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San José State University
Department of Economics |
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applet-magic.com Thayer Watkins Silicon Valley & Tornado Alley USA |
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Brazil's economic history, as least up until recent times, has been characterized by a pattern of booms and busts; i.e.,
Most of the prosperity of the sugar boom went for imported luxuries for the
plantation owners. One element of the ostentatiousness of the wealthy
was that they shipped their dirty laundry to Portugal rather than having it
done locally. Thus the wealth of the sugar industry was concentrated in
the hands of the elite and very little spread to the rest of the economy.
After the end of slavery the seasonality of sugar growing and processing
created special problems. The large labor force that was necessary to plant
and harvest the sugar cane was largely idle and destitute through much of
the year. Sugar cane growing also required the land to be left fallow
at frequent intervals. Thus in the sugar cane areas there was a great deal
of idle resources.
Even during the sugar boom there were very limit effects on the local
economy. The Portuguese discouraged the development of local industry that
would compete with enterprises in Portugal. Thus the prosperity of the
sugar industry did not spread throughout the economy.
These gold rushes were the classic examples of boom and bust. Often the
the intial development was in the form of small scale panning operations.
The winners would take their fortunes out of the area. Usually their prosperity
did not spread in the local economy because the gold rushes were in isolated
areas where the only people there were garimpieros. Even if entrepreneurs
had been present they would have been reluctant to invest capital in an
area that could not sustain economic activity for very long. Thus there were
no "spread effects" from the gold rush.
There came a bust to the coffee boom as a result of the glut on the
market resulting from the headlong expansion of coffee plantations. But this
was a different problem from the busts to the gold booms resulting from the
exhaustion of the deposits. This came, at least in part, from the four years
between the planting of a coffee tree and its production of coffee beans.
Planters typically based there planting decisions on past prices and these
were sadly out of date when new production came onto the market.
Rubber trees are native to the Amazon Region and the native peoples long ago
discovered the unique properties of rubber. They collected latex from the
trees and converted it into solid rubber over open fires. When the outside
world discovered numerous uses for this product, especially after Charles
Goodyear developed vulcanization to improve rubber's property, there was
a boom in the Amazon region. Individuals who secured the right to collect
the latex from large sections of the Amazon rain forest became fabulously
rich. The latex was actually collected by hordes of serengeiros (rubber tappers).
But during the rubber boom all benefited from the high price of natural rubber.
Some who became rich in the rubber boom built an opera house in Manaus,
deep in the interior of the Amazon Basin to provide a place for the opera
greats of that day to come to sing. It was a tremendously expensive
indulgence of the rubber barons' love for opera.
But the rubber boom eventually ended. The high price of rubber stimulated
the search for alternative sources of rubber. A British citizen smuggled
seeds of the rubber tree out of Brazil and they were taken to Southeast
Asia where they were planted. In Southeast Asia where rubber trees have no
natural enemies they can be grown in plantations, thus reducing the cost of
collecting the latex. In Brazil all of the rubber trees in a plantation
would be destroyed by the common plant diseases and insects indigineous to
the area. But even if the rubber tree seeds had not been smuggled out of
Brazil the boom would have ended eventually because of the incentive the
high price of rubber provided; e.g., through the development of synthetic rubber.
Gold
There has been a sequence of gold booms in Brazil. The first came in 1698
in Minas Gerais, followed 21 years later in 1719 by another in Mato Grosso
and then another six years later in 1725 in Goias. In recent decades there
was the gold deposit at Serra Pelada worked by thousands of gold prospectors
(garimpieros) in the Carajas Region.
Coffee
Coffee growing developed in Brazil in the nineteenth century becoming important
only in the latter half of that century. The coffee industry was centered
around São Paulo in the south. Coffee growing did produce local effects
and São Paulo went on to become one of the largest metropolitan areas in the world,
exceded in population only by Tokyo and Mexico City. Immigrant labor from
Europe supplied much of the manpower needed.
Rubber
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