The Dialectics of Globalization: Regional Responses to World Economic Processes: Asia, Europe, and Latin America in Comparative Perspective

By Menno Vellinga | Go to book overview

10
Globalization and Regional Integration: The Brazilian Industry and Mercosur

Kees Koonings

For half a century Brazil has been one of the classic cases of import substituting industrialization (ISI). This process was based on a "triple alliance" between state, foreign, and domestic private capital 1'and resulted in a closed economy heavily biased toward the urban sector and toward those industries producing durables and capital goods for the domestic market. Between the 1950s and the early 1980s, this model managed to realize an impressive industrial growth and overall economic transformation, driven by state intervention and, especially since the early 1970s, financed through extensive external borrowing. 2 In those years, the "politics of industrialization" united state technocrats, industrialists, the military, and national and regional politicians under the protection of the huge regulatory apparatus of the state. 3

Brazilian ISI was marked by a substantial spatial concentration of economic activities in the São Paulo-Belo Horizonte-Rio de Janeiro triangle, where the largest and most dynamic industries were located. However, some regional economies experienced noteworthy industrial growth as well. States like Pernambuco and Bahia and especially the three southern states of Paraná, Santa Catarina, and Rio Grande do Sul managed to play a significant role in national industrialization. Their industrial economies were based on a combination of historically established local manufacturing and more recent activities linked to specific regional conditions (such as a strong agriculture in Rio Grande do Sul) or to large-scale investments by the state or large firms from the center (as happened in Bahia, Pernambuco, and Amazonas).

This intricate and complex structure supporting ISI wore thin to the verge of breaking down with the "debt crisis" of the early 1980s. However,

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