In January 2023, Luiz In谩cio “Lula” da Silva, leader of the Partido dos Trabalhadores (PT), began his third term as the president of Brazil, the largest economy in Latin America. The economic outlook is promising, with steady growth, controlled inflation, and declining unemployment rate. Despite challenges from a difficult Congress, Lula aimed to revive social and economic policies from his earlier terms (2002-2010). Simultaneously, he is pursuing an active international agenda focused on peace in the Middle East and Ukraine, environmental protection, and reforms in global governance. Brazil’s G20 presidency will conclude in November with a meeting in Rio de Janeiro that is expected to introduce new tax measures on billionaires and initiatives to boost environmental conservation. A Global Alliance Against Hunger will also be launched to tackle global issues.

This article explores the potential for necessary changes to meet Brazilian demands, concerns about the macroeconomic trajectory’s sustainability, and political tensions leading to the 2026 elections. The central argument is that Lula’s external strategy is closely tied to strengthening the internal disputes affected by neoliberal institutions. Success in this approach is vital not only for achieving structural improvements, but also for safeguarding the democratic regime, which faced threats just eight days after Lula took office.

FROM THE PLAN TO ECONOMIC REALITY

Lula’s first years in office have demonstrated promising economic results, surpassing market expectations with a growth rate of 2.9% in 2023 and a projected growth of around 3% in 2024, which is significantly higher than the anticipated 1%. This outpaced both Latin American and global growth averages. Key contributing factors include a substantial increase in exports driven by strong soybean and corn harvests and an increase in household consumption. The recovery of income transfer programs, an 8% increase in the minimum wage at the beginning of 2023, and a decline in unemployment stimulated this consumption. Additionally, successful negotiations in Congress allowed for extra spending, facilitating the resumption of the Bolsa Fam铆lia program鈥擫ula’s flagship social transfer initiative鈥攚hich further enhanced the purchasing power of many families.

Inflation has also declined, dropping from 9.3% in 2022 to 4.5% by mid-2024. This reduction can be attributed to the appreciation of the nominal exchange rate and strategic changes in Petrobras鈥檚 pricing policies, a state-owned oil company. A high reference interest rate, maintained between 10% and 13%, has attracted capital inflows, contributing to the nominal appreciation of the Brazilian real, from six to five reais per dollar. This appreciation has helped ease domestic price pressures, while the abandonment of Petrobras鈥檚 import parity pricing has insulated fuel prices from international fluctuations. Moreover, unemployment rates have improved, decreasing from 8.4% to 6.4%, the lowest level since 2012.

Looking ahead, the projections indicate a slowdown in growth and controlled inflation, although several underlying risks remain. Estimates for 2025 anticipate a modest growth rate of 1%, reflecting the challenges within the neoliberal economic policy framework. The expected agricultural export boom may face obstacles owing to a 20% decline in international prices and severe flooding in Rio Grande do Sul, a crucial agricultural region. Additionally, gross fixed capital formation fell by 3% in 2023, particularly for machinery and equipment, signaling a trend toward productive disinvestment.

Specific tensions persist, especially regarding fiscal policy and proposed changes to public spending rules, along with the Central Bank’s focus on inflation targeting in its exchange and monetary policies. The New Fiscal Scheme (NFS) limits public spending by 2.5% per year and does not provide significant room for large-scale projects, such as the Growth Acceleration Program (PAC) initiated after the 2008 financial crisis. The only way to create additional fiscal space is through tax increases. While newly approved taxes on ultra-wealthy investment funds and simplifications to consumption taxes may boost future tax revenues, they are unlikely to generate sufficient fiscal space for substantial economic initiatives. If inflation projections hold, the new formula for adjusting the minimum wage could lead to real improvements in workers’ living conditions, offering a glimmer of hope for economic growth.

Since June 2024, the international environment has prompted capital outflows and pressure for currency devaluation amid a strengthening dollar against emerging market currencies. This has led to an increase in the exchange rate from 5.10 to 5.85 reais per dollar, prompting government intervention. These exchange rate pressures could lead to higher inflation, and the Central Bank鈥檚 inflation targeting policy might necessitate increased interest rates, potentially dampening consumption鈥攖he sole growth vector thus far. The emerging prospects underscore the restrictive nature of neoliberal institutional frameworks. In a deteriorating international scenario, these frameworks significantly limit policies aimed at stimulating economic growth and job creation, likely undermining popular support for the Workers’ Party (PT).

THE DOUBLE FRONT OF POLITICAL DISPUTE

The first 22 months of Lula’s administration were characterized by two primary fronts of political engagement. The first is Brazil’s re-emergence on the international stage, where Lula’s charismatic leadership has brought attention to pressing global issues. The second front involves internal political struggles marked by negotiations with Congress and the “independent” Central Bank president. This internal conflict has necessitated a delicate balance to defend democracy amid rising tensions. Just eight days after taking office, Lula faced an attempted coup in Bras铆lia by right-wing groups reportedly backed by military elements, political parties, and the former far-right president, Jair Bolsonaro. A strong international condemnation, combined with decisive judiciary intervention, has played a crucial role in preserving democratic order.

Initial assessments suggest notable progress on both fronts, although external achievements have outstripped internal ones. Although Bolsonaro鈥檚 disqualification from elections until 2030 weakened the primary opposition, the threat to democracy remained palpable. The municipal elections last October showed enduring popular support for far-right factions. This dual strategy, addressing both international and domestic issues, acts as a cohesive mechanism; the international agenda creates a vital space for internal maneuvering, pressuring progressive institutional changes, such as implementing higher taxes on the wealthiest individuals. Historical experiences from Lula’s and Dilma’s administrations, particularly the parliamentary coup, demonstrate that meaningful transformation requires addressing more than just internal conflicts, as all parties, especially capital and labor, must benefit from these changes.

Confronting the Western neoliberal consensus is critical to preventing societal demands for transformation from being penalized by international financial markets, which can manipulate credit ratings and provoke tensions in exchange rates, inflation, and macroeconomic instability鈥攅lements that could be perceived as a “soft coup” by market forces. The push for a multipolar international system anchored in initiatives like BRICS is gaining traction, with the inclusion of new partners (BRICS+) becoming increasingly significant. A comprehensive strategy for sustainable growth and development has emerged as a priority, earning Lula invitations to key international events such as COP27 and rekindling relations with G-7 economies. This dual approach exemplifies how international relations can expand domestic political maneuvering.

On the local front, tensions in economic policy highlight two critical aspects of the neoliberal institutional framework: (i) fiscal policy and potential adjustments to public spending rules and (ii) the Central Bank鈥檚 exchange and monetary policy, which is heavily focused on inflation targeting. These tools are central to the functioning of the Brazilian state but often hinder democratic efforts to address urgent social needs, such as building larger schools and universities, improving the water supply in drought-affected regions, expanding healthcare coverage, and fulfilling other social commitments. Instead of resorting to street mobilization or constitutional referendums to break congressional gridlock, as seen in Colombia and Chile, Lula aims to foster a new international consensus to counter the global rise of anti-democratic ultra-right and fascist movements.

PERSPECTIVES FOR THE PT鈥橲 POLITICAL PROJECT

Emerging prospects can be framed in three possible scenarios.

1. Advancement of International Patterns: This scenario envisions a continued mandate for Lula or a successor, enabling deeper transformations that significantly enhance the quality of life of the majority. Economic results would ideally follow a path of gradual improvement, partially satisfying the basis of popular support and facilitating continuity through the vote in 2026.
2. Political Blockage: In this scenario, the outcome of Lula’s third term may fall short of maintaining popular support. This could create a political space for conservative sectors to promote a candidate from the economic and financial establishment, not necessarily linked to the ultra-right or Bolsonaro movement.
3. Polarization and Discontent: This scenario posits a complete disagreement with the results of Lula’s third term, leading to increased polarization between PT’s ideological supporters and a new leadership emerging from the extreme right, possibly figures such as S茫o Paulo Governor Tarc铆sio de Freitas, or members of Jair Bolsonaro’s family.

Currently, the trajectory appears to lean between scenarios one and two. However, history reminds us that “unexpected” geopolitical, health, and climatic events can swiftly alter the course of events.

Sergio Martin Paez is Professor of Macroeconomics and Economic Development at the Institute of Urban and Regional Research and Planning (UFRJ-Brazil) and postdoctoral researcher at the same university with financial support from FAPERJ.

Brazilian agribusiness鈥檚 fervour for Soybean cultivation has manifested itself domestically as much, if not more so, than externally, with deforestation accelerating as plantations abound with similar velocity in both the Brazilian Amazon and the Paraguayan Chaco. The domestic intensification of Soybean cultivation can, in large part, be attributed to growing demand from China, the world鈥檚 primary soybean consumer (Song et al, 2009). China is the largest market for both Paraguayan and Brazilian soy, with both nations essentially relying on continued Chinese imports to balance their trade deficits (Giraudo, 2020). Accordingly, the impact of Chinese demand on Brazilian agriculture, and on other resource sectors across the region (Ganchev, 2020; Oviedo, 2015), replicates many of the dynamics previously mentioned with regards to Brazilian 鈥楽ubimperialism鈥� in Paraguay.

As soybeans are typically exported with minimal processing, and monocrop agriculture generates comparatively little employment (Giraudo, 2020), few of the benefits of the soybean supply-chain are appropriated within Brazil. Meanwhile, cheap Brazilian soybeans indirectly support the Chinese labour system by lowering the price of staple foods, especially pork, allowing Chinese manufacturers to keep wages low, thereby maintaining the competitiveness of Chinese exports (Wise & Veltmeyer, 2018). With Chinese demand likely to remain high, it seems inconceivable that either the Brazilian or the Paraguayan economies will wean themselves off of soy and will instead remain conditioned by, and dependent on, the whims of the Chinese industrial system

Furthermore, this integration of soybeans into the Chinese industrial economy exacerbates the existing China-Brazil trade imbalance. 98.4% of Chinese exports to Brazil are manufactures, whilst the majority of Brazilian exports to China are primary-resources, with soybeans representing the single most valuable export-commodity (Jenkins, 2012). Low-price Brazilian commodities thereby fuel an industrial system which exports value-added goods back to Brazil, creating a trade-deficit which entrenches the nation鈥檚 dependence on the industrialised core, reproducing the fundamental dynamics observed by dependency theorists in the mid-twentieth century (Frank; 1966; Prebisch, 1962).

Frank (1966) described South American nations as 鈥榮atellites鈥� of western industry given their primary economic function as sites of resource extraction for industrial demand. For Frank (1966), 鈥榮atellization鈥� is not merely a status, but an ongoing process in which the economic primacy afforded to resource-extraction in peripheral economies effects the stagnation of domestic industrial-development, further entrenching dependence on the industrial core (Alschuler, 1976). From 1999-2009, as Chinese demand for soy exploded, Brazil鈥檚 exports of primary goods grew by 525% whilst the production of manufactured goods slowed, increasing the relative imbalance between the two sectors (Cooney, 2016). The growing dependence of the Brazilian economy on the export of raw materials, among which soy is a key factor, has left the country ever more vulnerable to fluctuations in international demand, whilst its underdeveloped manufacturing sector has been further weakened by the increased flow of capital into extractivist enterprises (Prebisch, 1962). Accordingly, Giraudo (2020: 60) claims that Brazilian trade with China 鈥渞eproduces core-periphery dynamics identified by dependency theory scholars鈥�. It is clear then that this relation has fundamentally eroded Brazil鈥檚 autonomy, given that the largest national economy in Latin America is now significantly 鈥榗onditioned鈥� by Chinese demand, at least with regards to agriculture and other extractive industries.

