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Students must discuss also the following:
High Technology.-HOW EUROPE CAN FIGHT THE MULTINATIONALS
by Michael Butler (The Financial Times, 05/01/1986)
IMPACT OF THE 115 LARGEST TRANSNATIONAL CORPORATIONS ON BRAZIL'S
BALANCE OF PAYMENTS, 1974
THE TRANSNATIONAL CORPORATE SYSTEM by Osvaldo Sunkel
------------------------------------------------------------------
loose notes:
Historical Introduction: Brazil as a Portuguese colony until
mid-nineteenth century
( brief.- to explain the
formation of a very powerful rural oligarchy
around the rich owners of coffee plantations,
and how this economic situation originated a
vertical society, ruled by very few very rich
people linked to the international economy.
And how this society created large pockets of
poverty...feature common to the rest of the
South American economies (notoriously Peru,
Bolivia, Chile, Argentina, Uruguay and Paraguay)
------------------------------------------------
Origins of the modern Brazilian economy from
the 1930s to the politico-economic crisis
of 1962-1973
- 1930 The collapse of the international coffee market and
the Brazilian crisis leading to a revolution led by
Getulio Vargas.
- 1937 Getulio Vargas dictatorship as an alliance between
the weak urban bourgeoisie and the powerful rural
oligarchy
- Led by Getulio Vargas the industrial bourgeoisie emerges
as the most influential class in government
- The creation of a powerful state to control the rural
oligarchy and the popular movement
- The "new state"( Estado Novo): undisputed rule by the the
executive power in economic matters
- The external factors: the crisis of the industrialised
economies in the 1930s and in the Second World War
- 1956-1961 Kubitschek "plan of targets": extremely liberal
policies regarding foreign capital.
- Foreign capital concentrated on large industrial
enterprises, especially: motor vehicles, shipbuilding,
engineering, heavy electrical equipment, and steel
industries.
- 1962-1964 Popular movements attempt political struggles
against the new industrial oligarchy and against U.S.
economic and political imperialism.
- The external factors: U.S. foreign policy during the
Cold War and its political dominance of Latin American
governments
- 1964 The military coup staged in Washington and the
beginning of the Brazilian economic model: "economic
miracle".
------------------------------------------------------
-- the Brazilian model: a triple alliance between
TNCs, Brazilian monopoly capital and the State.
- The autonomy of the model regarding the international
economy
- The economic role of the state (and its political form
as a savage dictatorship)
- The economic role of transnational corporations and
its effect on balance of payments
- The economic role of the Brazilian industrial capital
- Income concentration, the State and industrialisation
- The expansion of the TNCs in the most advanced sectors
- The pattern of industrialisation as shaped by
international forces in the world market
- The social effects of the triple alliance: extreme
poverty and extreme wealth.
- The creation of two societies in one country: the majority
living in an underdeveloped economy and the minority
in a developed economy
----------------------------------------------------
-- The economic miracle: the economic engine
of the Brazilian model.
