California Western School of Law

Evrard, John T.

English

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Shinaver, Gary M.

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Penfold, John H.

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Edwards, W. David

Legal and Economic Considerations on Doing Business in the People\u27s Republic of China

Sayre, Robert M.

CONTINUITY AND CHANGE IN BRAZIL: A
CHALLENGE FOR AMERICAN FOREIGN
POLICY
ROBERT M. SAYRE*
In the past two decades, Brazil has slipped quietly into the
ranks of the big ten industrial powers in the world. This event has
not been the subject of headlines in the United States because our
antenna is set on an east-west axis and our communication system,
including the media, generally records events only as far south as
Panama. The Brazilians consider it compatible with their policy
that they continue to be thought of as a less developed country and
indeed in some ways it is. Consequently, Brazil does not advertise
its new economic power. Those responsible for defining policy for
the United States, however, must look beyond the headlines and
consider the implications of this already apparent major shift in
economic strength.
Actually it should not be a surprise that the shift has been
overlooked. Neither public nor private researchers in the United
States seem to have seriously looked at the political and economic
realignments that are taking place because of Brazil's new status. It
was considerably difficult to obtain specific data to document Bra-
zil's dramatic rise since 1960 and compare those changes with other
countries in order to determine what this may mean in the years
ahead for the foreign policy of the United States, Brazil and other
countries in South America.
I. BRAZILIAN GROWTH
Brazil has been the fastest growing country in Latin America
in the past two decades. The Brazilian economy grew at the rate of
over 6 percent in the 1960s and then jumped to almost 9 percent in
the 1970s.' Brazilian production more than quadrupled in the
twenty-year period while other countries such as Colombia, Vene-
* A career Foreign Service Officer who has held ambassadorial posts in Brazil, Uru-
quay and Panama.
1. 1980-1981 INTER-AMERICAN DEVELOPMENT BANK; ECONOMIC AND SOCIAL PRO-
GRESS IN LATIN AMERICA REPORT at 185.
1
Sayre: Continuity and Change in Brazil: A Challenge for American Foreign
Published by CWSL Scholarly Commons,
CALIFORNIA WESTERN INTERNATIONAL LAW JOURNAL
zuela and Mexico were tripling and Argentina was only doubling.
Brazilian foreign trade increased fifteen times and Brazilian manu-
factured exports increased almost twelve times while Latin America
in general was increasing such exports only 5 1/2 times.
Likewise, the nature of the Brazilian economy has changed.
Brazil has shifted from being an agrarian economy to one based on
industry and services. Petroleum imports doubled from 18 to 36
percent of total imports from 1960 to 1980, while capital goods im-
ports were cut in half from 38 percent to 19 percent. Nothing quite
dramatizes the change in the internal economy as the figures on
coffee. In 1960 almost 60 percent of Brazil's exports was coffee; but
by 1980 coffee had dropped to about 12 percent and has been sur-
passed by soybeans.
While Brazil has made spectacular advances on the economic
side, it has not done as well on the social side. The Brazilian liter-
acy rate dropped from being eighteenth out of twenty-four Latin
American countries in 1960 to sixteenth in 1980, according to Eco-
nomic Commission for Latin America (ECLA) data. It remained
fifteenth in Latin America in life expectancy although it improved
qualitatively from a life expectancy of fifty-six years to sixty-two
years. In 1980, it was ranked thirteenth and nineteenth respectively
with regard to the percentage of its population which had a supply
of drinking water and provisions for sewerage services. During this
same period, Brazil's population increased by 170 percent from 71
million to 121.2 million.2 Its population continues to grow at the
rate of 2.4 percent annually.3
II. POLITICAL AND SOCIAL IMPACT OF GROWTH
The statistics are quantitative but the change in Brazil has
been so overwhelming that it is qualitative. Brazil is not just an-
other country, which is a fact not really understood in the United
States. Brazil has one-third of Latin America's population and pro-
duces over one-third of its goods and services. 4 The Brazilian econ-
omy is presently three times that of Argentina whereas it was only
1.4 times larger in 1960. It has the largest economy in the so-called
2. See BUREAU OF PUBLIC AFFAIRS, U.S. DEP'T OF STATE, BACKGROUND NOTES ON
BRAZIL 1 (Sept. 1981) wherein the figures indicate that in 1971, the population was assesed at
119 million. The 119 million population figure refers to that part of the population classified
as "resident." [hereinafter cited as BACKGROUND NOTES].
3. 1980-1981 INTER-AMERICAN DEVELOPMENT BANK; ECONOMIC AND SOCIAL PRO-
GRESS IN LATIN AMERICA REPORT at 184.
4. Id at 145, 184.
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CONTINUITY AND CHANGE IN BRAZIL
third world. For the first time in its history, Brazil now has more
trade with its Latin American neighbors than with the United
States.
One could cite other facts, but that would merely serve to aug-
ment what is already clear. Economic weight carries with it polit-
ical weight. For example, consider the United States in the world,
the Federal Republic of Germany in Western Europe and Japan in
the Pacific. Yet, Brazil's political leadership has chosen not to exert
this tremendous economic strength. In fact, it has vigorously as-
serted that it does not want to exercise leadership. But the fact re-
mains that the balance has shifted and the political and economic
power is there. The world and the United States as the leader of
the West have a tremendous stake in Brazil's current efforts to