This dependence has ossified further as a result of Chinese investment in infrastructural developments which facilitate agricultural extractivism, such as highways into the Amazon which open up novel agricultural frontiers and new port facilities which expedite the export of soybeans (Mckay et al, 2016). Whilst Chinese infrastructural loans often feature below-market interest rates and flexible repayment schedules, their apparent benignity belies the manner in which they materially entrench extractivist economies and thereby constrain Brazil鈥檚 鈥渃apacity to autonomously determine its development path鈥� (Giraudo, 2020: 61). A highway into the Amazon, for instance, locks in extractivist agriculture as the region鈥檚 principal growth sector by creating a literal avenue for capital accumulation which, given consistent Chinese demand for Brazilian soybeans, provides much more secure and lucrative returns on investment than financing of Brazil鈥檚 underdeveloped industrial sector. The construction of an extractivist infrastructural network marks, therefore, not merely the latest step in the continuous capitalist colonization of underexploited peripheries which has characterised Latin America since the late 15^th century, but the material entrenchment of this dynamic, that is, the striation of the national space for the purpose of capital accumulation. Given the reality of Brazilian dependence, a highway into the Amazon becomes an outlet for the dispersion of Chinese, and additionally European and North American, imperial power, allowing for the reshaping and disassembling of Brazilian ecology in accordance with the demands of global industry. Chinese-funded infrastructure in Brazil, in so far as it facilitates extractive economies, can be understood as the material inscription of extractivism into the Brazilian landscape, forging chains of dependency that the nation is unlikely to break. From a global perspective, we may therefore view Brazilian national autonomy as illusory given that the shape of the Brazilian economy is ultimately determined by the demands of Chinese industry, among others, rather than the autonomous direction of the Brazilian state.

Ecological Dependence

The previous discussion conjures an image of a hierarchical chain of dependence which runs from China to Brazil and on to Paraguay, with autonomy diminishing and dependency intensifying as one descends its interlocking links. When examining these relations between states it is analytically unhelpful, however, to neglect the manner in which dependence functions within states. As Frank (1971: 34) explains, dependency 鈥渞uns through the entire world capitalist system in a chain-like fashion from its uppermost metropolitan world centre, through each of the various national, regional, local and enterprise centres鈥�. As this quote suggests, at its core, dependency is not defined by international relations, but by the flows of commodities and resources which exist both within and beyond the nation-state. In this regard we should not necessarily understand the interrelation between Paraguay, Brazil, and China as a hierarchy of dependency, but as the aggregate of multiple and overlapping ties of dependence which cumulatively interweave the productivity of Paraguayan soils with the output of Chinese manufacturing. It is precisely this integration of extractive industries into global supply chains which, Arboleda (2020: 15) claims, 鈥測ields a new territoriality of extraction whose immanent content cannot be fully elucidated by the loci classici of state-centric concepts of political economy鈥�. This is to say that the structure and function of the mine or the plantation, and their integration in international industrial supply chains, are incomprehensible from a purely national viewpoint, given that these structures prove subversive to the nation state on both a material and analytical level.

The proliferation of soy plantations across the Latin American landscape provides an example of this dynamic. In the Paraguayan context, Soy has been described as 鈥渟imultaneously a product and engine of the neoliberalization of nature鈥� (Correia, 2019: 319) given the manner in which soybean monoculture enacts a capitalist reterritorialization of Paraguayan ecology by entirely reengineering the nation鈥檚 resources to service the demands of capital. The ongoing transformation of the Paraguayan Chaco into cropland, for instance, represents the conversion of an organic, complex, and uncommodifiable environment into one which is dominated by neat rows of soybeans, genetically modified to grow in a rational and easily commodifiable fashion, in other words, the striation of a non-capitalist environment for the purposes of capital accumulation (Altieri & Pengue, 2005; Deleuze & Guattari, 2005). In the case of soy this ecological reterritorialization assumes even a cellular dimension, given the transgenic nature of soybeans genetically modified to better suit market requirements and the rhythms and techniques of industrialized agriculture (Cooney, 2016). Hence from the cellular organization of its crops to the distribution of its arable land, Paraguay and its ecology have been fundamentally remade in accordance with the designs of global industrial capital.

In this sense, land which is colonized by soy is no longer Paraguayan, Brazilian, or even Chinese, but rather belongs to 鈥渁 single, unified 鈥橲oybean Republic鈥欌�� governed by the demands of extractive capital rather than states (Turzi, 2011: 59). As 鈥楴ature-Exporting Societies鈥� (Coronil, 1997), forever dependent on resource rents to finance basic state functions, states such as Paraguay are thereby dissolved as sovereign units into an undefined reservoir of natural resource wealth from whence the global industrial system draws required inputs. Hence the ecological reality of peripheral regions is more so dictated by the direction of, say, Chinese manufacturing than it is the prerogative of national governments. To repurpose dos Santos鈥� (1970) definition of dependence, given the centrality of resource extraction in contemporary South American economies, we might well say that 鈥榙ependence is a situation in which the ecology of certain countries is conditioned by the development and expansion of an economy to which the former is subjected鈥�. Hence dependence can be tracked through the creep of soy plantations into untouched ecologies, reasserting 鈥渢echnological mastery over nature鈥� (Tilley, 2020: 70) and the subjugation of South American ecology to the industrialised core (Alimonda, 2020).

If we accept such a definition of dependence as an economic conditioning of ecology, then its impacts are observable even within China, the supposed head of our hierarchical chain, where the state is currently endeavouring to massively boost soybean production in Heilongjiang Province (Wang, 2022), creating an effective chain of dependency between this peripheral rural province and the coastal cities where the beans will be processed and consumed. The degree to which Heilongjiang鈥檚 ecologies will be transformed, its smallholders dispossessed, and its economy adjusted toward an agricultural export model will ultimately be dictated less by any local authority than by the requirements of the greater Chinese industrial system, based primarily in the country鈥檚 coastal metropolises. Seeing as similar relations can be observed within Brazil or Paraguay, there is no apparent reason why our analysis should privilege relations of dependence between nations over those that exist within national units. To merely examine the relation of dependency between Shenzhen and Amazonas without analysing that which exists between Amazonas and Sao Paulo, or even Sao Paulo and the Paraguayan Chaco, is to obscure the interlock of sub and transnational ties of ecological dependence which are ignored in nation-state centric analyses.

The question of dependency, therefore, is not merely one of how industrial nations relate to extractivist economies, but of which ecologies are inducted into techno-capital鈥檚 standing reserve鈥� (Heidegger, 1954). Dependency advances not from to country by country, but with the progressive transformation of the Earth鈥檚 surface (and its subsurface) into a standing reserve of potential value (Tilley, 2020), as national borders are subsumed into the frontiers of the 鈥楶lanetary Mine/Plantation鈥� (Arboleda, 2020). In this context 鈥渢here is a growing tendency for States to act as facilitators of global capital鈥� (Neiman & Blanco, 2020: 541), abetting its march into hitherto undercapitalised environments, thereby signalling an existential surrender of state autonomy to the whims of capital.

Dependence may not, therefore, necessarily cohere to national borders, a fact that contemporary analyses should acknowledge, rather dependence is produced organically through the myriad connections between nodes of autonomy (industrial or metropolitan centres) and capitalist frontiers which exist both within and between nation-states. This understanding highlights both a decline in state-sovereignty and the ineffectiveness of state-centred analytic methods. The use of the nation-state as an analytic unit obscures the internal tensions inherent to any capitalist economy (Cueva, 2007). As Ebenau (2015: 108) explains 鈥渢here is no such thing as a genuine 鈥榥ational interest鈥�, but rather a conflictual relationship between classes, to which the state apparatuses are constitutively connected鈥�. This class-centred critique is well-suited to an industry in which smallholders are systematically dispossessed for the material benefit of agribusiness executives who are nevertheless often unified under the same nationality. Yet Ebanau鈥檚 (2015) logic may also be repurposed for the ecological critique offered above to suggest that an exploitative extractivist relationship between rural-peripheral and industrialised-metropolitan regions within the same polity renders the nation-state methodologically inappropriate as an analytical-unit for those interested in dependence in the contemporary global economy.

To conclude

It is imprudent and imprecise, therefore, for a researcher to question whether a certain nation is dependent on another, or to what extent it is able to wield national autonomy, without examining the interrelations of autonomy and dependence which exist within national units whilst charting their coherence to an extractivist regime of ecological reterritorialization. Whilst the dependency of different nations may be compared on a relative basis, as this blog does with Paraguay, Brazil, and China, such an analysis can only result in a hierarchical ranking of nations from most dependent to most autonomous. In this framework, it is arguable that South American states may achieve limited autonomy through 鈥楽ubimperialist鈥� expansion, but this autonomy is directly proportional to dependency elsewhere in the region, as with Brazil and Paraguay. Meanwhile the fact that South American economies as a whole are conditioned by the demands of foreign capital compromises national autonomy by producing an overarching economic dependence, as is the case between Brazil and China. Such analysis is not without merit, as it demonstrates how governments and national bourgeoisies function as loci of autonomy within a broader network of dependence. However, the precise contours of the dependency network are impossible to outline through a state-centred methodological approach alone given the myriad dependent relations which exist between and within nation states. Instead, I claim, an ecological accounting of the demands that industrial capital places on the natural world provides a more accurate depiction of the exact function of dependency which, at its core, is conditional on the extraction of primary resources. That is to say that one might achieve a better understanding of dependence in South America by tracking the expansion of the 鈥済reen ocean of soybeans鈥� (Turzi, 2011: 66) across its landscape than by calculating the exact proportions of the China-Brazil trade deficit, as the former is a direct manifestation of dependency鈥檚 ecological underpinning, that is the capitalist reterritorialization of the natural world. In other words, the fundamental dependent relationship is that which subordinates nature to the accumulation of capital through the proliferation of extractivist structures, of which plantations serve as a quintessential example.

Bibliography

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Altieri, M. A. & Pengue, W. A. (2005). Roundup Ready Soybean in Latin America: A Machine of Hunger, Deforestation and Socio-Ecological Devastation. RAP-AL Uruguay. . net/~rapaluy1/transgenicos/Prensa/Roundupready.html

Cooney, P. (2016) 鈥楻eprimarization: Implications for the Environment and Development in Latin America: The Cases of Argentina and Brazil鈥�. Review of Radical Political Economics, 48:4, 553-61.

Coronil, F. (1997). The Magical State: Nature, Money, and Modernity in Venezuela. University of Chicago Press.

Correia, J. E. (2019) Soy States: Resource Politics, Violent Environments and Soybean Territorialization in Paraguay, The Journal of Peasant Studies, 46:2, 316-336, DOI: 10.1080/03066150.2017.1384726

Cueva, A. (2007). El an谩lisis posmarxista del Estado Latinoamericano. Cuadernos del Pensamiento cr铆tico latinoamericano, (2).

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Dos Santos, T. (1970). The Structure of Dependence. The American Economic Review, 60(2), 231-236.

Frank, A. G. (1971) Capitalism and Underdevelopment in Latin America: Historical Studies of Chile and Brazil. London: Penguin

Frank, A. G. (1966). The Development of Underdevelopment. New York.

Ganchev, I. (2020). China Pushed the Pink Tide and the Pink Tide Pulled China: Intertwining Economic Interests and Ideology in Ecuador and Bolivia (2005鈥�2014). World Affairs, 183(4), 359-388.

Heidegger, M. (1954). The Question Concerning Technology. Technology and values: Essential Readings, 99, 3-35.

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Neiman, M. and M. Blanco (2020) 鈥楤eyond the Pampas: Global Capital and Uneven Development in Argentine Soybean Expansion鈥�. Journal of Agrarian Change, 20:4, 538-61.

