Crisis in the Brazilian Amazon

By Chernela, Janet M. | Hemisphere, Spring 2000 | Go to article overview

Crisis in the Brazilian Amazon


Chernela, Janet M., Hemisphere


In the decade between 1988 and 1998, Brazilian policy regarding the Amazon rainforest abruptly turned from "brown" to "green." This was most apparent in Amazonas, the largest state in Brazil, accounting for one-third of the 1.9 million square miles designated as Legal Amazonia. The shift to preservationist policies is best explained not by growing environmental awareness, but rather by political and economic processes occurring at the international level. This article traces the reversal in political positioning, suggesting contributing factors that may explain changing policies toward the Amazonian forest and its preservation.

THE BOOM OF BLACK GOLD

The Brazilian Amazon has long been characterized by a continuum of slow economic growth, interrupted at intervals by peaks of economic prosperity. For four hundred years--from the sixteenth through the mid-twentieth centuries--wealth was derived principally from the export of forest products. The most economically significant of these products was rubber, latex extracted from the Amazonian tree Hevea brasiliensis. Demand for this commodity surged in the latter half of the nineteenth century, when first vulcanization, and then the nascent automotive industry, catapulted world demand for rubber to unprecedented levels.

Rubber was a minor export in the first half of the nineteenth century. In the mid 1800s, however, advances in vulcanization processes increased the strength and resilience of rubber and broadened its application to a wide range of commodities. Rubber became Brazil's principal export in 1871, and by 1909 Amazonia was the source of 94.4% of the world's rubber supply.

Brazil's rubber boom came to an end in 1913, when managed plantations in Malaysia outperformed Brazilian forest extractors. Previously, Asia had contributed only minimal amounts of rubber to the world market (four tons in 1900, compared to Brazil's 27,650). By 1913, however Asia had overtaken Brazil as the world's largest rubber producer. By 1918, Amazonia's share of the world rubber supply had fallen to 10.9%. Just before World War II, when Brazilian rubber came into temporary demand by Allied nations, its contribution to the world market had diminished to 1.4%.

With no export commodity to replace rubber, the economy of the central Amazon entered a period of stagnation. The region's wealth was concentrated in the city of Manaus, strategically situated near the confluence of the Negro and Amazon Rivers. As the rubber boom dissipated, Manaus contracted to a fraction of its former size, its revenue sources limited to the export of a few raw forest products.

A BOOM OF A DIFFERENT KIND: THE ZONA FRANCA OF MANAUS

Manaus was lifted out of its stagnation in 1967, when the Brazilian government decreed a portion of the city to be duty free. The decree outlined fiscal incentives from federal, state and municipal governments to attract industry to the north by allowing exemptions on steep import duties. The plan was designed to attract industrial development, particularly electronic assembly plants, that relied on imported components. The duty-free area was designated the Zona Franca de Manaus, or Manaus Free Trade Zone.

The decree came in the context of a Brazilian economy that was rigorously protected by trade barriers. In the 1960s, approximately 3000 products were prohibited from import, while many others were subject to hefty import taxes of 80%. Firms within the federally designated free trade zone could sell imported items at prices that were not available elsewhere in Brazil, providing them with strong competitive advantages.

Given these conditions, it was cost effective for Brazilians from the south to travel to Manaus to purchase imported goods. Despite the city's distance from Rio de Janeiro and Sao Paulo, thousands of Brazilians from the metropolitan south traveled there annually to purchase tax-free luxury and electronic goods.

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