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Development Strategies

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Development Strategies

  1. 1. Development Strategies Brazil Kerala (India) Taiwan Vietnam Senegal
  2. 2. Top Down or Bottom up Development <ul><li>Usually large scale </li></ul><ul><li>Carried out by governments, internat organisations. </li></ul><ul><li>Done by people outside the area. </li></ul><ul><li>Often well funded. </li></ul><ul><li>Local people not involved. </li></ul><ul><li>Imposed on the area & its people. </li></ul><ul><li>Small scale </li></ul><ul><li>Labour intensive </li></ul><ul><li>Involves local communities. </li></ul><ul><li>Run by locals for loacls. </li></ul><ul><li>Limited funds available. </li></ul><ul><li>See p33 Development Book </li></ul>
  3. 3. Top Down Plan – Polonoroeste Project <ul><li>The WB lent Brazil $443mn. </li></ul><ul><li>Located Rondonia State ( Rainforest). </li></ul><ul><li>Designated resettlement area for people form the NE and urban south. </li></ul><ul><li>Involved building 1500km highways, buying deforested land to be converted into commercial agriculture, mining resources. </li></ul><ul><li>Problems: Land poor; no supply outposts; no water supply or electricity; new migrants forced to sell new land and return home; many forced to find poorly paid work on cattle ranches; 34 indigenous tribes threatened; habitats destroyed. </li></ul>
  4. 4. Bottom up - Rural farmers Union (FATA) <ul><li>FATA -formed 1988, in Northern province of Para. Supported by Christian Aid (NGO). </li></ul><ul><li>FATA funding sustainable development for the 65,000 small scale farmers devoted to growing rice and sugar cane in the area. </li></ul><ul><li>15,000 families benefit from the programme. </li></ul><ul><li>Together they decide which crops they will grow and how much they will produce. Together they plan how to market the rice ( no middle man involved). </li></ul><ul><li>FATA has built research & training centre complex which holds courses on relevant topics for small scale farmers. </li></ul>
  5. 5. Sustainable Development <ul><li>Meets the needs of the present generation without compromising the needs of future generations. </li></ul><ul><li>Takes into account environmental conditions . </li></ul>
  6. 6. Brazil – 1st Stage (1880-1930) <ul><li>At first Brazil based it development on commodity exports .It usually focused on one raw material at a time. See economic cycles from last lesson. </li></ul><ul><li>Brazil wood cycle, Sugar Cane cycle, Mineral cycle, Coffee Cycle. </li></ul><ul><li>Luckiest Nut in the world video (Senegal & Ground Nuts) see -Media that matters film fest </li></ul>
  7. 7. Brazil 2 nd Stage – Import Substitution (ISIs) (1930-1955) <ul><li>1930s- Brazil began to industrialise . </li></ul><ul><li>Import substitution industries aim to reduce dependence upon expensive foreign imports. </li></ul><ul><li>Shift to local manufacture of basic consumer goods ( textiles, clothing, footwear, food processing). </li></ul><ul><li>This was made possible as coffee barons began to invest in other industries in the SE. </li></ul>
  8. 8. Benefits of industrialisation <ul><li>Manufacturing adds value to products. </li></ul><ul><li>The added value from converting the raw materials into finished goods is crucial for countries that wish to earn foreign currency. </li></ul><ul><li>Can increase export earnings and reduce import costs, allowing greater self reliance. </li></ul><ul><li>Being a large country like Brazil should have been an advantage – large domestic market!! </li></ul>
  9. 9. 3rd Phase: Secondary Import Substitution (1955-68 ) <ul><li>Substitution of domestic production for imports such as consumer durables (E.g. autos), intermediate goods (e.g. petrochemicals, steel), capital goods (e.g. heavy machinery). </li></ul><ul><li>Shortage goods during WW2 had given added impetus to the government’s policy of ISIs. </li></ul>
  10. 10. The Car Industry <ul><li>In 1956 foreign companies were invited by the government to establish branch plants and then pressed to manufacture more and more parts for their vehicles in Brazil. </li></ul><ul><li>Most branch plants were located around Sao Paulo. Sao Paulo had: good regional raw materials; skilled labour; close to Santos (large port); welcoming government; hub of communications in the city . </li></ul><ul><li>Other plants were then set in Belo Horizonte & Rio. </li></ul>