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George Shepherd is a politics PhD student at the University of York currently researching lithium extraction in Latin America in an attempt to understand the ecological implications of a 鈥榞reen鈥� energy transition predicated on intensified resource extraction in the periphery. He tweets at .

Photo: .

Though its influence may have waned in recent decades, dependency theory remains an indispensable prism through which to regard the bifurcated, or polarized, development of national economies within the capitalist world-system. This framework, in which the persistence of uneven development is attributable to the interrelation between the industrialised core and the underdeveloped periphery, admits both the geographic and historical scope to adequately tackle the hard problems of political economy and to accurately trace the chains of dependency which inhibit peripheral economies. Through two blog posts, I wish to explore how dependency theory can help us understand various ecologies of dependence in Latin America, including Brazilian agribusiness in Paraguayan soy (this blog post) and the role Chinese industrial demand plays in constraining Brazilian subimperial autonomy in soy cultivation (in the second blog post). In this post, the colonization of Paraguayan soy cultivation by Brazilian agribusiness is used to demonstrate that Sub-imperialist powers can achieve relative autonomy within the periphery by making dependent weaker states in their vicinity.

From dependent nations to peripheral ecologies

A fundamental concern of dependency theory is the extent to which peripheral states are masters of their own economic destiny, or how concretely they are able to wield autonomy within the global capitalist system. Dos Santos (1970: 231) has provided perhaps the most commonly cited definition of dependence within the dependency theory cannon, describing the situation as one 鈥渋n which the economy of certain countries is conditioned by the development and expansion of another economy to which the former is subjected鈥� (Dos Santos, 1970: 231). In short, one could somewhat accurately characterize dependency theory as a framework of relative autonomy, with the capacity for economic self-determination among peripheral economies actively curtailed by their subordinate relation to those of the industrialised core. Importantly, autonomy, in this understanding, is not merely relative but conditional, with the autonomy of core economies the direct product of peripheral dependency. In this understanding, the uneven development of core and peripheral nations can be attributed, in part, to the making dependent of the latter by the former, and the resultant loss of autonomy among the latter cohort.

Yet, as revealing as this framework is of the hierarchical ordering of national economies, by emphasizing the contrast between the national economies of the core and periphery, the nation-state centred analysis of some traditional dependency theorists (Prebisch,1962; Dos Santos, 1970; Cardoso & Faletto, 2021) potentially obscures the oppositional modalities which propagate on a national and subnational level. In other words, the relative interplay of autonomy and dependence on a global scale is somewhat obfuscated by an analytic approach which treats nation states as coherent units and which promulgates a simplistic division between core and peripheral nations, or those of the North and South, without acknowledging the myriad cores and peripheries which transcend and subvert strict national boundaries. That is to say that cores and peripheries exist both within and between so-called core and peripheral nations, with relations of autonomy and dependence thereby manifesting on both a subnational and international scale.

In the interest of better mapping the aforementioned dynamic, this two-part blog post encourages an ecological understanding of dependency in which the relative dependence, of a nation, region, or resource, is indexed not to the respective trade deficits, industrial capacities, or consumptive habits of core and peripheral states, but to the specific demands imposed on the natural world by transnational industrialised capital. Put differently, we might better comprehend the dimensions of dependence by analysing the subordination of peripheral ecologies (which might exist outside of, within, or even between core and peripheral nation states) to the enterprise of capital accumulation rather than by simply regarding, say, the subordination of various groups and structures within the Brazilian economy to Chinese industrial demand. Doing so frees us from the analytic rigidity of a nation-state focused approach and allows analysts to understand autonomy and dependence in a globalised context in which ecological concerns dominate both public and academic discourses. To illustrate this point, this post explores the relative autonomy and dependence of Latin American states, the traditional muse of dependency theory, from three sequential analytic standpoints, using the soybean supply chain as a prism through which to understand the working of dependency in the contemporary setting.  

Paraguay, Brazil, and the Colonization of Soy

Since the turn of the millennium, rising Chinese demand has stimulated a massive growth of the hectarage dedicated to soybeans across Latin America (North & Grinspun, 2016). This trend is indicative of the wider phenomena of 鈥楻eprimitization鈥�, or the marked expansion of sectors such as mining and agriculture which depend primarily on the extraction and export of primary resources (Cooney, 2016). Soy鈥檚 integration into international supply-chains renders it a useful prism through which to examine relations of dependency between national economic units. If, as this blog post suggests, dependence manifests as a complex interlock of border crossing extraction and exploitation, then the Soy supply chain serves as a distinct vein which runs through its myriad and overlapping strata, allowing for a more complete and more coherent viewing of its otherwise labyrinthine structure. Accordingly, the initial argument presented herein concerns the manner in which the colonisation of Paraguayan agriculture by Brazilian agribusinesses demonstrates the intra-continental function of dependence and autonomy.

In recent decades, Brazilian agribusinesses have expanded their search for territories of capital accumulation in their undercapitalized periphery (Luxemburg, 2015), with annual Brazilian outward investments in Latin America growing by $6 billion from 2004-2010 alone (Misoczky & Imasato, 2014). Even prior to this latest wave of agricultural colonization, Marini (1977: 208) influentially described Brazil as a 鈥楽ubimperialist鈥� power, able to exercise autonomy internationally through the pursuit of 鈥渁 relatively autonomous expansionist policy鈥�. Essentially, 鈥楽ubimperialist鈥� nations such as Brazil are able to exert influence over weaker states in their periphery and thereby achieve a greater degree of autonomy on an international scale as a condition of the intensified dependence of these peripheral states. Crucially, Marini (1977) argued that this development does not free Brazil from structural dependency on the industrialised core, but that Brazil鈥檚 role as regional hegemon grants it limited autonomy relative to those peripheral states coerced into a condition of dependence vis-脿-vis Brazilian capitalism.

This expansion of Brazilian 鈥楽ubimperialism鈥� has received significant state support under both leftist and conservative governments, with the national development bank funding infrastructure projects in Bolivia to allow for further integration between the two economies (Friedman-Rudovsky, 2012), and the PT government facilitating the purchase of vast swathes of arable land in Mozambique by Brazilian corporations (Clements & Fernandes, 2013). Investments of this type in peripheral nations open novel avenues for the expansion of the agricultural frontier, and therefore for capital accumulation, in regions where environmental protection is lax, wages are low, and the often-violent dispossession of smallholders is ignored, or even assisted, by local authorities (Clements & Fernandes, 2013).

Perhaps the most significant manifestation of this Brazilian 鈥楽ubimperialism鈥�, at least in the agricultural space, is the colonisation of Paraguayan soy production by Brazilian agribusinesses which are estimated to control 64% of the total area under soy cultivation (Guere帽a, 2013), equal to around 25% of Paraguay鈥檚 arable land (Glauser, 2009). With Brazilian enterprises thereby maintaining majority control over the cultivation a crop which accounts for 40% of Paraguay鈥檚 total exports (Wesz, 2021), and with many of the remaining soy plantations controlled by Argentine agribusinesses (Ezquerro, 2016), soy production in Paraguay can fairly be described as a manifestation of agricultural imperialism, and Paraguay itself more of a dependent plantation than a sovereign nation-state. Hence a quintessential distillation of the dependent relationship is realised in the cropland of Paraguay, with the direction of the agricultural sector largely 鈥榗onditioned鈥� by the development and expansion of Brazilian and Argentine agribusiness.

This 鈥榝oreignisation鈥� (Galeano, 2012) of Paraguayan agriculture has fundamentally compromised national autonomy by threatening food sovereignty. Following a nation-wide campaign of 鈥榓ccumulation-by-dispossession鈥� (Harvey, 2003), thousands of smallholder farmers have been displaced from their lands, with their plots appropriated by Brazilian-owned soy plantations (Ezquerro-Ca帽ete, 2016). This displacement is an overwhelmingly coercive undertaking, with smallholders convinced to abandon their plots to Brazilian soy barons through threats of violence and the active poisoning of communities via the intentional spreading of pesticides and other harmful chemicals around rural households and plots (Ezquerro-Ca帽ete, 2016). This cohort of smallholder agriculturalists traditionally produced the majority of staple-crops consumed within the country, whilst the plantations which have replaced them yield the overwhelming majority of their soybean harvests for foreign consumption, often as protein-rich feed for livestock (Guerena, 2013). Accordingly, a nation which, with regard to staple-crops, was once largely self-sufficient, now requires constant imports from Argentina and Brazil to feed its population, further compounding Paraguay鈥檚 dependence on the very 鈥楽ubimperialist鈥� powers which enacted this agricultural transformation (Elgert, 2016).

Any understanding of Paraguay as a unified and sovereign state should be questioned, therefore, given the privileging of the calorific requirements of foreign cattle over those of domestic rural populations enacted by this foreignization of agriculture and the colonisation of soy. Paraguay, therefore, is not so much an autonomous state as 鈥渁n assembly plant鈥� Guerena (2013: 19), for Brazilian agribusinesses, providing the land and labour required for cultivation before exporting much of the value produced within the nation麓s agricultural sector to its 麓Subimperialist麓 neighbour. In fact, even the labour required for these enterprises is often more readily supplied by Brazilian migrants (Correia, 2019), rendering Paraguay a passive staging ground for an entirely foreign venture, the recipient of several negative environmental and social externalities but vanishingly few benefits.

The political and economic subordination of Paraguay to Brazilian interests was categorically demonstrated in 2008 when newly elected leftist President Fernando Lugo attempted to levy a 6% tariff on soy exports and implement preliminary land-reform measures to alleviate the suffering of dispossessed smallholders (Galeano, 2012). The Brazilian government quickly enacted a decree which threatened military reprisals in the event of Paraguayan expropriation of Brazilian-owned farms (Turzi, 2016). Such a threat must be understood in the context of the 1864-1870 Paraguayan war, in which a Brazil-led military coalition killed the Paraguayan head of state, installed a Brazil-friendly government, and forced the defeated nation to concede much of its territory to its northern neighbour (Whigham & Potthast, 2002). Up to 60% of Paraguay鈥檚 population perished during the conflict, etching deep wounds in the Paraguayan political landscape, and permanently entrenching the nation鈥檚 dependence on Brazilian 鈥楽ubimperialism鈥� (Leuchars, 2002). Corrective Brazilian military action should therefore be understood as a plausible disciplinary threat which effectively compromises the autonomy of a Paraguayan state ill-equipped to resist the martial predations of its northern neighbour. Ultimately a more subtle approach was taken to the Lugo problem, with Brazilian agribusinesses collaborating with the 鈥楲umpenbourgeoisie鈥� (Frank 1974) of Paraguay鈥檚 Colorado party to engineer the President鈥檚 impeachment (Correia, 2019). This agribusiness-led 鈥楽tate-Capture鈥� (Grzymala-Busse, 2008) was followed by the relaxation of all restrictions on transgenic soy production and a literal invitation from the new President to an audience of Brazilian investors to 鈥淯se and abuse Paraguay鈥� (Martin, 2016).

To conclude

Through the erosion of food sovereignty, threats of military action, and political subterfuge, the Brazilian colonization of Paraguayan soy production has largely dissolved the state鈥檚 autonomy. In light of Dos Santos鈥� (1970) definition of dependence, it is clear that Paraguay鈥檚 economy is significantly 鈥榗onditioned鈥� by the expansion of a Brazilian-led consortium of foreign agribusinesses. Paraguay, therefore, is largely dependent on Brazil which, as a 鈥楽ubimperialist鈥� power, has been able to exercise a degree of autonomy through the subjugation of its southern neighbour.

