Urbanization and Rural-Urban Linkages: The Brazilian Experience of Late Industrialization. Mauro Borges Lemos Full Professor CEDEPLAR/UFMG

Transcription

1 Urbanization and Rural-Urban Linkages: The Brazilian Experience of Late Industrialization Mauro Borges Lemos Full Professor CEDEPLAR/UFMG

2 Urbanization and Rural-Urban Linkages: The Brazilian Experience of Late Industrialization This paper integrates analytically two inter-wined phenomena regarding urbanization of emerging economies: 1) Late Industrialization; 2) Rural-urban urban linkages. The integrating element of these two phenomena is dual functionalism, and the Brazilian experience will be the reference for a comparative analysis with an Asian experience, Thailand.

3 1.Theoretical background: late industrialization and functional dualism LATE INDUSTRIALIZATION Contribution of Latin American economists and sociologists of the 1950s and 1960s coming from the theoretical tradition of the UN s s ECLAC. The meaning of late industrialization is closely related to the idea of newly industrializing and emerging economies, i.e., national economies which have experienced fast economic growth driven by industrialization in the post-world War II period.

4 1.Theoretical background: late industrialization and functional dualism LATE INDUSTRIALIZATION PREBISCH (1949) Challenges from the own condition of backwardness: poverty trap, technical scale, market size and technological gap relative to central economies national young industry were uncompetitive in export markets. FURTADO (1961) Historical coexistence of development and underdevelopment. TAVARES (1963) Sequencing of import substitution: bottlenecks as industrial inducements and external constraints.

5 1.Theoretical background: late industrialization and functional dualism FUNCTIONAL DUALISM Dynamics of economic development take place at different marginal productivity between industry and agriculture (Lewis, 1954). This theoretical background provides insightful clues to understand late industrialization processes engaged by third generation countries, i.e., the emerging economies. Common starting point to industrialization: similar structural characteristics of a dual economy with primary-export sector engaged in division of labor leaded by the central industrialized economies.

6 Urban Market Food Supply Functional Dualism Industry Core Industrial Inputs Labor Transfers Export Sector Labor Transfers Subsistence Sector Imports Foreign Exchanges Wage rates regulated by labor supplies from subsistence sector

7 2.Stylized factors of industrialization in Brazil compared to Thailand The choice of Thailand as Comparative Case - Thailand is not so large: 1/3 of Brazil s s population - Similar dynamism of industrialization: both countries have experienced high rate of long-run economic growth (7% annual). - They have also experienced an export-driven phase. - Both countries have had an evolution of the rural-urban urban linkages along several phases and under structural changes. - Still their differences in rural-urban urban relationships are remarkable.

8 2.Stylized factors of industrialization Brazilian Development Phases 1) First Period ( ): 1980): the fast-growth period; 30 year import-substitution. 2) Second Period ( ): the slow-growth period 3) Third Period ( ): 2008): the fast-growth period. Thai Development Phases 1) First period ( ): 1981): import substitution; fixed overvalued exchange rates; inward-oriented growth. 2) Second Period ( ): 1996): a lasting fast growth phase. 3) Third Period ( ): 1999): the financial-exchange crisis. 4) Fourth Period ( ) 2008) : the recovery phase.

9 2.Stylized factors of industrialization in Brazil compared to Thailand Table 1 Growth rates of GDP and related variables for Brazil and Thailand, annual averages ( ) Source: GDF, World Bank and IMF/IFS.

10 2.Stylized factors of industrialization in Brazil compared to Thailand Table 2 Investment Rate of the economy and Exports Coefficient ( ) Source: IMF/IFS.

11 3.Rural-Urban Evolution in Brazilian Late Industrialization compared to Thailand s s Experience Table 3 Urbanization Ratio Source: Bielschowsky and Mussi, Table 4 Poverty Levels Source: WDI.

12 3.Rural-Urban Evolution in Brazilian Late Industrialization compared to Thailand s s Experience Figure 2 Gini Index (Brazilian Case) Gini Index - Brazil 50 Figure 3 Gini Index (Thai Case) Source: WDI Gini Index - Thailand

13 3.Rural-Urban Evolution in Brazilian Late Industrialization compared to Thailand s s Experience Table 5 Labor Productivity ( ) Note: * Sectoral Work Productivity in Thailand (1961=100); Source: UNIDO/UM for Thai datas; Bonelli (2005) for Brazilian datas.

14 80% 70% 60% 50% 3.Rural-Urban Evolution in Brazilian Late Industrialization compared to Thailand s s Experience Figure 3 Sectoral Composition of Occupation 40% 30% 20% 10% 0% BRAZIL 80% 70% THAILAND 60% 50% 40% Agriculture Industry Services 30% 20% 10% Source: ILO. 0%

15 3.Rural-Urban Evolution in Brazilian Late Industrialization compared to Thailand s s Experience Table 8 Sector Composition of Real GDP, % of real GDP ( ) Source: WDI.

16 4.Concluding Remarks - Brazilian experience of late industrialization shows that urban-rural rural linkages are quite different from other experiences of emerging economies in East Asia. - The main finding of our study: the markedly differences between Brazil and Thailand regarding the working of the subsistence agriculture to the industrialization process. - Thus, the two countries have undergone diverging rural- urban linkages. - Urbanization ratios are strikingly different: 81% in Brazil against 48% in Thailand.

17 4.Concluding Remarks - Brazilian experience: spontaneous industrialization was quite relevant. - Brazilian state-oriented industrialization: enormous labor contingent of rural-urban urban immigrants agglomerated in low-productivity services (disguised unemployment). - Low-productivity activities are still predominant in service activities linked to poor urban development: urban poverty level 17.5% but large relative to poor number. - In contrast, international competitive agribusiness based on large-scale farming substantial part of the domestic industry; remaining rural population: very poor (rural poverty level 51.4% despite small numerically).

18 4.Concluding Remarks -The path of rural-urban urban linkages under Thai industrialization is quite different from the Brazilian path. - Nowadays 50% of Thai population still lives in rural areas against less than 20% of Brazilians. - It reflects that urban-industrial demand to rural workforce was relatively weak along the Thai industrialization. - Accordingly, Thai dual productivity levels among agriculture and urban-industrial activities and within agriculture still remain after import-substitution industrialization. - Thai structural dualism: 1) a safe-guard to avoid uncontrolled urbanization; 2) an obstacle to the development of industry- agriculture linkages.

19 4.Concluding Remarks - As a result, the majority of Thai poverty is concentrated in rural areas in contrast to the Brazilian case. - However, Thai rural poverty levels are low (14.3%) compared to Brazilian levels (51.4%). - And Thai urban poverty: lower relative to urban population and relative to absolute number of poor. - Sharp decrease in poverty levels in Thailand recently: more related to income policies towards rural population than to production policies to improve agricultural productive capacity.