The Multinational Monitor


B O O K   R E V I E W S

Where's the Miracle?

The Cruel Dilemmas of Development:
Twentieth Century Brazil
by Sylvia Ann Hewlett
Basic Books, $15.00, 243pp.

Reviewed by Peter Evans

Sylvia Hewlett describes the contours of Brazilian development with a deftness that could threaten her claim to being a bona fide economist. "Real" economists are supposed to produce prose that is turgid and jargon-filled. Hewlett's writing is neither.

While she speaks to several theoretical debates fundamental to development economics, Hewlett is equally interested in placing these debates in a broader political and historical context. In addition, she is highly critical of the tendency among her colleagues to sidestep questions of values and welfare.

Latin American economists should have no problems with Hewlett's definition of the discipline, but one suspects that this will not be a popular book among North American economists.

It is also unlikely to be popular among uncritical admirers of the Brazilian model of development. Hewlett is careful to document the costs of the Brazilian "miracle": infant mortality rates double those of countries at comparable income levels; declining incomes for the working class; and increasing prevalence of malnutrition in Brazil's industrial heartland (p. 170).

At the same time, Hewlett makes-no exaggerated accusations against the current regime, emphasizing instead that poverty and inequality have characterized Brazil from the colonial period onward. Hers is no leftist tract designed to show that rule by a progressive vanguard would erase the misery of Brazil's masses. If anything, it errs in the opposite direction.

While Hewlett criticizes those who would argue for a direct link between inequality and economic growth (p. 181), she does say that Brazil's economic performance "depended on massive poverty and political repression" (p. 4). Insofar as she means that poverty and repression were necessary because Brazil's leadership wanted growth without disturbing the wealth and prerogatives of the privileged, few would disagree.

However, she often leaves the impression that it was growth in itself rather than the preservation of privilege that created the "cost" of the Brazilian model.

Complementing the tendency to portray the misery created by the military regime as an unfortunate but necessary price that Brazil had to pay in order to achieve high growth rates, is the tendency to emphasize the efficacy of the military's economic policies.

For example, Hewlett says "chronic inflation and balance of payments problems were resolved (in 1964) by military dictatorship" (p. 204)., To be sure, the military regime reduced inflation, but it did so only by cutting the growth rate down to about half what it had been under the parliamentary regime of Juscelino Kubitschek. As growth rates recovered so did the rate of inflation, until by the end of The 70s inflation was back to the levels it had reached in the chaotic years of Jango Goulart (table 7).

By no stretch of the imagination has chronic inflation been "resolved" in Brazil. Likewise, as Hewlett points out (table 4 and 6), Brazil's current account continues in chronic deficit.

Looking at Brazil in the late 70s, one finds rates of growth about what they were under the parliamentary regimes of the 5Os, inflation as bad as it has ever been, foreign debt at previously unimagined levels, and no end in sight to the current account deficit. Hardly a miraculous performance.

External factors (OPEC, etc.) are, of course, partially responsible for Brazil's current economic difficulties, but then as Hewlett is careful to note (p. 47-48), external factors were equally involved in generating the high growth rates of the late 60s and early 70s.

The military produced no economic miracles. If it was in certain important respects more effective than the bourgeois parliamentary regimes that proceeded it, it was in other respects surprisingly prone to letting the preservation of privilege stand in the way of more efficient use of the productive apparatus.

Like most scholars, myself included, whose views of Brazil were fundamentally shaped in the late 60s and early 70s, Hewlett finds the military's successes in the promotion of economic growth more interesting than its failures, viewing the authoritarian regime primarily as economic manager. Her use of comparative materials exacerbates this tendency.

By focusing on other developing countries with high growth rates, unequal income distributions and repressive governments (table I), she further strengthens the assumption that repression, inequality and growth go together.

In fact, most developing countries have highly unequal income distribution and can be accused of engaging in repression, but there is no evidence that repression is any guarantee against economic stagnation or that countries with low growth rates are more dedicated to human rights. Highlighting a few cases like Zaire to demonstrate the lack of relation between equity costs and growth benefits would have been worthwhile.

Hewlett's comparative analysis also downplays the existence within capitalist countries of alternatives to Brazil's model. Some capitalist regimes have at least managed to couple rapid growth with improvement in the distribution of income. Taiwan, for example, while clearly a repressive capitalist regime, both grew rapidly and put a larger share of its national income into the hands of the working class, in part by jettisoning a small segment of the privileged class (local landlords).

Socialist alternatives are also dismissed more rapidly than they should be. For example, Hewlett is quick to dismiss China's growth as "disappointing" (p. 217). Even according to the World Bank's World Development Report, 1980 (which surely underestimates the monetary value of the increased social services available to the rural population), per capita incomes have grown more rapidly in China than in other countries at comparable levels of income.