Yet whilst Brazil is able to wield significant autonomy relative to Paraguay, Mozambique, or Bolivia, it is by no means a fully-fledged imperialist power and assumes a dependent role in relation to the industrialised core. At this juncture we must heed Marini鈥檚 warning (1997) not to overstate the autonomy of 鈥楽ubimperialist鈥� powers and instead consider Brazil鈥檚 exact positioning on the hierarchical chain of dependence. Part Two of this analysis explores how Chinese industrial demand constrains Brazilian subimperial autonomy, before complicating this hierarchical state-centric understanding of dependency by exploring the ecological foundations of the economic interrelation between Paraguay, Brazil, China.  

I hope this post (and the next) serve to illustrate the shortcoming of state-centric analyses in obscuring the fluid transnational function of dependency. In so far as capital, in its expansive phase, pays little heed to national borders, neither should our analysis. Rather it should be adapted accordingly to better catalogue the dynamic interplay of capital and ecology. Hence, whilst specific states may be more autonomous or dependent, or more so belonging to the economic core or periphery, than others in relative terms, no one state can be categorised as autonomous or dependent in its entirety due to the internal contradictions which define all capitalist economies.

Bibliography

Altieri, M. A. & Pengue, W. A. (2005). Roundup Ready Soybean in Latin America: A Machine of Hunger, Deforestation and Socio-Ecological Devastation. RAP-AL Uruguay. . net/~rapaluy1/transgenicos/Prensa/Roundupready.html

Cardoso, F. H., & Faletto, E. (2021). Dependency and Development in Latin America. In Dependency and Development in Latin America. Berkley: University of California Press.

Clements, E. A., & Fernandes, B. M. (2013). Land Grabbing, Agribusiness and The Peasantry in Brazil and Mozambique. Agrarian South: Journal of Political Economy, 2(1), 41-69.

Cooney, P. (2016) 鈥楻eprimarization: Implications for the Environment and Development in Latin America: The Cases of Argentina and Brazil鈥�. Review of Radical Political Economics, 48:4, 553-61.

Correia, J. E. (2019) Soy States: Resource Politics, Violent Environments and Soybean Territorialization in Paraguay, The Journal of Peasant Studies, 46:2, 316-336, DOI: 10.1080/03066150.2017.1384726

Dos Santos, T. (1970). The Structure of Dependence. The American Economic Review, 60(2), 231-236.

Ezquerro, C. A. (2016). Poisoned, Dispossessed and Excluded: A Critique of the Neoliberal Soy Regime in Paraguay. Journal of Agrarian Change, 16(4), 702鈥�710.

Frank, A. G. (1974). Lumpenbourgeoisie: Lumpendevelopment (Vol. 285). Monthly Review Press.

Friedman-Rudovsky, J. (2012). In Bolivia, A Battle Over a Highway and a Way of Life. Environment360.

Galeano, L. A. (2012). Paraguay and The Expansion of Brazilian and Argentinian Agribusiness Frontiers. Canadian Journal of Development Studies/Revue canadienne d’茅tudes du d茅veloppement, 33(4), 458-470.

Glauser, M. (2009). Extranjerizaci贸n del territorio paraguayo. Asunci贸n, Paraguay: BASE Investigaciones Sociales.

Grzymala-Busse, A. (2008). Beyond Clientelism: Incumbent State Capture and State Formation. Comparative Political Studies, 41(4-5), 638-673.

Guere帽a, A. (2013). The Soy Mirage: The Limits of Corporate Social Responsibility-The Case of The Company Desarrollo Agricola del Paraguay. Oxfam International.

Leuchars, C. (2002). To the Bitter End: Paraguay and the War of the Triple Alliance: Paraguay and the War of the Triple Alliance. ABC-CLIO.

Luxemburg, R. (2015). The Accumulation of Capital. Routledge.

Marini, R. M. (1977). La acumulaci贸n capitalista mundial y el subimperialismo. Ola financiera, 4(10), 183-217.

Martin, A. (2016). Can Paraguay Escape Decades of Despotism, Ineptitude, and Corruption?. Retrieved 20 May 2022, from

North, L.L. and R. Grinspun (2016) 鈥楴eo-extractivism and the New Latin American Developmentalism: The Missing Piece of Rural Transformation鈥�. Third World Quarterly, 37:8, 1483-1504.

Prebisch, R. (1962). The Economic Development of Latin America and its Principal Problems. Economic Bulletin for Latin America.

Turzi, M. (2016). The Political Economy of Agricultural Booms: Managing Soybean Production in Argentina, Brazil, and Paraguay. Springer.

Wesz Jr., V.J. (2021) 鈥楽oybean Production in Paraguay: Agribusiness, Economic Change and Agrarian Transformations鈥�. Journal of Agrarian Change, 鈥楨arly View鈥� section

Whigham, T., & Potthast, B. (2002). Refining The Numbers: A Response to Reber and Kleinpenning. Latin American Research Review, 37(3), 143-148.

George Shepherd is a politics PhD student at the University of York currently researching lithium extraction in Latin America in an attempt to understand the ecological implications of a 鈥榞reen鈥� energy transition predicated on intensified resource extraction in the periphery. He tweets at .

Photo: .

The history of global human rights has been, as Joseph Slaughter puts it: 鈥渉ijacked鈥� by Euro-American narratives (Slaughter, 2018). It has been claimed, through history books and the institutional memory of bodies such as the United Nations or Amnesty International, that human rights can be traced back to documents such as the Magna Carta, that they were intellectually developed and promoted globally through the ages of Enlightenment and Imperialism, and that they were enshrined in the Universal Declaration of Human Rights of 1948.

Even in recent decades, attempts to frame and conceptualise the latest milestone of human rights, which took place at the height of globalisation in the 1970s, was a Western 鈥榬evival鈥� or 鈥榬ediscovery鈥� of human rights as a transnational tool through which states could be held accountable for their violation of rights. Crucial reference points for scholars today include the so-called 鈥楬uman Rights Utopia鈥� of the 1970s (see Moyn, 2010) or the development of 鈥楴ew鈥� Human Rights two decades later (see Nelson & Dorsey, 2008). To reconstruct the past, scholars often seek changes in the discourse of global institutions; they analyse the most widely reported human rights movements; they call upon the emergence and establishment of organisations such as Amnesty International; they run keyword searches of major international newspapers; and they look to the political discourse of major global players, all of which are largely based in the Global North.

No wonder, then, that the major turning point of the transnational human rights movement is so precisely associated with the year of 1977, when Amnesty International won the Nobel Peace Prize and US President Jimmy Carter incorporated human rights into the country鈥檚 foreign policy. The so-called utopia that was set forth during this transformative moment in history was that human rights came to represent an alternative to anti-establishment movements against US imperialism and consumerism. It also represented an alternative to socialist states, which for many of the Left was proving to be a disappointing avenue for meaningful change. A transnational social movement of solidarity was also imagined as the key to holding states accountable for the human rights violations of their own citizens.

The result of this revisionist history is not only an incomplete picture, but what Walden Bello calls “the [structural] resubordination of the [Global] South within a US-dominated global economy鈥� (Bello, 1994 cited in Slaughter, 2018). As the agency of Global South-identifying actors is denied, so is their role in shaping what today are known as rights of self-determination, sustainable development, peace, minority, and rights to natural resources and the environment, among other things.

Yet there exists an alternative history to human rights that has been obscured through attempts to narrate the past. This history has been prevented from entering the debate, I would argue, for three key reasons: first, dominant historical narratives emphasise actors and institutions of the Global North as the leading protagonists in the process of the construction of human rights. Second, and as a result of the first, methodological approaches have been limited by what is perceived as the spaces within and through which concepts and practices of human rights are constructed and diffused globally. Third, potential alternative sources of ideas surrounding human rights and their global diffusion are and have almost always been brushed aside as anything but potential sources of human rights: they have been labelled as socialist, anti-colonialist, anti-imperialist, and even terrorist, none of which could possibly be compatible with human rights.

But the issue does not stop at asking the right questions. The problem cannot be solved simply by asking whether and if so what Global South actors and organisations contributed to human rights norms, concepts, and practices, but also how they did so. And this requires returning to the drawing board methodologically. If potential contributions do not take place within dominant institutions, state-to-state dialogue, and major international organisations, then we need to look beyond these spheres for our evidence.

Brazil and the Oppressed

My own research has demonstrated just how valuable it can be to move beyond traditional methods when addressing the construction of human rights and development norms. In 1964, Brazil was hit by an authoritarian military coup. At first, many – including the military itself – believed there would be a return to normalcy within a few months, but the dictatorship ended up lasting 21 years. In this time, around 10,000 Brazilians fled the country as political exiles, fearful of the military鈥檚 increasing use of torture and disappearance as a means of repression. Manyof these exiles were affiliated to socialist and communist parties, student and labour unions, and even militant urban guerilla groups.

Against the backdrop of the so-called Transnational Human Rights Movement of the later 1970s, it might be hard to imagine Brazil鈥檚 political exiles engaging with debates about human rights. While the violation of political and civil rights was important, opposition to the regime was really about social and economic inequality, environmental degradation, workers鈥� rights, indigenous minorities, and the economic penetration of multinational companies. To begin with, these were topics that groups like Amnesty International deemed 鈥榯oo political鈥� and tended to avoid. Second, it would seem out of place to imagine Brazilian exiles engaging with the very same liberal and individualist human rights discourses which, they argued, were so easily reconcilable with the global capitalist order they were fighting in the first place.

Yet this was not the case. Many Brazilians – particularly those of the more active Left – actively re-interpreted human rights and used them as a weapon of resistance against the regime, merging it with their own locally developed ideas, concepts, and practices surrounding rights and development. These re-interpretations of human rights and their dissemination did not take place through the traditional channels of groups like Amnesty International, European political parties, or major international institutions like the UN. They took place through 鈥榯ransnational advocacy networks鈥�, or TANs (Keck & Sikkink, 1998), taking the form of political pamphlets, posters, community hall meetings, university seminars, public protests, and religious conferences, among other things.

Upon closer inspection it becomes clear that Brazilians often presented themselves as part of a broader Latin American and 鈥楾hird World鈥� community – a people at the whim of the global economic order; a people with shared struggles and visions of rights and development. In particular, Brazilians called upon locally situated concepts such as oppression and economic dependency. Oppression in this context is a concept coined by Brazilian educator Paulo Freire and popularised through progressive Catholic groups subscribing to 鈥楲iberation Theology鈥�, a branch of Catholic action dedicated to bringing about social justice for marginalised and oppressed communities. Dependency theory, on the other hand, which was elaborated by prominent Latin American intellectuals, economists, and scholars from the 1960s, provided a framework for explaining Brazil鈥檚 position within the global economy, and thus the social and economic hardships of exploited workers, rural and landless peasants, indigenous peoples, and the urban poor.

An important example here is Brazilian sculptor Guido Rocha, a political exile, whose ideas were disseminated internationally through artistic and cultural production. Guido, who had been an active member of the Brazilian Socialist Party, was first arrested in 1962 for protesting against the military. He was arrested again in 1969 during one of his exhibitions, where the political nature of his work rendered him a suspect of subversion. His first attempt to flee Brazil landed him in a Bolivian detention Centre for ten days, before he was returned to Brazil. In  1971, he was arrested once again and detained for eight months, during which he was frequently tortured.

