Pernambuco Aims for Globalization

Article excerpt

Pernambuco is developing one of the great ports of the

Southern Hemisphere, which will help make the state an

increasingly important center of world commerce into the next

century. A group of community leaders representing the

public, private, and academic sectors met recently in Recife with

Global Finance's Ernest McCrary for a discussion of

Pernambuco's growth and investment opportunities.

GLOBAL FINANCE: How is the state of Pernambuco preparing for global competition, and what is the outlook for success in those efforts?

JOAO RECENA: Globalization has a lot to do with physical connection and, consequently, with transportation links. For us, a key step toward globalization is the development of the Suape deepwater port just south of Recife. With the rise of globalization, raw materials and intermediate products will be moved around more and more, seeking the places where they can be processed most efficiently. With that growth in shipments, our concern is to consolidate and expand the Suape port, the state's river navigation system, and the railway system.

GF: So Suape is to be your principal link to the world?

RECENA: Today, Suape is unquestionably our most important project in terms of linking the economy of Pernambuco with the rest of the world. At the same time we have to think about the kinds of economic activities here that can be internationalized. There is a consensus that the most important of these should be tourism and agriculture in irrigated lands. So one of our most important projects today is the development of the Guadalupe Tourism Center on our Gold Coast. There we're investing $46 million in roads, water and sewage systems, electricity, and communications to support tourism investments.

GF: Looking at the private sector, do companies in Pernambuco have reasonable conditions of competitiveness?

LUIZ FELIPE DE BRENNAND: If you compare Pernambuco to other states, we have some locational advantages with regard to the Northeast region. You have to keep in mind that this is a large region, with a generally low level of income and consumption among a population widely dispersed. When companies come here from outside the region, they find that Pernambuco has the advantage of being the most centrally located among the region's urban areas. The Recife metropolitan area is the largest in the region, and is a good base of operations. We have a long industrial tradition here-going back 400 years to the start of the sugar industry-and a welltrained pool of workers. What we still need is the completion of these infrastructure projectsport, roads, and railways.

TANIA BACELAR: You just have to look at the map of Brazil to see that Pernambuco is well situated, and we do already have a reasonably well-developed infrastructure-certainly above average for the Northeast. The Suape port is an example. Suape will be competing to become one of Brazil's main cargo concentration ports because of its geographical advantages for shipping to the United States, Europe, and elsewhere in Latin America.

GF: How do the numbers for Pernambuco's economy compare with those for the Northeast region and the rest of Brazil? ALEXANDRE RANDS: Pernambuco has a gross domestic product of $17-20 billion, while the Northeast's GDP is about $100 billion. [Brazil's national GDP for 1996 was $745 billion.] But if you look at the adjacent areas, which are easily linked to Pernambuco, you see that the state's area of economic influence represents maybe $40-50 billion. The state doesn't have any dominant industry or large mineral resources that would attract big investments, but Recife in the eastern part of the state and Petrolina in the west have become major centers of services for the whole region. This is a market that is growing, with 45 million inhabitants in the region.

GF: And in Pernambuco?

RANDS: Almost 8 million. …