Economic Development of the Brazilian Amazon: Opportunities and Constraints

Abstract

in Brazil during the ten years I was responsible for the Bank's Brazil operations program, up to 1981, and readings that I shall cite. Needless to say, the opinions voiced are my own and are not necessarily those of the World Bank. However, I am indebted to my former associates at the World Bank, the Johns Hopkins School of Advanced International Studies, the Brazilian administrations, federal and state, Brazilian private citizens lofty and humble, and many others, who have informed and inspired me. The great problem of the Brazilian Amazon is how to guide its development to further the economic growth and well-being of Brazil and its people without destroying the Amazon's contribution to the well-being of the earth. On the one hand, the Amazon's potentially rich forest and mineral resources, and in certain districts its productive soils, can contribute much to the regeneration of growth and prosperity of the potentially dynamic (though temporarily slowed) Brazilian economy. On the other hand that very growth could alter the unique ecosystem ofthe world's largest remaining tropical forest, eliminate plant and animal species, modify the region's (and perhaps the world's) climate, and bring disappointment and material loss to venturesome investors and the common folk whose livelihood depends on them. I do not pretend to have all the answers to these dilemmas and contradictions. What I propose to do here is to recall some of the promises and the constraints, the processes?planned and unplanned?that govern economic development of the Brazilian Amazon. I will also describe interventions by the government, some of them supported by the World Bank, that seek to compose these conflicting potentials and to achieve economic gains compatible with prudent conservation of the Amazon's transnational advantages and the orderly evolution of its indigenous population. The constraints on development Brazil's 'legal' Amazon comprises 57 per cent of its land area, but only 4 per cent of its population, and the region provides only 2 per cent of the country's domestic product. This means that the people in the region earn on average only half as much as the average Brazilian citizen. This is about the same as the per capita income in Brazil's north-east?the area known as one of the poorest in South America Why is this insignificant economic performance associated with a region that appears to be so rich? Because the development of the apparent riches of the Amazon is the subject of myriad of natural, human and economic constraints. There are at least seven important such constraints: 1. The weak data base. Knowledge of both natural phenomena and economic data is fragmentary and unreliable. An engineer designing a dam does not really know how much rainfall and runoff have occurred in the past and are likely in the future. The dam may or may not produce the energy he expects. The settlement planner does not really know whether his soil samples represent the whole settlement area, or only a minor fragment?so that the farmers he wants to settle may or may not be able to produce the crops that are expected to justify the investment and sacrifice. There are innumerable other examples.