鈥淏y some sort of irony鈥�, recounts Guido, 鈥渙ne of the torturers hid his identity behind the pseudonym 鈥楯esus Christ鈥欌��. He began to create sculptures that depicted the crucifixion of Christ. Interpreting the principles of Brazilian liberation theology, Guido鈥檚 sculptures were of a Christ that sided with the oppressed:

From that moment on, all the Christs I make have facial characteristics which simultaneously reflect the expressions of comrades that were murdered or tortured by the police, as well as the faces of poor peasants¹.听

Their bodies were shaped to resemble the marginalised masses of the country鈥檚 dry Northeastern backlands, while the material they were made from, burned plaster, represented the regime鈥檚 use of electric shock torture.

On the eve of an exhibition of these sculptures, Guido was warned that he was in danger, and so fled once again with his partner, this time for Chile. It was not long after his arrival that the Chilean coup of September 1973 took place, and Guido was captured standing in line to enter the Argentine Embassy before being detained and tortured for another forty days. Connections in Switzerland eventually helped him to secure a special scholarship at the 脡cole des Beaux Artes, funded by the Canton of Geneva, allowing him to enter the country as a refugee.

In exile in 1975, Guido produced one of his signature pieces and donated it to the All Africa Council of Churches (AACC) in Nairobi. In July that year, it appeared on a poster produced by the Swiss Committee of Defence for the Political Prisoners of Chile; in September, the image was displayed during a discussion on toture held at the Parish of Saint Germain in Gevera; and in November, a print of the photo was presented to the World Council of Churches as a gesture of gratitude on behalf of refugees helped by the Church.

Sculpture by Guido Rocha, World Council of Churches Archive, Geneva, WCC 429.07.03 40

Guido鈥檚 story is just one of countless examples of how Brazilians reinterpreted the language of human rights based on situated concepts of their own, and then used them to appeal to and communicate with broader audiences in Western Europe. From there, Brazilians鈥� ideas were diffused both horizontally and vertically, eventually becoming incorporated into more mainstream discussions about human rights. My research has shown that from the early 1970s, national newspapers, public debates, and even television and radio production across countries like Italy, France, Switzerland, Belgium, and the UK increasingly reflected heightened concerns with social and economic inequality, the growth of multinational companies, and the impacts of development projects on marginalised groups in Latin America.

Towards a New History of Global Human Rights and Development

To return to the problem at hand: actors and ideas from the Global South are missing from mainstream narratives of human rights and development. And this is not because those actors were not involved in relevant debates and knowledge exchange, nor is it because their visions for social and economic justice or development projects belonged firmly in the camp of socialism. There are countless examples of how these spheres actively engaged with the language of human rights and development, not only to critique capitalism but to appropriate and redefine human rights in an attempt to translate the struggles and experiences of the Global South into more universal terms.

There are a multitude of networks, repertoires of action, visual artefacts, embodied practices, and situated knowledges at researchers鈥� disposal, all of which offer rich potential for unveiling the agency of Global South contributions to human rights and development paradigms. The challenge we face is drawing that agency out to the surface with the right methods and conceptual frameworks. For this to happen, researchers need to ground themselves in the reality of those underrepresented actors, initiate a truly equal dialogue with those underrepresented ideas, and take the lessons about human rights and development that they have to offer.

Bibliography

Keck, M. & Sikkink, K. (1998) Activists Beyond Borders: Advocacy Networks in International Politics. Cornell University Press: Ithaca.

Moyn, S. (2010). The last utopia: Human rights in history. Cambridge, Mass: Belknap Press of Harvard University Press.

Nelson, P.J. & Dorsey, E. (2008) New Rights Advocacy: Changing Strategies of Development and Human Rights NGOs. Georgetown University Press.

Slaughter, J. (2018). Hijacking Human Rights: Neoliberalism, the New Historiography, and the End of the Third World. Human Rights Quarterly 40.

Anna Grimaldi is Lecturer of Modern Latin American History at King’s College London. Her research focuses on the formation of transnational advocacy and solidarity networks and the spread of ideas about human rights and development from the Global South.

Since the Brazilian Regulatory Agency for Supplementary Health鈥檚 (ANS) creation in 2000, health insurance inflation has grown at a much greater pace than general inflation. Indeed, after eighteen years the private health insurance price index was close to double the official inflation index, with its 382% (see ). 

The upward course of prices can be interpreted as a response to the problems arising from the escalating costs. Baumol (2012) calls this phenomenon 鈥渃ost disease鈥�, designating that labor relates differently to production: in the case of the goods, work would be incorporated into the product; in the case of services, labor would be the product being exchanged, making difficult to substitute factors.

This blog post cautions that the relationship between demand and supply for private health insurance should not be only assessed according to traditional criteria. Even economists in the mainstream of the field already point out that the health marketplace has distinguishing characteristics, such as (i) demand is inelastic; (ii) supply creates its own demand; and (iii) information is asymmetric (agent/principal conflict: moral hazard and adverse selection) (Cutler and Zeckhauser, 2000).

However, at first glance, it seems that the growth of financialization also impacts rising prices. According to Lavinas (2020), health companies鈥� assets are purchased by investment funds or by foreign investors to win dividends and resale shares afterwards in the stock exchange. In this scenario, health insurance premiums are overdetermined by speculative movements by shareholders, who wish to increase expected average profit rates, a key variable to attract investors in the healthcare area under globalization.

The turmoil with rising health prices is also at the center of debate in other countries (Ferreira and Mendes, 2018). This situation has long alarmed Brazilian consumers and employers and recently led the ANS to change the methodology used for annual adjustments in individual and family health insurance premiums (ANS, 2021). Fiscal austerity has led to persistent underfunding of the Brazilian public health system, and the middle class is driven to buying private health insurance.

In the face of a price explosion during the Brazilian economic crisis in 2015-2016, given the institutional context favorable to enlarging free markets in health care, which led to the exclusion of three million health insurance users, ANS approved a new formula for calculating the annual premium adjustments of individual insurance in December 2018, calibrated by productivity and age group. 

One could argue that the quest for higher profits from monopoly price and risk selection (cream skimming) is still part of standard market behavior. So, the question arises: will this new formula better measure costs in the sector, and thereby have the potential to prevent further price increases? 

The  economic mainstream based on principal-agent problems does not adequately explain the evolution  of costs and prices of private health insurance in Brazil. These variables  are influenced by interest rates (opportunity costs); exchange rates (dependence on imports of medical supplies and equipment); incorporation of technology (pressure of the medical-industrial complex); low mobility of private factors of production (non-tradable services); and transaction costs (time spent to find both quality network and doctors and hospitals with reputation) (Ock茅-Reis and Cardoso, 2011).

At last, but not least, as indicated above, financialization sponsors a pattern which favors market concentration, high consumer prices, production chain verticalization and practices associated with managed competition in the health systems. Despite advances in telemedicine,  robotics and  artificial intelligence, which could lead to increased productivity and efficiency, the market does not offer competitive prices, comprehensive coverage, or even quality in medical care. 

No doubt, the healthcare industry鈥檚 鈥榤ission鈥� detaches itself from clinical and epidemiological targets to focus on becoming platforms for the accumulation of wealth by financial investors.

References

ANS. Ag锚ncia Nacional de Sa煤de Suplementar. . Accessed 8 April 2021.

Baumol WJ. The Cost Disease. Why computers get cheaper and health care doesn鈥檛. New Haven, USA: Yale University Press; 2012.

Cutler DM, Zeckhauser RJ. The anatomy of health insurance. In: Handbook of Health Economics. Vol. 1A. Amsterdam, Netherlands: Elsevier; 2000: 563-643.

Ferreira MRJ, Mendes AN. Commodification in the reforms of the German, French and British health systems [in Portuguese]. Ci锚nc. Sa煤de Colet., 2018; 23(7): 2159-2170.

Lavinas, L. The collateralization of social policy by financial markets in the global south. In: The Routledge International Book of Financialization. New York, USA: Routledge; 2020: 312-323.

Ock茅-Reis CO, Fiuza EPS, Coimbra PH. Inflation of health plans 鈥� 2000-2018 [in Portuguese]. IPEA Technical Report 54, 2019; Institute of Applied Economic Research.

Ock茅-Reis, CO, Cardoso, SS. Pricing regulation of Brazilian private health insurance. Brazilian Journal of Political Economy (BJPE). 2011; 31 (3): 455-470.

Phelps C. Health Economics. New York, USA: Routledge; 2016.

Carlos Oct谩vio Ock茅-Reis is a researcher at the Institute of Applied Economic Research (IPEA), Rio de Janeiro, Brazil.

Aquilas Nogueira Mendes is a professor  at the Faculty of Public Health, S茫o Paulo University (USP), S茫o Paulo, Brazil.

Photo: GSK employees, working on the production of medicine, Brazil. Source: .

By Norberto Montani Martins, Carlos Ock茅-Reis and Daniel Drach

The covid-19 pandemic is showing how important universal health systems are. As the virus continues to devastate communities and economies, many governments have started to look at them with different lens. Investing in public health systems should be mandatory, but austerity policies in peripheral countries are still the priority. Moreover, the increasing financialisation of the health sector produces conflicts that constraint the achievement of a truly universal and comprehensive public healthcare. This is what we address in our , where we argue that lead firms in the provision of healthcare plans seem to have become platforms for the accumulation of wealth by financial investors, a process that is making shareholder value the main guiding principle of firm behaviour.

A good example of such contradictions is Brazil. A universal health system called the Unified Health System (Sistema 脷nico de Sa煤de, or SUS) was established in the 1988 Constitution. However, it would be misleading to affirm it has provided universal access and comprehensive care: since its inception, SUS faced an inadequate low level of public spending that jeopardized its mission. In the 2000s, the Brazilian government eventually increased public spending in healthcare, but a kind of paradox emerged as it also set up many policies to foster private healthcare and private accumulation in that sector (e.g., health-related tax expenditures).

The idea of a in this period helps to understand this paradox. Financialisation in such a context can be characterized, among other things, by the 鈥渦nchecked advance of the commodification of health services, care and education in particular, via private provision which grew out of the vacuum left over by public provision鈥�.

Further, the state鈥檚 decision to provide a platform for private accumulation can only be understood in the context of the growing influence of financial actors, institutions and, markets on social and fiscal policies. Such influence not only shape the way governments act but also changes the ways modern corporations behave, with the emergence of shareholder value as the most relevant guideline for corporate behaviour.

In this sense, it is the interplay between two dimensions that characterises modern financialisation. That is, in Brazil, the state paves the way for private accumulation, while private firms align themselves to the needs of financial markets and actors, and, as a result, there is an amalgam of interests to provide new opportunities for capital accumulation.

With this background in mind, our paper explores how financialisation has affected the organisation and behaviour of private health insurance plans involved in the financing of the provision of healthcare in Brazil (third-party payer). This task is relevant because it would allow us to understand if the process described above is indeed a process of healthcare financialisation or just a process of privatization of public services de-linked of financial motives.

Private Health Insurance Behaviour: Financialization or Simply Privatization?

The first task is to understand how financialisation could affect the behaviour of private health insurance firms. The existing literature on financialization highlights a few stylized facts in firm behaviour: an increased share of financial assets in the firm鈥檚 portfolios and an increasing share of financial revenues on total revenues; an increasing indebtedness; and a redefinition of corporate governance in shareholder value contours, with an increasing orientation towards capital markets and the adoption of practices such as equity buybacks. One limitation of this literature is that it is mainly focused on firms in the Global North, especially US firms, but we assume that such stylized facts may hold when analysing peripheral economies.

Now, the key question is: can we observe those trends in the behaviour of private health plans and insurance in Brazil? We devote our attention to the firms that are leaders in the provision of healthcare insurance plans in Brazil. Such firms have been well-known for their political influence in the healthcare arena, such as price formation in the marketplace. We could have focused on hospitals, diagnostic support services or elsewhere, but choose such firms due to the comprehensive and consistent information provided by Brazil鈥檚 National Agency of Supplementary Health (ANS). It is worth saying that the main goal of the ANS is to promote competition and consumer protection, seeking to restructure the market to reduce oligopolistic practices and elimination of economic abuses.