achieve a genuine political opening that assures Brazilian citizens
effective participation in the decisions that affect their future.
Brazil has historically been a force for peace and moderation,
and a guardian of western values. Its growing strength should be
welcomed as added support for the ideals of liberty and democracy.
It was not, for example, just chance that political events in Brazil in
1967-1969 helped set the tone for political events in Latin America
during the late 1960s and 1970s.5 Nor was it happenstance that the
Brazilian decision in 1974 to return to an open political system with
free elections echoed in other countries on the South American
continent. It would not be correct to deduce from this that as Brazil
goes, so goes South America, but events in Brazil certainly have an
influence. Its influence in political terms extends beyond the hemi-
sphere and may be seen especially in Africa. Brazil has the capabil-
ity in the United Nations and by other means to make positive
contributions to the resolution of issues in Africa today and in the
future.
III. DECENTRALIZATION
While the United States is interested primarily in the external
effects of Brazilian developments, these rapid changes obviously
have a major internal impact on how Brazil will manage its polit-
ical, economic and social structure. How Brazil decides these issues
5. See BACKGROUND NOTES, supra note 2. During the 1950s and 1960s, Brazil at-
tempted to create a reform-oriented constitutional democracy. However, Brazil's civil poli-
tics were brought to an abrupt halt by a military coup in 1964. Since then, the military has
governed the country, using authoritarian methods and modern techniques of economic
management. Since 1977, Brazil has tried to return to the path of democratization.
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Sayre: Continuity and Change in Brazil: A Challenge for American Foreign
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CALIFORNIA WESTERN INTERNATIONAL LAW JOURNAL
will certainly have additional effects on Brazil's neighbors, includ-
ing the United States.
Economic growth of over 400 percent in twenty years has pro-
duced significant managerial problems. Brazil is a country stretch-
ing along the Atlantic seaboard from Belem near the mouth of the
Amazon River to Porto Alegre and the border with Uruguay. Until
recently, the overwhelming part of Brazil's population lived within
one hundred kilometers of the sea coast. However, this is rapidly
changing in many ways as a conscious policy. The move of the
capital to Brasilia is the most evident feature of that policy.6 Simi-
larly, the fastest growing area in Brazil is now Rondonia, bordering
on the Andes.
Brazil has also made the political decision to make the states
an effective part of the political process and an important partner in
the federal-state relationship.7 The massive growth in the economy
and the requirement for public services have rendered impractical
centralized decision-making on every detail. The political decision
will be carried out through the popular election of governors in
1982. The major political changes that the decision implies will
take some years to work out, but the effects will become evident as
early as 1984 when Brazil selects a new President.
As a part of the decision on changing the political process, the
Brazilian President created a Ministry of Debureaucratization. 8
We would probably call it deregulation, but that would miss the
point. The Brazilian Government is attempting nothing less than
to change cultural attitudes inherited from Portugal and others
about the "patron" system and the view that every event has to be
recorded on paper and kept in multiple copies.
Brazil also seeks to have genuine national political parties.
One of the chronic problems is the political groupings. It is not
unheard of to have as many as a dozen political parties in a Latin
American country, or to have what appears to be two or three par-
ties but in reality is an umbrella for numerous legally recognized
factions.9 Brazil seeks to curb this political factionalism and force
the creation of national parties by requiring that parties have an
6. BACKGROUND NOTES, supra note 2, at i.
7. Id. at 5.
8. Id.
9. See BACKGROUND NOTES, supra note 2. Five parties are in the process of establish-
ing themselves under the party reorganization law: (I) Social Democratic Party (PDS);
(2) Party of the Brazilian Democratic Movement (PMDB); (3) Popular Party; (4) Workers
Party (PT); (5) Brazilian Labor Party (PTB).
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CONTINUITY AND CHANGE IN BRAZIL
organized base in nine of its twenty-two states. In addition, it
would require that these parties obtain at least 3 percent of the vote
in each of the nine states in a general election. The penalty for
failure to organize a geographically broad-based party is to be re-
moved from the ballot.
Brazil has serious distortions in regional growth which has en-
couraged mass migrations of population, costly problems in the
provision of urban services in the cities which receive the migrants,
and a host of other concerns. Although all Brazilians have bene-
fited from the economic growth of the past two decades, the fact
remains that wealth is more concentrated at the upper end of the
scale now than it was in 1960.10 Thus, Brazil has been confronted
in this new phase of its political and economic development with
the kind of issue the United States faced in the early 1930s: how to
improve the regional distribution of income and to reverse the
trend toward concentration of wealth evident over the past two
decades.
Moreover, Brazil has been faced with problems concerning the
education of its citizens. Despite major efforts to improve educa-
tion, Brazil has been unable to accommodate the rapid increase in
