The economic function of the Amazon

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By JOSÉ RAIMUNDO TRINDADE & WESLEY DE OLIVEIRA*

The contradiction between economic and environmental sustainability, visible in the relationship between trade balance surpluses and the advance of deforestation

Over the last forty years, Brazil has become an agro-mineral export center, the country has taken a place in the international division of labor as a major producer of commodities and/or primary products, mainly soy, meat and iron ore. The industrial segment, with some degree of added value, practically disappeared from the domestic product, today represents less than 9% of it.

In this context, the Amazon is relevant on the national scene as a region that exports primary products, with emphasis on products from mineral extraction (mainly iron ore), live cattle and, in the border zone with the Midwest, especially the contiguity area between Mato Grosso and Pará, soy production gains relevance.

The participation of exports from the Amazon region in the national export basket of basic products, considering how much the advance of a pattern of economic reproduction centered on neo-extractivism and primary specialization was nationally consolidated and, on the other hand, the relationship of this economic reality with environmental issues in the region deepen the contradiction between economic and environmental sustainability, clearly visible in the relationship between trade balance surpluses and the advance of deforestation in the Amazon.

The analysis of the Brazilian trade balance demonstrates the role that capitalist expansion in the Brazilian Amazon plays for this primary-export pattern that has been imposed since the end of the 1980s, accentuated in the 2000st century. Thus, in just four moments in the period 2021-XNUMX, the Brazilian trade balance was negative, that is, more imports than exports. This surplus performance in most years resulted in a significant inflow of resources into the Brazilian economy, which consolidates the significant balance in the balance of payments of the last two decades and the low national exchange rate risk.

With regard to the composition of Brazilian exports, a very clear behavior of decreasing participation of products from the manufacturing industry has been noticed – considering the grouping of the international reference classification of productive activities (ISIC). If in 2000 the manufacturing industry represented 83% of our export basket, in 2021 it reached 51,3%, which is the lowest percentage observed in the series shown. On the other hand, the extractive industry and agriculture have been gradually increasing their share, corresponding together to more than 48% of all that is exported. The following graph demonstrates this behavior.

graphic 1 – Exports (%) by international reference classification of productive activities (ISIC) – Brazil, 2000-2021
Source: Comex Stat, Ministry of Economy (2022).

Prior to the ISIC classification presented above, foreign trade statistics could be analyzed by aggregate factor, which involved grouping products into two broad categories: basic and industrialized (semi-manufactured and manufactured). It is worth noting that in the context of a reduction in the participation of the manufacturing industry in the export basket and an increase in agriculture, livestock and extractive industries, there is a trend towards regionalization in the production of the latter two, with the Amazon being the site of the most accentuated expansion of exports.

If in 2000, 44% of agricultural and extractive industry exports originated in the Amazon region, in 2021 the percentage reached practically 70%. The graph below shows the percentage share of aggregated exports from the states of the Amazon region in Brazilian exports (Acre, Amapá, Amazonas, Maranhão, Mato Grosso, Pará, Tocantins, Rondônia and Roraima).

graphic 2 – Share (%) of exports from the Amazon in Brazil's export basket by international reference classification of productive activities (ISIC), 2000-2021
Source: Comex Stat, Ministry of Economy (2022).

This movement towards the Amazon has resulted in numerous studies on the impacts of agricultural and mineral expansion in the region, especially regarding the increase in deforestation and the failure to reduce regional inequalities. What we have, then, is a clear displacement of agricultural and mineral production to the Amazon.

This process correlates with three important aspects: (i) deepening of the country's de-industrialization and loss of its own capabilities generated by broader economic development policies; (ii) expansion of regional inequalities and deepening of the Amazon's primary-export logic, with loss of biotic capacities and value aggregation; (iii) it accelerates the negative impacts on the environment, whether due to the extensiveness of deforestation, or the destruction of biomes and loss of the forest's regenerative capacity.

In this way, the “national function” that has been given to the Amazon in recent decades does not prove to be the ideal when thinking about environmentally sustainable and nationally integrated development. The generation of foreign exchange via the trade balance in recent years is based mainly on the sale of basic products, whose surplus logic is centered in the states of the Amazon, mainly Pará and Mato Grosso. Thus, the Amazon is an important exporting region for Brazil, but at an enormous social and environmental cost.

Continuing the observed trend of being only a supplier of basic products, the region: (a) loses by not adding value to the production process; (b) it increases its fragility in the face of possible crises in the foreign market (or a drop in prices for some other reason), given the emphasis on exporting commodities, as it has already shown in recent years (2013 and 2014, for example); (c) increases the gap in the process of regional development in relation to other regions of the country, which are more focused on industrial production, however, it also sustains the national condition of a primary-export pattern with serious consequences in the medium term, including due to the Brazilian urban complexity and the limits of a standard that does not generate necessary job and income stimuli; (d) it also loses due to greater concentration of capital (and income) in the primary-export sector, which does not provide a spillover effect on the economy; (e) in environmental terms, the damage is very significant, as the activities considered to be the main causes of deforestation (mining, livestock and soy) are in the growing export basket of primary products.

Thus, the trade-offs The generation of foreign exchange versus the recrudescence of regional productive inequality must be rethought, whether due to the necessary improvement in the quality of life of the population of the Amazon region, or through the introduction of a development model that overcomes the current pattern of a mere granary of basic products, with deleterious effects on the environment and with low social return, just check the human development indicators of the region and especially of the two states in focus.

If it depends on the foreign market and the Brazilian agro-mineral exporting bourgeoisie, this scenario will continue to intensify, as the international demand for iron ore, soy and beef continued to grow. Continuing China with its high growth rates, as well as the economic recovery of the United States and European countries, the trend is that Brazil will continue to expand its role as a world supplier of the aforementioned products and have its export basket increasingly centered on basic products.

For everything that was developed throughout the text, the complex issue involved is quite evident: if, on the one hand, the environmentalist discourse suffocates the need for a “new model”, on the other hand, the harsh crudity of the balance of payments and the needs for generating foreign currency impose the continuity and expansion of the old primary-export model and, in very acute terms, very little concerned with the preservation of biomes or with the improvement of the quality of life of the native Amazonian populations. Changing this Brazilian and Amazonian pattern is an urgent task.

*Jose Raimundo Trinidad He is a professor at the Institute of Applied Social Sciences at UFPA. Author, among other books, of  Six decades of state intervention in the Amazon (Paka-armadillo).

*Wesley De Oliveira Master in Regional Economics from the Federal University of Pará (UFPA).

 

References


Comex Stat, Ministry of Economy (2022).

TRINDADE, JRB; OLIVEIRA, WP Pattern of primary-export specialization and dependency dynamics in the period 1990-2010, in the Brazilian economy. FEE tests, Porto Alegre, v. 37, no. 4, p. 1059-1092, Mar. 2017. Available at: http://revistas.fee.tche.br/index.php/ensaios/article/view/3435

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