(here write four or five subheadings in
relation to the "miracle" from 1968 to 1980, and then
to the period of stagnation, which will end up with
a return to democratic rule. Make clear that the whole
of the economic miracle, and the best part of the
period of stagnation was under the rule of the
military)
-----------------------------------------------------------------
About the Brazilian model (notes):
neo-monetarism became the fashion from the mid 1970s
onwards (otherwise known as neo-liberal approach)
In Latin America, the new pioneering development
path by Brazil after 1964
based upon a triple alliance: state capital, transnational
corporations and local bourgoisie
this model received several "labels":
bureaucratic authoritarianism
savage capitalism
sub-imperialism
state capitalism
Brazilian miracle
the model combined orthodox monetary policies,
decisive state intervention, and
widespread political intervention
foreign investment was encouraged
public corporations were given a key role in the
economy
new growth was achieved NOT via democratization
of society, BUT by an authoritarian military
regime
(ECLA's assumption was proven wrong: that
industrialisation,
with its concomitant growth of the middle class and
skilled labour force, would enhance the
DEMOCRATIZATION OF SOCIETY, and that these two processes
were mutually reinforcing)
the model, by following an INCOME CONCENTRATION WITH
GROWTH STRATEGY, Brazilian generals overturned the
structuralist's DISTRIBUTION-WITH-GROWTH strategy
and the STAGNATIONIST thesis:
Instead of WIDENING OF INTERNAL MARKET through
INCOME REDISTRIBUTION and AGRARIAN REFORM
the military government's policy was based on
FURTHER INCOME CONCENTRATION
LAND CONCENTRATION
PROLETARIZATION OF THE PEASANTRY
thus, a case of capital accumulation combining
a DRASTIC PROCESS OF PRIMITIVE ACCUMULATION with
REMARKABLE INCREASES IN PRODUCTIVITY
most (if not all) the increases in labour
productivity WERE APPROPRIATED BY CAPITALISTS
(and were not transformed in higher wages)
and, most importantly, the model did not abandon
import-substitution industrialisation, BUT added
a VIGOROUS EXPORT DRIVE IN MANUFACTURES
Growth and persistent poverty are one of the dominant
features of the Brazilian model
The "unprivileged half" of the Brazilian population
has never been so unprivileged. The majority of those
with relatively stable jobs earn less today (in the late
1980s) than they did in 1964.
-----------------------------------------------------------------
.... useful aditional bibliography:
Stepan. A. (ed.), AUTHORITARIAN BRAZIL, Yale
University P., 1977
BAER W. (1987),
THE RESURGENCE OF INFLATION IN BRAZIL, 1974-1986, in "
WORLD DEVELOPMENT, VOL. 15, NO. 8, 1987, PP. 1007-1034
PERGAMON
BAER W. DA FONSECA M. GUILHOTO J (1987),
STRUCTURAL CHANGES IN BRAZIL'S INDUSTRIAL ECONOMY, 1960-80, in
" WORLD DEVELOPMENT, VOL. 15, NO. 2, 1987, PP. 275-286", PERGAMON
PRESS
BRUNEAU T. (1985),
CHURCH AND POLITICS IN BRAZIL: THE GENESIS OF CHANGE, in J.
OF L. STUDIES, VOL. 17, PART 2, NOVEMBER 1985, PP. 271-293
CHACEL J. M. (1985),
BRAZIL'S FOREIGN DEBT: THE NATIONAL DEBATE, in "
LATIN AMERICA AND THE WORLD RECESSION, DURAN E.", CAMBRIDGE
UNIVERSITY PRESS
DIMBLEBY J. (1979), Brazil's 'miracle' crushes the poor, in THE
OBSERVER, 3 JUNE 1979, P. 8", THE OBSERVER
ECLA (1983), RECENT ECONOMIC TRENDS IN BRAZIL [1983], in
ECONOMIC SURVEY OF LATIN AMERICA, 1983, PP. 129-178", UNITED
NATIONS
FEARNSIDE P.M. (1986),
AGRICULTURAL PLANS FOR BRAZIL'S GRANDE CARAJAS PROGRAM: LOST
OPPORTUNITY FOR SUSTAINABLE LOCAL DEVELOPMENT?, in
WORLD DEVELOPMENT, VOL. 14, NO. 3, PP. 385-409, 1986, PERGAMON
PRESS
FISHLOW A. (1976), Brazilian size distribution of income, in
INCOME DISTRIBUTION IN LATIN AMERICA A. FOXLEY (ED), PP. 59-75,
CAMBRIDGE UNIVERSITY PRESS
Foxley A. (1980),
Stabilization policies and stagflation: the cases of Brazil and
Chile, in World Development, vol.8, 1980, pp. 887-912",
Pergamon Press
HEWITT T. (1992), BRAZILIAN INDUSTRIALIZATION, in
INDUSTRIALIZATION AND DEVELOPMENT HEWITT T. JOHNSON H. WIELD D.