Eight leader firms were selected: Amil, Bradesco Sa煤de, Hapvida, Notre Dame Interm茅dica, Qualicorp, Sulam茅rica, Unimed-BH and Unimed Central Nacional. Together they provide 34.4% of healthcare plans in Brazil 鈥� 19.2 million users 鈥� and represent 43% of the total assets of firms involved in the provision of healthcare plans. Conceptually, in our point of view, the leader firms are the ones that can influence the configuration and dynamics of the market, seeking extraordinary profits and dictating organizational and operational standards in that environment.

We gathered information on the eight firms鈥� financial statements and balance sheets from 2007 to 2019 in the ANS database and developed indicators on (i) the weight of financial assets and revenues on total assets and revenues respectively; (ii) the weight of indebtedness and leverage on total obligations; and (iii) stocks issuances, capital concentration and share buybacks.

Our analysis shows a small increase in the share of financial assets in those firms鈥� portfolios over more than a decade and a very small weight of financial revenues on total revenues, with no clear trend. Regarding indebtedness, a process of de-leveraging is going on and we cannot say whether such firms became more dependent on the moods of banks or lenders or not. In this context, one might be asking: Was there a decrease in the financialisation of such firms?

We show that this is not the case because we can see clearly their increasing reliance on stock markets and the reorientation of their corporate governance practices to shareholder value. It seems that leader firms engaged in a long journey accumulating profits and doing mergers and acquisitions to achieve the size needed to access capital markets in Brazil.

Many of them opened capital in the Brazilian stock exchange, B3, during this period and made deep adjustments in corporate governance standards towards shareholder-value-oriented practices. Anecdotal evidence of this process is the announcement of share buyback programs by Notre Dame and Hapvida in 2020 during the covid-19 pandemic as we can observe recently in newspapers鈥� headlines 鈥� while lobbying against expenditures with testing of their clients before ANS, they were 鈥榠nvesting鈥� in delivering profits for their shareholders.

Patterns of Financialization in the Global South

Based on the findings above, we can conclude that when the Brazilian government paved the way for the expansion in the provision of private health care, such leader firms probably became platforms for the accumulation of wealth by financial investors. Our results are preliminary, but we believe they illuminated relevant issues for future research on financialisation and on financialisation of health.

First, we believe we need to concentrate research efforts in understanding the process of capital concentration 鈥� merger and acquisitions 鈥� as well as in the fundamental role which has been performed by the financial capital in the organisation of the healthcare sector.

Second, we need to keep track of the indicators we developed in our research to check out if those firms can engage in new portfolio strategies in the future, with growing weight of financial assets, or in new financing patterns with a growing indebtedness, reproducing the general stylized facts registered in the literature (Is there a long way forward for financialisation in this sector?).

Finally, from our results, we started to question if firms in the Global South can engage in financialisation patterns that are different from the Global North. Of course, we need to replicate and refine our methodology to other groups of firms and sectors to accurately assess this possibility, but this can be a fruitful field for future research.

* The paper was written in Portuguese, but we are working in an English version for the second part of 2021.

Norberto Montani Martins is professor in the Institute of Economics at the Federal University of Rio de Janeiro.

Carlos Ock茅-Reis is economist and researcher at Brazil鈥檚 Institute for Applied Economic Research (Ipea).

Daniel Drach was research assistant at Brazil鈥檚 Institute for Applied Economic Research (Ipea).

Photo: .

“Without community there is no liberation, no future, only the armistice most vulnerable and temporary between me and my oppression.” Audre Lorde to Tony Morrison

The 黑料社区

Toni Morrison is one of the writers who wrote the most about 鈥榯he home and racial justice鈥�. In her emblematic novel , set in the post-Civil War South, she tells the story of a young girl murdered by her formerly-enslaved mother, Sethe. Sethe is importantly surrounded by the unheimlich (Freud), the stranger, where the foundations of our ethical judgment on slavery are found. In the United States, in the period 1882 to 1895, approximately one-third to half of the average black mortality rate corresponded to children under the age of five (). We face the dilemma of judging these acts.

Sethe, in an act of love, kills her daughter Beloved to avoid her master’s appropriation of her daughter. Sethe was a pariah in the post-slavery society of the United States. She knew from when she was a slave what it meant for a woman to have her children taken when her breasts were full of milk; that she would have been beaten to exhaustion for others to take her milk. She was raped by her master, as was the case for many of the slaves of Sweet 黑料社区; that name itself being a mockery of a plantation that was held under a system of slave laws that collaborated on that tragic fate. If a female slave escapes, there is a double loss; the capacity for reproduction and for manual labor. The slave society must permanently produce new slaves for reproduction ().

Sethe insistently repeats:”It wasn’t a story to share. They forgot it like a nightmare (鈥�) What should be forgotten before it is shared; what should be hidden and silenced as to not interrupt our present?鈥�. I wondered in my Perturbando el texto colonial. Los estudios poscoloniales en Am茅rica Latina (2010): “This is not an easy story to transmit” but it needs to, as says Bhabha (2002), so that it may be engraved in our subconscious.

Morrison reflected on 鈥榟ome and race鈥� this way:

I prefer to think of a world in which race is not, in fact, important. I don’t think of a theme park, a failed dream that will always fail, or the paternal house with its many rooms. I conceive of it as a home. For three reasons. First, because making a radical distinction between the metaphor of the house and that of the home helps me clarify what I think about racial construction. Second, because it allows me to take the concept of the insignificance of race and turn it away from longing and desire, to turn it away from an impossible future or from an irrecoverable and probably non-existent past, to bring it closer to a manageable and feasible human activity. Third, because the job I can do is to eliminate the strength of racial construction in language. I can’t wait for the great theory of liberation to come in, define its operation and do its job. Likewise, both race and home issues are a priority in my work and have led, in one way or another, to my quest for sovereignty, as well as my abandonment of that quest I have barely recognized its disguise. (Lecture at Princeton University, 1994)

A similar approach is that of bell hooks鈥檚 () Yearning. Race, gender and cultural politics where 鈥満诹仙缜鴓lace鈥� is conceived as a site of resistance and a space to fight for liberation against white racism. In her words, “since sexism delegated women the task of creating and caring for a home, it was the primary responsibility of black women to build domestic homes as spaces for care against brutal racist oppression and sexist domination. Historically, African-Americans gave the construction of homeplace a radical political dimension” (p. 43).

In the context of the ongoing pandemic, the home has been transformed into the world. In the face of growing neo-apartheid racial injustices, the anti-racist feminist politics that ancestrally battled from the home is the source of inspiration for today’s resistance. Recently, they aroused global awareness of movements such as #BlackLivesMatter in the United States and the African Refugee Union鈥檚 “We Are Born Free!”, along with others from the European Network for the Peoples of Africa and the Afro-Diaphoretic Women from Latin America and the Caribbean.

Global Black power is reborn with Afrofuturism, “a way to unite the future with the past and help reinvent the experience of people of color,” said . Her intertextual and performing languages – science fiction; African cosmologies; music – condenses “the intersection between black culture, technology, liberation and imagination,” she says. For (2016), the idea is 鈥渢o free the racialized body from colonial and world trauma and from the weight of racism and revenge”, a project inspired by the “Gateway of No Return” (Gor茅e, Sen茅gal) and the “tout-monde” (Edouard Glissant) of the exiles of racial capitalism thrown into the 鈥渮one of non-being鈥� ().

The question of which experiences occur in our postcolonial collective body during the pandemic opens us to new reflections: How difficult is it to think outside the sphere of typical Western philosophy and aesthetics? How do we decolonize the aesthetic imaginary and dismantle the racist images that persist? Citing the performative writing of the African-American poet Audre Lorde: “The master’s tools will never dismantle the master’s house”, so how do we then build a global power of minority brotherhoods and sisterhoods that can tear down the master’s house?

The Cry – Black Lives Matter!

“We Can’t Breathe”: the last words of George Floyd became a cry throughout the world. 鈥淟ook at the Black man! He was ‘a Black man’ and admitted it (…). But he also had to admit that this treatment was evil. It was necessary to plead it, to confess it: he was guilty of being Black; to tell before the world that this 鈥榝act鈥� was a curse, this ‘fact’ a destiny, this Blackness an essential 鈥榙efect鈥欌��, said (2009).

His death, captured on video, sparked widespread protests in the United States, which called for an end to police brutality against Black communities and people. At the sanctuary of North Central University, Minneapolis (Minnesota), a mural with the face of George Floyd was installed with the words “Now I Can Breathe” next to the names of other victims of racial violence in the United States. The world mobilizes behind these slogans against structural racism. 鈥淏lack Lives Matter!鈥�, they scream.

After mass demonstrations in the cities, monuments of slavers and racists were torn down: in Indianapolis, Indiana; Rocky Mountain, North Carolina; in Roanoke and Norfolk, Virginia, they are in the process of removal. In Richmond, the statue of Jefferson Davis, president of the Confederacy, was demolished. “Jefferson Davis was a racist and traitor who fled our city while his troops were carrying orders to burn it,” mayor Levar Stoney

Two years earlier, the statue of Dr. James Marion Sims had been lowered from his pedestal in Central Park in New York. Dr Sims is known in the United States as the father of modern gynecology and in a slave community in Alabama between 1835 and 1849, carrying out operations on dozens of slaves without anesthesia. He then moved to New York, where she founded the first women’s hospital in 1855. He pioneered fistula intervention and also invented the speculum and other medical instruments currently in use. Activists for years that his achievements were based on experiments with 鈥淎frican-American slaves鈥�.

The Cry can be traced back to even an earlier period: the New York State negotiating the abolition of slavery in 1799 and emancipating all slaves on July 4th, 1827. John Dumont, a slave master who rejected the emancipation of the enslaved, illegally sold Sojourner Truth鈥檚 5-year-old son Peter to an Alabama man. Truth, later known for the famous speech, took the matter to court and got Peter’s return. This case was one of the first in which a Black woman successfully challenged a white man in a U.S. court. Sojourner Truth her life to Methodism and the abolition of slavery, writing her in 1850 through dictation, as she could not read or write, and in the same year speaking at the first National Convention on Women’s Rights in Worcester, Massachusetts. She began traveling with the abolitionist George Thompson, and spoke to crowds about slavery and human rights.

The movement crossed the “Black Atlantic”, as Paul Gilroy put it. “Black Lives Matter protesters in Bristol of 17th-century slave trader Edward Colston and rolled it through the streets before unceremoniously throwing it into the River Avon.” The same was seen with the Rhodes Must Fall movement, which started as early as 2015 in South Africa with the post-apartheid generation organizing the first student protest for the decolonization of knowledge at the University of Cape Town (UCT). The statue of Cecil Rhodes, one of the many remnants of the colonial and apartheid past, had stood since 1934 at UCT and was the center of a debate that encompassed the consequences of the neoliberal model. The movement coincided with the emergence of the cyber movement #PatriarchyMustFall, spearheaded by actions of feminists and people from the queer community who demanded the fall of patriarchy to carry out such a task. Hate crimes and homophobia in the lives of South African Black lesbians, notably the rise of so-called corrective rapes, are practices of extreme violence faced by the community. What they called a process of began.