According to the same report, per capita incomes in countries with "centrally planned economies" have grown more rapidly than those in any other category of nations except oil exporters. This does not, of course, speak to the problem of combining growth with the expansion of effective, wide-ranging political participation, but it does indicate that removing wealth from the traditionally privileged can go together with promoting economic growth.

Disagreeing with the extent to which Hewlett has linked repression, increased inequality and economic growth is, fortunately, possible without disagreeing with most of what she has to say about Brazil. It is a well-crafted, thoroughly researched book which draws on the best of Brazilian social science.

For readers interested in a sophisticated yet accessible attempt to capture the complexities of Brazilian development in a single volume, Hewlett's book is unquestionably one of the best options available.

It is only necessary to keep in mind that Brazil is a good example of what must be done to produce growth without threatening privilege-not a demonstration of the impossibility of growth with equity. ,

Those struggling to increase output, distribute it equitably and at the same time build popular participation in the political process should not find the Brazilian case discouraging. If it shows anything, it shows the importance of finding a better way. 0

Peter Evans is author of Dependent Development: The Alliance of Multinational, Slate, and Local Capital in Brazil.

Outposts of Monopoly Capitalism: Southern
Africa in the Changing Global Economy

by Ann Seidman and Neva Seidman Makgetla
Lawrence Hill-Zed Press, 370 pp.
U.S.$16.95 ($8.95 paper).

Two longtime activist-scholars of Southern Africa have produced a good and readable discussion of the role of international capital in Southern Africa. It is a work aimed at beginning Africanists, and reviews in nontechnical fashion the historical and contemporary role of European, Japanese and South African-as well as American and British-investment in the region. Modern sector growth is linked to deepening underdevelopment, with individual chapters on the mineral sector, agribusiness industry, oil, and finance capital.

The authors seek a solution of integrated regional development and local industrial growth poles to end South Africa's sub-imperial role. One wishes for far more detail on this prescription.

The July, 1979 meeting of Front Line States envisioned this kind of solution, declaring that "external aid must be directed to the real needs of the people' and countries as identified by their governments." Given the deleterious role that external aid has played in developing countries, this reaching out for aid may bode ill for participatory development and real human needs-the practical issues that both governments and macroanalysts need to think about far more.

The United States and World Development Agenda 1980<.i>
by John Sewell et al.
Praeger, 256 pages
U.S.$23.95 (cloth), $6.95 (paper)

The annual volume of the liberal Overseas Development Council in Washington sounds its familiar thesis: the North should pay more attention to the South.

Washington won't listen. A light general prescription for a growth and equity strategy for the 1980's is not going to pave the way. ODC avoids the issues of practicality, straddles the sensitive NIEO matter, and perpetuates the generic intellectual inbreeding of Washington.

ODC has elementary perceptual problems. It may be an appropriate imperial vision that the North has a stake in the South "to make it an integral part of the engine of world growth," but ODC cannot honestly at the same time claim that more aid and trade as now conceived will meet the basic human needs of the world's poor.

Even worse is the assumption that "we know enough to begin to take action, toward improving the prospect of poor countries and of poor people everywhere." It has been apparent for years that the major donor agencies and their sponsors don't know enough .about area studies, organization studies, and the political economy of development to do any such thing. This is, in sum, bureaucratic and political "scholarship" in its most typical form.

Alternatives to the Multinational Enterprise
by Mark Casson: Holmes & Meier
116 pp, U.S.$26.00

A neoclassical academic economist from England argues against UNCTAD proposals to outlaw restrictive business practices like licensing. He seeks instead the improvement of market efficiency by changing legal, tax, and institutional arrangements and by expanding patenting so that corporations will have less incentive for transfer pricing and more for transferring proprietary technology.

Host, countries, by pursuing such technology rather _than direct investment, would gain greater control over investment and employment decisions. Market efficiency would gain all around.

Casson's approach argues against the worldwide socialization of information as politically unfeasible. He leaves it to others-more fluent in the progressive economic development literature and more hopeful about structural change-to expand some of this material.


The World Directory of Multinational Enterprises
by John M. Stopford, John H. Dunning and Klaus O. Haberich
1189 pages, U.S.$195.00

This recently completed report, written by three business academics, provides vital information about the 430 largest multinationals in the world.

The companies are arranged alphabetically and then analyzed in seven categories: structure, products, background, current situation and strategic plan, five-year financial performance, major shareholders, and principal subsidiaries and affiliates.

To facilitate easy use of the directory, the two-volume, 1200 page report comes replete with cross-indexes and comparative statistical charts.

For students of multinationals, this resource should serve as an indispensable tool. Its high price, U.S.$195.00, however, will make it available to the general public only in libraries.

For a copy, write: Facts on File Publications
119 West 57th Street
New York, N.Y. 10019

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