(ED.) PP. 66-96, OXFORD UNIVERSITY PRESS
RODGERS P. (1987), BANKERS SEE THE UPSIDE OF BRAZIL, in
THE GUARDIAN FRIDAY, MARCH 6 1987 P. 31", THE GUARDIAN
ROJAS R. (1965), TABLES US DIRECT INVESTMENT AND TRANSFER OF
PROFITS [1950-1961], in UNITED STATES IN BRAZIL, ROJAS R.,
PRENSA LATINOAMERICANA
ROJAS R. (1965), TABLES US DIRECT INVESTMENT AND TRANSFER OF
PROFITS [1947-1960] , in UNITED STATES IN BRAZIL, ROJAS R. [28],
PRENSA LATINOAMERICANA
TEUBAL M. (1984), THE ROLE OF TECHNOLOGICAL LEARNING IN THE
EXPORTS OF MANUFACTURED GOODS: THE CASE OF SELECTED CAPITAL GOODS
IN BRAZIL, in WORLD DEVELOPMENT, VOL. 12, NO. 8, PP. 849-865,
1984, PERGAMON PRESS
THOMAS V. (1987), DIFFERENCES IN INCOME AND POVERTY IN BRAZIL,
in " WORLD DEVELOPMENT VOL. 15 NO. 2 PP. 263-273, 1987",
PERGAMON JOURNALS LTD.
TINNIN D.B. (1983), THE WAR AMONG BRAZIL'S BANKERS, in "
FORTUNE, JULY 11, 1983, PP. 50-55", FORTUNE
WELCH J.H. PRIMO BRAGA C.A. DE A (1987),
BRAZILIAN PUBLIC SECTOR DISEQUILIBRIUM, in WORLD DEVELOPMENT,
VOL. 15, NO. 8, 1987, PP. 1045-1052, PERGAMON
WILLMORE L.N. (1986), THE COMPARATIVE PERFORMANCE OF FOREIGN AND
DOMESTIC FIRMS IN BRAZIL, in WORLD DEVELOPMENT, VOL. 14, NO. 4,
PP. 489-502, 1986, PERGAMON PRESS
Regis de Castro Andrade, BRAZIL: THE ECONOMICS OF SAVAGE
CAPITALISM, included in M. Bienefeld and M. Godfrey,
THE STRUGGLE FOR DEVELOPMENT. NATIONAL STRATEGIES
IN AN INTERNATIONAL CONTEXT, John Wiley, 198
-----------------------------------------------------------------
MILITARY EXPENDITURE MILITARY POPU- MILITARY
YEAR 1988 EXPEND. GNP GNP EXPEND. LATION EXPEND.
AS % OF US$ PER US$ (mill.) PER
GNP (mill.) CAPITA (mill.) CAPITA
VENEZUELA 3.60 59390 3170 2138.0 18.74 114
PERU 4.90 29185 1440 1430.1 20.27 71
ARGENTINA 1.40 83040 2640 1162.6 31.45 37
BRAZIL 0.30 328860 2280 986.6 144.24 7
CHILE 4.00 19220 1510 768.8 12.73 60
COLOMBIA 1.10 37210 1240 409.3 30.01 14
ECUADOR 2.60 10920 1080 283.9 10.11 28
URUGUAY 2.50 7430 2470 185.8 3.01 62
BOLIVIA 3.00 3930 570 117.9 6.89 17
PARAGUAY 1.00 4780 1180 47.8 4.05 12
SURINAME 3.40 1050 2450 35.7 0.43 83
GUYANA 9.30 327 410 30.4 0.80 38
SOUTH AMERICA 1.30 585342 2070 7596.8 282.72 27
AGRICULTURAL Population Agr. land: hec. per Agr. Land
LAND (mill.) (% of total) capita (thou. sq km)
Latin America 1965 1991 1965 1991 1965 1991 1965 1991
HONDURAS 2.3 5.3 32.1 39.0 1.57 0.83 36.0 43.7
JAMAICA 1.8 2.4 45.1 42.4 0.28 0.20 5.0 4.7
BOLIVIA 3.8 7.3 27.4 27.8 7.84 4.16 301.1 305.5
GUYANA 0.6 0.8 6.9 8.8 2.30 2.36 14.8 18.9
BRAZIL 84.0 151.0 21.2 29.4 2.15 1.66 1804.5 2502.5