COVID-19 and the Cry: Inequalities and Vulnerabilities for Afro-Descendant Populations

COVID-19 has a different impact among Afro-descendant and Latino/a/x populations in the United States, Brazil, and other Latin American and Caribbean countries. Afro-descendants are particularly vulnerable to the coronavirus.  See below the case for Brazil ()

In New York City, mortality rates were twice as high for Black populations as they are for white. In Brazil, 1 in 3 Afro-descendants admitted into a hospital die (compare with only 1 in 4.4 for white people) (). The spread of Coronavirus in Brazil was also much faster in Black neighborhoods.

In addition, there is the issue of statistical invisibility in official information when it comes to the impact of COVID-19 among Afro-descendants in Latin America. The Inter-American Network of High Authorities on Policies for Afro-Descendants (RIAFRO) has recently highlighted both how 鈥渢he information available on the impact of COVID-19 among Afro-descendants in Latin America is virtually nil鈥� and 鈥渢he importance of improving the quality of information differentiated by race and ethnicity to improve the responsiveness of governments.鈥�

With health systems collapsing, social distancing is simply not possible in places where the informal economy is a source of survival and is carried out in public space. The alternative is to go back 鈥榟ome鈥�

The 黑料社区: Communities of Care

Audre Lorde wrote in “Cancer Diaries” in 1980 remembering her home while in the hospital battling against breast cancer:

At home this year we are celebrating the Kwanzaa Festival, the African-American harvest festival that begins the day after Christmas and lasts seven days. There are seven Kwanzaa principles, one for each day. The first principle is Umoja, which means unity, the decision to work for and maintain unity of itself and the community. The principle from yesterday, the second day, was Kujichagulia: self-determination, the decision to define ourselves, give us a name ourselves, and speak for ourselves, rather than being defined and described by others. Today is the third day for Kwanzaa, and the beginning for today is Ujma: collective work and responsibility, the decision to build and keep us together ourselves and our communities, and to recognize and solve our problems together.

Today, Brazil’s favelas organize their own fight against coronavirus. The movement of the virus to South America showed that these neighborhoods could have been devastated. The virus has disproportionately affected Brazil’s poor favelas, mostly Black ones. In S茫o Paulo, people living in poorer areas and getting the virus are up to 10 times more likely to die than people in rich areas, according to data published by the city’s health department. Afro-descendant residents of S茫o Paulo are 62 percent more likely to die from the virus than white residents in general. However, favelas are a great source of activism and resistance. Abandoned by government services, the Washington Post notes that communities have created parallel institutions鈥攊ncluding mail, the Internet, and sanitation鈥攁nd are working on health and education systems.

One of the alternatives that women in the Parais贸polis neighborhood of S茫o Paulo developed was the 鈥淧residents of the Street鈥� program to monitor and curb the spread of the virus. 鈥淲e decided to create alternatives so that if the government did not do its job, we could mobilize to prevent suffering in the community,鈥�  a favela鈥檚 resident . In the Complexo do Alem谩o favela of Rio de Janeiro, a database was created to track the disease. The community residents’ association of Cantagalo in Rio joined a local non-governmental organization to spray disinfectant. Also, Julian Carmo, a twenty-year old resident, partnered with other youngsters to map and fight the fake news related to virus (that warm climates would curb the coronavirus and that donated masks were contaminated with the virus). They a video that addresses the most common misinformation and established a hotline to help people.

Community-based action is the key: 鈥淲ithout the community there is no liberation,鈥� explained Audre Lorde.

Karina Bidaseca is a Principal Researcher at CONICET/University of San Martin and Professor at the University of Buenos Aires, Argentina. 

A version of this text was published in 23/7/2020. Photo: Audre Lorde. By .

A few days ago, despite another daily mass body count, the country stopped to watch the footage of a 22nd April meeting with President Bolsonaro鈥檚 cabinet. The tape release was commanded by a Supreme Court judge in an inquiry into an alleged interference by Bolsonaro in the Brazilian federal policy to protect one of his sons, currently under investigation.

The footage is horrendous to the democratic sensitivities and bitter to any political or civic taste. But I would like to point out one single intervention in the meeting that speaks to the country鈥檚 entrapment into its own version of . It reveals a government fixated in dismantling any piece of State regulation and privatizing any available company owned by the State.听

Philip Mirowski has argued in his 2013 book that cognitive dissonance boosts neoliberal thought to the point that no countervailing evidence can shake its disciples鈥� convictions of its ultimate truth. No matter how apocalyptical a crisis may seem, there is always reason to blame government intervention for all evils plaguing the Earth.听

This is in no way new to Brazil, as we claimed elsewhere, and it has gained full throttle in Bolsonaro鈥檚 administration. In the April 22^nd cabine meeting, the Environment Minister, Ricardo Salles, urged the president to seize the 鈥渄istraction鈥� of the COVID-19 crisis to push deregulation of the sector. Here is his quote during the meeting: 鈥淲e need to make an effort while we are in this calm moment in terms of press coverage, because they are only talking about COVID, and push through and change all the rules and simplify norms.鈥�听

As a piece recently warned, deforestation has hit 鈥渁n 11-year high last year and has increased 55% in the first four months of the year, compared to a year ago, with environmentalists blaming Bolsonaro鈥檚 policies.鈥�

Now, Bolsonaro calls for development of the Amazon by way of expanding extractivist activities such as gold and diamond panning, wood extraction and cattle breeding in protected areas, claiming it is necessary to lift people out of poverty.

In response to the video, the Environment Ministry claimed that de-bureaucratization and simplifying norms within the law is his priority and that 鈥渢he tangle of irrational laws hinders investments, the generation of jobs and, therefore, sustainable development in Brazil.鈥�

This is doubly alarming for two reasons that may have already become clear. First, “seizing” the healthcare crisis to push legislation that caters only to special interest groups is morally reproachable in itself.

Second, it replicates an outdated understanding of development as a short-term increase in income with blatant disregard of the costs to a broader scope of stakeholders, such as the native communities in the Amazon basin, the environment itself and the world at large.

has shown that 鈥減arts of the Amazon and other tropical forests are now emitting more CO2 than they absorb.鈥� This development has not yet been incorporated into climate models and could set the Paris Agreement鈥檚 temperature goals well beyond our reach.听

The second development-related issue speaks to a regressive technological agenda locked in static comparative advantages from which the country should be striving to escape.

A by Jo茫o Romero (Cedeplar-UFMG) and Camila Gramkow (ECLAC) brings new evidence that economic complexity correlates with lower greenhouse gas (GHG) intensity. Using data for 67 countries between 1976 and 2012, the results indicate that economic complexity can turn low carbon emission compatible with structural transformation.

In an co-authored by Paulo Gala (FGV-SP), we convey to an unspecialized readership that climbing the technological ladder is the way out of Brazil鈥檚 middle-income trap. By building more complexity into our fast deindustrializing economy, Brazil can take a leap forward into the future by becoming a and fostering a new national growth strategy based on .

It is my understanding that the Amazon forest and the Cerrado should be viewed as an immense biolibrary. Both provide a rich menu of blueprints for various chemical components and biological agents that current technology is perfectly capable of reproducing in laboratory work without the need to alter the original ecosystem. If this is true in any way, we are tearing down entire sectors of the world鈥檚 biolibrary only to keep the agrobusiness鈥� flame alive. Every acre of deforestation means terabytes of foregone knowledge. It means veritably crippling humankind to deal with a looming tide of climate- and health-related crises.

The current Brazilian administration continues to see the Amazon-Cerrado complex as a static reservoir of raw materials and low-hanging fruits. Impermeable to a growing body of evidence and to the winds of change, its outdated view misses the dynamic interaction between technology and natural resources. Instead of turning away from the environmental cliff, it might just take a step forward.

Andr茅 Roncaglia听is a Professor in Economics at the Federal University of S茫o Paulo (UNIFESP) 鈥� Brazil. He tweets at听.

Photo: Aerial view of the Amazon Rainforest, near Manaus, the capital of the Brazilian state of Amazonas, Brazil. By .

Brazil is in a crisis again. The COVID-19 pandemic has spread across the country and听听has led to a massive health crisis. Investment outflows have been听听and the Brazilian real has听 dramatically. The Brazilian economy is set to again after three years of weak positive growth.

Brazil鈥檚 development bank Banco Nacional de Desenvolvimento Econ么mico e Social (BNDES) has announced some听听to deal with the financial instability caused by the COVID-19 pandemic. However, these measures are being听听for being insufficient. Rather than being a temporary policy mistake that can be corrected easily, 叠狈顿贰厂鈥� passive response is linked to the bank鈥檚 structural retreat from the economy over the past five years.

During the 2000s, BNDES听was acclaimed as a catalyst of the country鈥檚 economic growth. Globally, developing countries such as saw the rise of BNDES as something favourable and sought to mobilise their own national development banks.

By acting as of major domestic companies, BNDES played a key role in Brazil鈥檚 state-activist growth model of which the observers have labelled 鈥�,鈥� 鈥�,鈥� or 鈥�.鈥� Furthermore, BNDES actively supported national champions鈥� strategy by financing export and investment activities. During and after the global financial crisis, 叠狈顿贰厂鈥� role extended and was used by the government to carry out .

A comparison of key financial indicators between BNDES and the World Bank illustrates the scale of 叠狈顿贰厂鈥� rise. 叠狈顿贰厂鈥� loan portfolio increased by over $200 billion during 2002鈥�2011 and it was comparable to the World Bank鈥檚 during the first half of the 2010s (Figure 1(Left)). 叠狈顿贰厂鈥� annual disbursement exceeded the World Bank鈥檚 from the mid-2000s and was over three times larger than the World Bank鈥檚 in 2013 (Figure 1(Right)). This rapid expansion was possible largely due to significant inflows of Treasury financing, whose share in BNDES’ total liabilities increased from 7% in 2007 to 58% in 2014.

Figure 1. Comparison of BNDES and World Bank (2002鈥�2019)

(L) Net loans outstanding / (R) Disbursements

(L) (i) BNDES and World Bank: As of and for the fiscal years ended June 30; (ii) End of the fiscal year exchange rates were used to convert the real into dollars.
(R) (i) BNDES: Calendar years, World Bank: As of and for the fiscal years ended June 30; (ii) Annual average exchange rates were used to convert the real into dollars; (iii) 2019 data for BNDES is annualised data using the data on 2019 1H.
Source: BNDES financial reports; World Bank Group financial reports

However, there was a critical juncture for BNDES when Brazil suffered a dual, economic and political, crisis during the mid-2010s.

A decline in commodity prices, a rapid withdrawal of foreign capital, and depressed investment sentiment caused the in the history of Brazil. There was also that involved the impeachment of President Rousseff and a revelation of complex corrupt networks composed of politicians and the country鈥檚 largest companies.

BNDES, a key financier of the Brazilian economy, was deeply involved in this turmoil. The development bank鈥檚 and came under scrutiny, and BNDES reform became a central component of the government鈥檚 economic liberalisation and fiscal consolidation. The pendulum began to swing to the other direction.

叠狈顿贰厂鈥� reversal of fortune was as dramatic as its rise. 叠狈顿贰厂鈥� loans outstanding, in dollars, has more than halved and its annual disbursement has shrunk by 84% since 2014, making both approximately a third of the World Bank鈥檚 in 2019 (Figure 1). If one holds the exchange rate constant to erase the effect of currency depreciation from around 2 real per dollar in 2014 to 4 real in 2019, the magnitude of changes is less dramatic, though similar trends are evident.

叠狈顿贰厂鈥� shrinking balance sheet was facilitated by the end of new subsidised funding inflows from the Treasury and 叠狈顿贰厂鈥� speedy debt payment to the government since 2015. As a result, the proportion of Treasury financing in BNDES’ total liabilities declined to 31% in 2019 3Q. In terms of assets, 叠狈顿贰厂鈥� loans with a subsidised interest rate () began to be with loans with a market-linked interest rate () based on the five-year real treasury rate and inflation rate in 2018. As the existing subsidised loan programme based on TJLP is phased out by 2023, 叠狈顿贰厂鈥� balance sheet reduction is expected to continue.

