half its projected population of 557,000

Estrutural, a slum near Brasília, is home to over 20,000 people

The pattern of urban modernization pushing the poor to the edge of the city is common

Dependency Theory

Underdevelopment in less developed countries is the result of development in the West International capitalism has set up a global economic

system with a division of labor that maintains the periphery in a subservient position relative to the core

Dependent nations develop dual economies Modern sector is entirely dependent on the international

economic system – for resources (capital, technology, and materials) and markets; a “collaborating class” forms

Traditional sector is not, but it is eroded by the activities of the modern sector

Dependent nations are adversely affected by unequal terms of trade: they export cheap raw materials and import expensive, finished, manufactured products; the core relies on this imbalance for its prosperity, the core must break it if it is to develop

Import Substitution Industrialization

ISI policies may be consistent with several types of economic theories, though it is most closely associated with Dependency Theory

Domestic production of substitutes for imported commodities

Protectionist barriers to international trade in order to encourage a domestic market

Government financing for new industrial projects State-led economic policy

Dependency in Brazil

Fernando Henrique Cardoso After the 1964 military coup

Cardoso went into exile; he returned in the 1980s

In the 1970s Cardoso was addressing the weaknesses of Dependency Theory: limited development is possible despite significant dependence; poor nations must develop as much as possible within the global economy.

President of Brazil, 1995-2000 While president, Cardoso followed

standard neoliberal economic policies

ISI in Brazil

Timeline 1945-1962 period characterized by intense ISI

1950-1961: GDP growth averages over 7%, industry growth averages over 9%

Imports (esp. fuels and machinery) increased more than exports

Large foreign debt 1962-1967: the industrial sector stagnated as

a result of adverse macroeconomic conditions 1968-1973: rapid industrial expansion and

modernization

ISI in Brazil

Nationalism: Vargas gained support for ISI policies in the working and middle classes through the explicit use of nationalist rhetoric

Development: gains in industrial work are offset by massive rural to

urban migration and thus un/underemployment and the resulting lowering of the standard of living in urban areas despite increasing labor regulations

political conditions deteriorate into Fascism and military dictatorship in which the working class is included but subordinated through populist structures

Rural poverty and landlessness increase as farming is mechanized and the Amazon is opened to industrial development; demands for land redistribution grow

Dependency Theory

What role do political forces play in economic development? To what extent do/can domestic political circumstances influence the national economy?

Does dependency theory put too much emphasis on the power of capitalism to shape the circumstances of underdeveloped countries?