  11. 11. Car Industry – A success <ul><li>In 1995 Brazil produced 1.6mn motor vehicles, making it the 7th largest manufacturer in the world. </li></ul><ul><li>Vehicle sales 65% S. American market. </li></ul><ul><li>Strong domestic demand & Mercosul contributing to rapid growth. </li></ul><ul><li>The growth potential is very high, compared to mature markets like the US & Europe. </li></ul><ul><li>In 1992, the government helped kick start the industry’s growth by cutting taxes on small vehicles, which now account for 57% Brazilian market. </li></ul><ul><li>Investment has taken place to modernise the factories in the 90s – many robots have been installed, to cut employee number slightly & thus costs. Brazil needs to ensure it remains a competitive location. </li></ul><ul><li>Government grants and cheap labour cost are now making the NE a attractive location for vehicle manufacturers. </li></ul>
  12. 12. Problems -80s & Early 90s Aid - Loans <ul><li>Mid/late 1970s – after the first oil crisis in 1973/74 growth was achieved in capital goods and basic immediate goods at the expense of a sharp rise in external debt. Second oil price rise in 1979 created more problems. </li></ul><ul><li>Large importer of oil + all related industries affected. </li></ul><ul><li>Rise in global interests meant firms did not want to invest. </li></ul><ul><li>World recession led to a fall in demand for goods & MNCs reduced their production. </li></ul>
  13. 13. Brazil chooses alcohol to replace Petrol – 1975 <ul><li>Plan to use sugar based alcohol as an alternative to petrol. </li></ul><ul><li>Half of country’s exports go to pay for its imports of crude oil.. </li></ul><ul><li>Already provided foreign exchange savings, created jobs in the poorer NE region. </li></ul><ul><li>The government has provided incentives for those who have set up alcohol plants. </li></ul><ul><li>Brazil's carmakers sold more vehicles adapted to run on alcohol last year than conventional petrol-driven models. </li></ul><ul><li>&quot;Flex-fuel&quot; cars, which run on any combination of ethanol and petrol, took 53.6% of the Brazilian market in 2005. </li></ul><ul><li>&quot;Flex-fuel&quot; cars attract a purchase tax of 14%, while buyers of their exclusively petrol-powered counterparts are charged 16%. </li></ul>
  14. 14. The Development of the Amazon <ul><li>The ‘last frontier’; an area to be brought into the national economy ‘ to change the face of Brazil’. Since 1945 governments tried to develop this area through RDAs. </li></ul><ul><li>Resettlement programme (slide 2) & the Trans Amazonian highway. </li></ul><ul><li>Mining – Grand Carajas Project ( Video) </li></ul><ul><li>Improve agriculture –assistance grants to farmers given; Cattle ranching encouraged; loans given to buy land. </li></ul><ul><li>Manaus – made a free trade area – (1966) Belem & Manaus were to encourage and cause development effects to spread throughout the region. </li></ul><ul><li>HEP – Dams p109/p110 Dev Book </li></ul>
  15. 15. Carajas facts <ul><li>Covers 8,000km ² - Size of France +Germany. </li></ul><ul><li>150 tonnes of gold deposits, as well as silver, manganese, copper, nickel & bauxite deposits. </li></ul><ul><li>World’s largest iron ore mine – produces 40mn tonnes each year fro export. </li></ul><ul><li>Owners – Companhia Vale de Rio Doce </li></ul><ul><li>Growth pole – around lumbering, ranching, oil palm plantations. </li></ul><ul><li>Railway line (890km) to the coast, HEP & aluminium factories developed. </li></ul><ul><li>Trans Amazonian highway nearby. </li></ul><ul><li>Township houses 7,000 people. </li></ul>
  16. 16. Diversified export promotion & continued secondary ISIs (1968-Present) <ul><li>Diversified export promotion – prodcuing goods with high global demand. </li></ul><ul><li>Examples – car manufacturing, iron mining, steel, commercial agriculture. </li></ul>