FRENCH GUIANA 0.0 0.1 0.1 0.2 0.22 0.22 0.1 0.2
Labour Force, AGE GROUPS Lab/F % of Distribution GDP
Productivity, (percent.) as %of L/Force in of GDP(%) p/head
Data for 1990 <15 15-65 >65 15-65 agr. ind.srv. agr.ind.srv. US$
Argentina 28 62 10 58 13 34 53 14 33 54 2886
Bolivia 44 53 3 59 46 20 34 24 27 49 613
Chile 30 63 6 57 17 25 58 9 37 55 2110
Colombia 34 62 4 51 34 24 42 17 36 47 1247
Ecuador 38 58 4 53 39 20 41 16 31 53 1027
Guyana 32 64 4 75 27 26 47 25 31 44 310
Paraguay 40 57 4 58 49 21 30 30 22 48 1229
Peru 36 60 4 55 40 18 42 8 31 62 1696
Suriname 34 62 5 52 20 20 60 11 26 63 3129
Uruguay 24 63 12 62 16 29 55 11 28 61 2660
Venezuela 37 59 4 59 16 28 56 6 46 48 2445
SOUTH AMERICA 34 61 6 56 27 26 48 12 35 53 1897
Brazil 34 61 5 60 31 27 42 9 43 49 2754
Labour Force, AGE GROUPS Lab/F % of Distribution GDP
Productivity, (percent.) as %of L/Force in of GDP(%) p/head
Data for 1990 <15 15-65 >65 15-65 agr. ind.srv. agr.ind.srv. US$
EASTERN EUROPE 21 67 12 98 22 44 35 12 60 28 3146
MIDDLE EAST 43 53 4 53 34 27 39 12 36 52 2923
Brazil 34 61 5 60 31 27 42 9 43 49 2754
Mexico 35 61 4 57 37 29 34 8 32 60 2683
South Africa 37 59 4 60 17 35 48 6 44 50 2571
SOUTH AMERICA 34 61 6 56 27 26 48 12 35 53 1897
THE CARIBBEAN 32 62 6 66 40 20 40 14 43 43 1460
NORTH AFRICA 39 57 4 48 41 24 34 14 37 48 1169
CENTRAL AMERICA 42 54 4 60 48 18 34 20 25 55 995
EASTASIA PCF.1 29 66 6 83 70 14 16 23 41 36 590
S-S WEST AFRICA 47 50 3 78 71 10 19 32 33 35 428
SOUTH ASIA 38 58 4 62 69 12 18 32 27 41 285
S-S E&S. AFRICA 47 50 3 82 80 8 13 31 28 42 266
Labour Force, % of Value Added V/Added p/sector
Productivity, L/Force in per worker(US$) % of world total
Data for 1990 agr. ind.srv. AGR. IND. SRV. AGR. IND. SRV.
Argentina 13 34 53 8573 7767 8152 0.81 0.38 0.40
Bolivia 46 20 34 1024 2649 2828 0.07 0.01 0.02
Chile 17 25 58 2992 8536 5524 0.15 0.12 0.12
Colombia 34 24 42 1955 6000 4408 0.44 0.18 0.15
Ecuador 39 20 41 1358 5131 4279 0.11 0.04 0.05
Guyana 27 26 47 588 777 610 0.00 0.00 0.00
Paraguay 49 21 30 2246 3979 5981 0.10 0.01 0.02
Peru 40 18 42 973 8676 7547 0.18 0.14 0.18
Suriname 20 20 60 5353 12556 10269 0.01 0.00 0.01
Uruguay 16 29 55 4563 6573 7497 0.06 0.03 0.04
Venezuela 16 28 56 2683 11510 6044 0.19 0.27 0.18
SOUTH AMERICA 27 26 48 2539 7663 6225 2.11 1.20 1.17
Brazil 31 27 42 2088 11956 8689 2.25 2.19 1.60
Labour Force, % of Value Added V/Added p/sector
Productivity, L/Force in per worker(US$) % of world total
Data for 1990 agr. ind.srv. AGR. IND. SRV. AGR. IND. SRV.