school-age population. Brazilians generally recognize that contin-
ued rapid economic growth depends on the availability of trained
manpower. Indeed, the limited availability of Brazilians with a pri-
mary and secondary education is a major obstacle to further rapid
economic growth. At the same time, the oversupply of university-
trained Brazilians is a source of social and political tension.
This type of problem in education is not unique to Brazil. If
one considers the history of the United States, only 10 percent of
eligible school-age children were in secondary schools in 1900. As
we moved from an agrarian-based society into a more sophisticated
industrial society which required skilled technicians and managers,
we found primary education was not enough. The explosion in
technology in the late 1800s and 1900s forced the United States to
reassess its educational structure and develop a broad-based secon-
dary educational system. The allocation of a greater share of re-
sources to primary and secondary education has become crucial if
Brazil is to develop over the next twenty years as it has over the
past two decades.
Another major issue concerning Brazil is the management of
10. World Tables, 1976, from the data files of the World Bank at 517 (Washington D.C.
1976).
5
Sayre: Continuity and Change in Brazil: A Challenge for American Foreign
Published by CWSL Scholarly Commons,
CALIFORNIA WESTERN INTERNATIONAL LAW JOURNAL
its economy. It has recently reiterated its determination to develop
its economy on the basis of private enterprise and the government
is considering how it can divest itself of certain companies that can
more effectively be managed in the private sector. According to a
recent survey of nonfinancial enterprises in Brazil, private Brazilian
companies control 87 percent of the firms, provide over 65 percent
of the employment, possess over 53 percent of the sales and are
comprised of greater than 38 percent of the net worth. The govern-
ment is dominant in public utilities with almost a monopoly in this
sector and in many basic services. This dominance means that the
federal government owns twenty-four of the largest twenty-five
companies and accounts for about half of the net worth of the 7,535
firms surveyed. Multinationals are a distant third in the non-
financial sector with an important role only in the manufacturing
sector where they account for about 25 percent of the total employ-
ment and net worth, and one-third of the sales. In the financial
sector, state and private Brazilian banks are dominant with private
foreign banks having only a minor share.
Brazilian private companies are generally family owned which
tends to restrict their ability to raise capital and therefore the
growth of the private sector and the economy. Thus, the private
sector also faces a decision on broader-based participation.
IV. THE CHALLENGE OF CHANGE
Brazil's growth over the past twenty years has thus brought it
to the point of decision on a number of highly significant issues:
(1) how to distribute power between the federal government and
state municipal governments; (2) how to organize a political process
that is national in scope and permits meaningful participation by
the citizen and political parties; (3) how to establish policies that
will result in more equitable distribution of resources both region-
ally and individually; (4) how to allocate resources and manage an
education system that provides adequately trained manpower to as-
sure a strong and expanding economy; (5) how to strengthen the
private sector so that it will be the engine of growth and have a
structure capable of raising the immense amounts of capital
needed; and, (6) how to manage its relations with other countries in
a way that will be supportive of this monumental task of internal
development.
It is not pretended that the foregoing agenda is exhaustive.
But it is easy to see even from this list that it is an exciting time to
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CONTINUITY AND CHANGE IN BRAZIL
be in Brazil. Obviously, how Brazil handles these issues is exceed-
ingly important to the United States. If Brazil can make the adjust-
ments which are required because of its success since World War II,
and can continue to progress for the next two decades at the rate it
has for the past two, it will be the fifth or sixth largest economy in
the world by the year 2000.11
Stated another way, Brazil is one of the four continental-sized
powers in the world; the others being the United States, the Soviet
Union, and China. Also, Brazil is an offspring of Western Europe
as is the United States. Consequently, it is a custodian of western
civilization and political thought that stresses individual freedom,
social justice and individual initiative. Moreover, Brazil is similar
to the United States in that it seeks to develop its natural and
human resources and to give its people the freedom to be creative,
try new approaches, and hopefully succeed.
V. CONCLUSION
The United States and Brazil have traditionally been allies.
We share in common many interests and ideals. That is the con-
stant. But if there is anything clear, one of the constants is also
change. The changes in Brazil have been especially dramatic. A
challenge for the United States is to recognize that change and to
build with Brazil a new and strong alliance that will serve our mu-
tual interests as we move into the twenty-first century.
11. BACKGROUND NOTES, supra note 2, at 5. Brazil has the tenth largest economy in
the world and is expected to surpass Italy before the end of the twentieth century.
7
Sayre: Continuity and Change in Brazil: A Challenge for American Foreign
Published by CWSL Scholarly Commons,


Continuity and Change in Brazil: A Challenge for American Foreign Policy

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Perey, Ron J.

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