  17. 18. <ul><li>Differences – in stage 3, Asian industrialisation was mainly export orientated (primary & secondary), while in Latin America the focus was mainly on import substitution. </li></ul><ul><li>The Asian Tigers, perhaps because of their decisions to go for export-orientated industrialisation, have certainly been the ones to capitalise most on the opportunities created by globalisation. They were in the right place at the right time. </li></ul><ul><li>If Brazil had undergone land reform like Taiwan it may have been more successful, as it would have widened its domestic market – more people with capital to spend. This is still a problem today leading to wide inequalities in the country. </li></ul><ul><li>Problems have been further added through debt payments & SAPs </li></ul><ul><li>See Globalisation video notes for Taiwan case study & Vietnam case study + p86 in Dev book for Vietnam. </li></ul>
  18. 19. Recap – Real Plan <ul><li>1985 – The military handed back power & a ruined economy. </li></ul><ul><li>*A roller coaster ride of hyper inflation & recession began. </li></ul><ul><li>1986-94 – There were 8 finance ministers, 7 stability plans & 6 different currencies. </li></ul><ul><li>*1994 – Inflation was running at 80% a month. The Real Plan was announced. </li></ul><ul><li>*they lost inflation was introducing a transitional currency & then they began to stabilise prices and wages. Prices were fixed at high levels and wages at low levels. People accepted this in order to end inflation. </li></ul><ul><li>*High inflation hit the lowest classes hardest, as by the time they got paid at the end of the month, their wage had lost so much value. They were unable to save & make a profit out of the situation, unlike the rich. </li></ul><ul><li>Kept a lid on inflation & opened up the market to foreign imports – even though this led to the closure of many factories which could not compete. Thus many people lost their jobs. </li></ul><ul><li>*1992-8 The Industrial base of Brazil was eroded. 1,300 capital goods companies closed. </li></ul><ul><li>*The flood of cheap imports led to a trade deficit. Also many rich left & spent their money abroad – for them an over valued Real was good news. </li></ul><ul><li>*Foreign investment which flooded in was for luxury consumer goods, especially cars. </li></ul><ul><li>*Allowed TNCs to make decisions – gave tax breaks to car industry. </li></ul><ul><li>*Though short term policies were costly, they did maintain economic stability for 4 years. The immediate effects were good. </li></ul>
  19. 20. Today & Globalisation <ul><li>Tariff barriers on imports reduced from 40 to 7.5% </li></ul><ul><li>Exports increased by 20% in 2000. </li></ul><ul><li>State owned companies being privatised. </li></ul><ul><li>FDI flowing in - +£30bn in 2000. </li></ul><ul><li>Lula has denounced US & EU agricultural subsidies and protection as unfair and a cause of poverty in LEDCs. Lodged complaints to the WTO. </li></ul><ul><li>Head to head with US over cotton – US threatened to retaliate. </li></ul><ul><li>More involvement in the UN. </li></ul><ul><li>Brazil has paid $15.5bn IMF debt of early. </li></ul><ul><li>Building relationships with China . </li></ul><ul><li>Advising African countries – Aids/HIV </li></ul>
  20. 21. Mercosul <ul><li>1991 set up Mercosul – Common Market </li></ul><ul><li>Trade since 1991 has tripled between Argentina, Brazil, Paraguay & Uruguay. </li></ul><ul><li>Also countries are working together on Projects, which will boost their trade. </li></ul><ul><li>Hidrovia Project – super waterway (3000km) </li></ul><ul><li>*Will allow Ocean going ships to travel into the heart of Latin America. </li></ul><ul><li>*Provide with landlocked countries – Bolivia & Paraguay with an outlet to the sea. </li></ul><ul><li>*Create modern international port in Uruguay & boost exports in NE Argentina & central plains of Brazil. </li></ul>
  21. 22. The Future – Division of Labour <ul><li>If Brazil continues to develop & if the domestic economy expands – it may find as its heavy industries become increasingly competitive and their workers wages increase. </li></ul><ul><li>They have to locate their labour intensive industries in Latin America countries which have lower labour costs. (South Korean firms relocated in Thailand & Malaysia to cut labour costs.) </li></ul>
  22. 23. Kerala - India 1.7 3.2 1.8 Total fertility rate 72 48 64 % of married women who use contraceptives 99 57 85 Female literacy rate % 6 70 14 Infant mortality 80 61 75 Life expectancy (women) in yrs Britain India as a whole Kerala