EASTERN EUROPE 22 44 35 2624 6637 3930 3.29 3.26 0.98
MIDDLE EAST 34 27 39 3724 14006 14565 2.85 1.66 1.57
Brazil 31 27 42 2088 11956 8689 2.25 2.19 1.60
Mexico 37 29 34 1686 8659 13716 1.20 0.94 1.13
South Africa 17 35 48 2489 9151 7646 0.33 0.49 0.36
SOUTH AMERICA 27 26 48 2539 7663 6225 2.11 1.20 1.17
THE CARIBBEAN 40 20 40 1221 7753 3818 0.36 0.22 0.14
NORTH AFRICA 41 24 34 1462 6536 5922 1.22 0.62 0.52
CENTRAL AMERICA 48 18 34 1269 4253 4971 0.37 0.09 0.13
EASTASIA PCF.1 70 14 16 350 3028 2373 13.89 4.81 2.68
S-S WEST AFRICA 71 10 19 490 3541 2053 1.90 0.37 0.26
SOUTH ASIA 69 12 18 372 1719 1764 6.71 1.08 1.06
S-S E&S. AFRICA 80 8 13 247 2373 2110 1.40 0.25 0.24
Labour Force, Lab/F Labour Force(000s) Urban POPULATION %inc
Population, (000s) agric. ind. serv. Pop.% (millions) p/yr
Data for 1990 1950 1990
Argentina 11548 1501 3926 6120 86 17.15 32.32 1.6
Bolivia 2283 1050 457 776 51 2.77 7.31 2.5
Chile 4753 808 1188 2757 86 6.08 13.17 2.0
Colombia 10394 3534 2495 4365 70 11.95 32.98 2.6
Ecuador 3287 1282 657 1348 56 3.31 10.59 3.0
Guyana 383 103 100 180 35 0.42 0.80 1.6
Paraguay 1410 691 296 423 48 1.35 4.28 2.9
Peru 7138 2855 1285 2998 70 7.63 21.55 2.6
Suriname 135 27 27 81 47 0.22 0.42 1.6
Uruguay 1216 195 353 669 86 2.24 3.09 0.8
Venezuela 6860 1098 1921 3842 91 5.01 19.74 3.5
SOUTH AMERICA 49407 13144 12704 23559 58.13 146.25 2.3
Brazil 55026 17058 14857 23111 75 53.44 150.37 2.6
Labour Force, Lab/F Labour Force(000s) Urban POPULATION %inc
Population, (000s) agric. ind. serv. Pop.% (millions) p/yr
Data for 1990 1950 1990
EASTERN EUROPE 91426 19815 39984 31518 106.08 140.23 0.7
MIDDLE EAST 36298 12070 9635 13595 37.8 129.21 3.1
Brazil 55026 17058 14857 23111 75 53.44 150.37 2.6
Mexico 30487 11280 8841 10366 73 28.01 88.6 2.9
South Africa 12434 2114 4352 5968 60 13.68 35.28 2.4
SOUTH AMERICA 49407 13144 12704 23559 58.13 146.25 2.3
THE CARIBBEAN 11663 4718 2296 4649 13.71 28.29 1.8
NORTH AFRICA 31887 13209 7688 10991 42.59 115.18 2.5
CENTRAL AMERICA 9459 4548 1693 3217 9.23 29.09 2.9
EASTASIA PCF.1 900859 626178 129032 142220 769.18 1654.52 1.9
S-S WEST AFRICA 85943 61312 8596 16035 73.11 218.24 2.8
SOUTH ASIA 411057 284411 51209 75437 464.4 1145.75 2.3
S-S E&S. AFRICA 112129 89320 8473 14336 92.24 272.63 2.7
DISTRIBUTION OF THE WORK FORCE (percent)
L. America & the Caribb. AGRICULTURE INDUSTRY SERVICES
YEAR Wage NWage Wage Nwage Wage NWage Income
Argentina 1980 6.4 5.7 23.6 7.9 41.6 14.9 middle
Bahamas, The 1980 3.3 2.4 13.2 3.3 71.3 6.6 high
Barbados 1982 8.6 1.5 9.1 1.8 71.1 8.0 middle
Bolivia 1991 0.5 0.7 15.2 9.6 34.1 39.9 middle
Brazil 1988 9.4 14.8 19.4 4.0 37.3 15.1 middle
Chile 1991 10.5 8.6 20.5 5.8 38.0 16.6 middle
Costa Rica 1991 14.5 10.5 20.0 6.9 36.3 11.7 middle
Cuba 1981 25.2 7.0 39.6 0.4 27.0 0.9 middle
Dominican Rep. 1981 4.6 19.0 14.1 4.0 36.4 21.9 middle
Ecuador . 1990 8.2 23.0 8.4 9.7 26.4 24.4 middle
El Salvador 1991 7.0 3.7 19.6 9.6 38.0 22.2 middle