With the shrinking size, there has also been a multidimensional retreat of 叠狈顿贰厂鈥� operations.

Firstly, BNDES has lost its role as a credit-crunch fighter.

When the country鈥檚 credit growth rate began to decline with the effects of the global financial crisis in 2008, BNDES, alongside other public financial institutions, rapidly expanded lending until the early-2010s. As a result, public financial institutions鈥� proportion in Brazil鈥檚 total credit outstanding increased from a third in 2008 to half in 2013.

In contrast, Figure 2 shows that the growth rate of credit outstanding provided by BNDES, as well as public financial institutions in general, was below Brazil鈥檚 overall growth rate since 2016. Most notably, the growth rate of BNDES was approximately minus 10% for three consecutive years, indicating that BNDES contributed to, rather than countered, credit tightening.

Figure 2. Credit outstanding growth rate (2003鈥�2019)

Years ending in June. Source: Banco Central Do Brasil; BNDES financial reports.

Secondly, BNDES seems to be losing interest in stimulating industrialisation.

During the 2000s, one of the major concerns of the Brazilian government was the of the preceding decades. With the aim of reversing or slowing down this trend, BNDES actively provided loans to the industrial sector.

However, there are now signs of BNDES withdrawing its efforts to invigorate structural transformation in the form of sector-specific support. Instead, BNDES is increasingly focusing on ; concentrating on lending to the infrastructure sector and resulting in this sector鈥檚 share in the loan portfolio rising from 37% in 2013 to 53% in 2019. In comparison, modern productive sectors鈥� shares in loans outstanding have generally shrunk. The total amount of lending to the manufacturing sector nearly halved and its share declined from 26% to 16% (Figure 3).

Figure 3. 叠狈顿贰厂鈥� loans outstanding by economic sector (2013鈥�2019)

Years ending in June. Source: BNDES financial reports

Thirdly, BNDES is shrinking its role as a shareholder of national champions.

During its prime, BNDES became a key minority shareholder in some of the largest Brazilian companies in a swathe of sectors. The number of firms in BNDES鈥� equity portfolio increased from 130 in 2006 to 157 in 2012, with its average ownership increasing from 11% to 14%.

In contrast, BNDES is now participating in the Brazilian government鈥檚 . The number of companies in 叠狈顿贰厂鈥� equity portfolio declined from 155 in 2013 to 90 in 2019 3Q. In particular, 叠狈顿贰厂鈥� sales of shares in large firms, many of which were involved in recent corruption scandals, has gained traction over the past few years. BNDES completely moved away from Braskem, a subsidiary of conglomerate Odebrecht, in 2017. Ownership stakes in Petrobras and Vale have gradually been reduced (Figure 4).

Figure 4. 叠狈顿贰厂鈥� ownership share in major Brazilian companies (2006鈥�2019 3Q)

Source: BNDES financial reports

Though not reflected in the graph, BNDES all of its shares in Marfrig at the end of 2019. In February 2020, the development bank also a stake of 5.6% in Petrobras, which was 叠狈顿贰厂鈥� to date. The timing to sell shares of some other large firms such as JBS is also being . Prior to the recent financial turmoil caused by the COVID-19 pandemic, Privatization Secretary Salim Mattar听 that 鈥楤NDES could sell its entire portfolio.鈥櫶�

Lastly, the financial relationship between BNDES and the government is being disintegrated.

As well as ending subsidised funding inflows from the Treasury, another principal change in this regard is the dividend policy. Between 2002 and 2014, BNDES contributed to government revenues by paying 87% of adjusted net income as dividends on average. In contrast, the government has applied a much lower dividend ratio from the mid-2010s with the aim of strengthening 叠狈顿贰厂鈥� financial position (Figure 5).

Figure 5. Composition of BNDES’ adjusted net income (2002鈥�2018)

Source: BNDES financial reports

In 2017, a new dividend policy that sets the dividend pay-out ratio between 25% and 60% was institutionalised. This policy was dubbed the 鈥�鈥� in 15 years. Reformers that this policy would allow BNDES to accumulate retained earnings, strengthen capital structure, weaken dependence on state funding, and eventually curb government influence on 叠狈顿贰厂鈥� operations.

Through the multidimensional retreat of BNDES from the Brazilian economy, the reformers may now be seeing the anticipated results. The capital adequacy ratio has nearly doubled over the past three years, recording 36% in 2019 3Q. Return on asset and equity ratios have increased by around five-fold and three-fold, respectively. In the next few earnings announcements, we may even see 叠狈顿贰厂鈥� dividend payments temporarily increase despite low dividend ratio due to 叠狈顿贰厂鈥� recent sales of corporate shares.

Using these financial performances as evidence of success, the reformers will try to the market-oriented restructuring which has recently been due to the pandemic-induced economic instability. Despite these circumstances, BNDES is still surprisingly in its potential contribution to Brazil鈥檚 development. How the development projects in demand will be financed remains uncertain. Furthermore, the demand for the 鈥榬eturn鈥� of BNDES is increasing amid the COVID-19 pandemic.听 As a result, the on the desirable role of BNDES in the Brazilian economy will continue.

In sum, the trends since the mid-2010s suggest that we are seeing the beginning of a new chapter in 叠狈顿贰厂鈥� 68-year history. More broadly, the multidimensional retreat of 叠狈顿贰厂鈥� operations, as well as 叠狈顿贰厂鈥� to the COVID-19 pandemic, may be a signal of the beginning of the end of active state capitalism in Brazil. The retreat of BNDES may also be highlighting the fragility or weak of democratic state capitalism in the developing world. Developing countries which have been Brazil鈥檚 model of state capitalism should closely study the rise and fall of BNDES and refine their strategy.

Kyunghoon Kim听is a PhD student in the Department of International Development at King鈥檚 College, London.

Photo of BNDES by .

In recent years, state capitalism has become an important buzzword in the development economics discussion (again). In view of the very different ways in which this term is used, Ilias Alami and Adam Dixon recently highlighted the dangers of using the term too loosely in an article in . In view of its recent popularity, state capitalism could suffer a similar fate to the terms “neoliberalism” or “financialisation” by becoming a very loose rallying cry without any significant analytical value. To overcome this problematic situation, Alami and Dixon propose that future research should (1) develop a theory of the capitalist state, (2) circumscribe the time horizons of state capitalism, and (3) locate state capitalism more precisely in territorial and geographical terms.

Although I am not sure whether the genius can be put back into the bottle by developing a unified theory of the state (too many different theoretical traditions are involved by now), I am very sympathetic to the latter two demands. Our recently published book “State-permeated Capitalism in Large Emerging Economies” () is a modest contribution to the latter goals. It deals with the economic development of Brazil, India, China and South Africa between 2000 and 2015. Departing from a 鈥�鈥� perspective, we have developed an ideal type of state-permeated capitalism – as opposed to liberal, coordinated and dependent capitalism – and examined to what extent large emerging markets are approaching this ideal type.

During the last two decades, comparative capitalism scholarship 鈥� defined by common features such as the emphasis of institutional contexts that are sticky and most important on the national level 鈥� has evolved a lot. Despite the existence of various earlier and parallel developments, the 鈥淰arieties of Capitalism鈥� approach had become canonical during a first generation of comparative capitalism research. Many of its basic features are still useful for the analysis of capitalist systems. This primarily refers to the distinction of five institutional spheres (corporate governance, financial system, industrial relations, education and training as well as the transfer of innovations) and the identification of cross-cutting coordination mechanisms (inter-firm networks and associations in coordinated economies, in contrast to competitive markets and formal contracts in liberal economies). The narrow analytical focus on OECD countries as well as the rigid typological dichotomy of the original framework later has been overcome by extending the study of national capitalist institutions to other world regions and constructing new ideal types accordingly, including the state-permeated type mentioned above.

China and India, the two economies that come closest to the ideal type of state-permeated capitalism, have featured very high growth rates during the last decades. This growth was based on real investments in industry, not only on financial sector activities. Against the conventional wisdom that emerging markets鈥� growth is mainly based on exports, industry in the countries following the state-permeated model mainly produce for domestic markets, particularly in a market segment with a medium level of technology. Domestic markets are sheltered from global competition, both by tariffs and regulatory measures. In order to tap this market segment, companies in state-permeated capitalism are supported by institutional complementarities that provide a high degree of stability, both with regard to corporate governance and finance for investment.

Both the temporal and territorial issues highlighted by Alami and Dixon play an important role in our research. From the perspective of development economics, the key question should be: When does state-permeated capitalism work? Let us first turn to the territorial aspect. A core problem for different types of state capitalism is the problem of state revenues and the associated phenomenon of “rent-seeking”. Certain economic groups gain a dominant position in the state apparatus and abuse it for personal enrichment, or to gain anti-competitive advantages for their affiliated companies. As has been some decades ago, this is a major problem for development, particularly in economies based on natural resources. Our research on more successful forms of state capitalism has shown that the latter are based on competition between different coalitions of state and business that keep each other in check, thereby preventing extensive state capture and rent-seeking by a single group. In both China and India, no economic power is able to fully control the state’s steering of the economy. In contrast, there are a number of competing coalitions on the subnational level, very often based on close informal and reciprocal cooperation between local or regional authorities and large companies based in these regions. These coalitions form an informal system of checks and balances. The system largely prevent the harmful capture of the state apparatus by a single group. However, an important prerequisite for this mechanism to work is a very large economy. Smaller economies can be more easily controlled by a single group of rent-seekers.

Turning to the time dimension highlighted by Alami and Dixon, we find that the rise of state-permeated capitalism was accompanied by an economic situation in which large Western companies were desperate to access the large domestic markets of major emerging markets in the face of stagnant demand and fierce competition in their home economies. Both the Chinese and Indian governments controlled the access to their large domestic markets and were able to negotiate large concessions from Western companies. This was most pronounced in the case of China where, for example, Western car producers were forced to undergo joint ventures with local companies and agree to substantial technology transfer, in order to be able to set up shop. During the 1950s or 1960s, in contrast, the negotiation position of the Chinese or Indian government would have been much weaker, due to sufficiently high growth rates in the Western economies.

In both dimensions (space and time), state-permeated capitalism has turned out to be an option for major emerging markets only. Small emerging markets, in contrast, are neither large enough to develop competing state-business coalitions, nor do they have a strong negotiating position to force Western companies to cooperate on their terms. Correspondingly, state-permeated capitalism is no panacea for successful economic development.

However, not even all large emerging economies have proven to be able to mobilize the advantages of state-permeated capitalism in spite of their temporal and territorial advantages. Our study of the cases of Brazil and of South Africa demonstrate that state-permeated capitalism also requires a certain degree of political coherence to work well. During the last decades, both in Brazil and South Africa, massive conflicts between the various class fractions dominating their political economies have prevented their ability to come up with a coherent institutional set-up for the successful pursuit of state-permeated capitalism. At least in case of Brazil, a strongly entrenched role of foreign-linked capital also inhibited the development of a common national development project.

To conclude, Alami and Dixon are to be applauded in highlighting very important factors for the future study of state capitalism, even if their rallying cry for a coherent state-theoretical foundation of this research may prove to be elusive. At least for the case of state-permeated capitalism, both time and space have proven to be important factors circumscribing their effectiveness.

Dr. Andreas N枚lke is professor of political science at Goethe University and head of research group at the Leibniz Institute for Financial Research SAFE in Frankfurt, Germany.