Falkland Islands 1986 14.3 5.6 17.2 1.2 58.9 2.8 middle
NOTE: Income groups are from World Bank 1995
SOURCE: ILO, various years; country sources
--------------------------------------------------------------------
--------------------------------------------------------------------
INCOME DISTRIBUTION IN BRAZIL (families)
Quintiles 1960 1970 1980 1988 1990
Poorest 20% 3.4 3.2 3.1 2.4 2.1
Next 20% 8.1 6.8 6.5 5.6 4.9
Middle 20% 13.9 11.1 10.0 8.9 8.8
Next 20% 20.2 17.2 17.1 16.7 16.7
Richest 20% 54.4 61.7 63.3 66.4 67.5
--------------------------------------------------------------------
sources: Economic Survey of Latin America and the Caribbean,
various years.
--------------------------------------------------------------------
==BOX 4===============================================================
IMPACT OF THE 115 LARGEST TRANSNATIONAL CORPORATIONS ON BRAZIL'S
BALANCE OF PAYMENTS, 1974
(Millions of dollars) Top of Page
----------------------------------------------------------------
Share of
Brazil Transnational TNCs in
Account total corporations category(%)
----------------------------------------------------------------
Trade:
Exports 7,951 838 11
Imports 12,635 2,999 24
Balance -4,684 -2,162 46
Service:
Interest -637 -85 13
Profit and Dividend -248 -125 50
Other -1,578 -- --
Total -2,463 -251 10
Current transactions
balance -7,147 -2,413 34
Capital:
Net investment 887 45 5
Loans 7,370 614 9
Amortization -1,940 -63 3
Other -82 -- --
Total 6,235 596 10
Surplus or deficit -938 -1,817 194
----------------------------------------------------------------------
Source: United Nations Centre on Transnational Corporations,
"Transnational Corporations and International Trade: Selected
Issues", United Nations, New York, 1985, p. 17.
----------------------------------------------------------------------
Ibid., op. cit., page 33:
TRANSFER PRICING.- On a theoretical level there are a number of
factors which could influence the behaviour of prices in international
transactions. An important one is ownership. Transnational
corporations may use their superiorinformation on world markets and
possible market power to use transfer pricing practices designed to
maximize global profits or minimize the risk and uncertainty inherent
in foreign operations. The evidence from empirical studies,although
subject to substantial criticism, has generally supported the
conclusion that transnational corporations often engage in transfer
pricing to their advantage ( Vaitsos, C., "Inter-country income
distribution and transnational enterprises", Oxford, Clarendon Press,
1974, and, United Nations Conference on Trade and Development,
"Dominant positions of market power of transnational corporations: use
of the transfer pricing mechanism", United Nations, New York, 1978)
==================================================end BOX 4=====RROJAS
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