Political Risk Latin America Blog @PolRiskLatam

Can Brazil live up to its promise as a ‘natural knowledge economy’

Posted in News and Articles by politicalrisklatam on August 9, 2010

by Damian Carrington for The Guardian Weekly, August 9th, 2010.

To forge a new direction, nation must avoid the petrol-power trap.

Outside Dr Gilberto Cãmara’s office, there is a beautiful satellite map of Brazil. From the fractal elegance of the Amazon and its tributaries to the twinkling mega-cities of Sao Paolo and Rio de Janeiro, the map shows why he thinks Brazil can be the world’s first environmental superpower.

He leads Brazil’s National Institute for Space Research (Inpe), one of the top 50 research organisations in the world. His startling claim, he explains in his easy English, rests on turning a piece of standard economic theory on its head. Nations develop their economies by moving up the value chain, away from churning out commodities and towards manufacturing, say the textbooks. Brazil has abundant natural resources, so the key to prosperity is to start making stuff, right? Wrong, he says, because of the “China effect”.

China mass manufactures at rock-bottom prices, with the consequence that over the past two decades the cost of manufactured goods has fallen fast, while demand has pushed up the cost of the commodities used to make the goods. This leads Camara to his slogan: “Brazil – the natural knowledge economy“. He describes this as applying knowledge and technology to commodities to boost their value, and reels off examples: biofuels, in which Brazil leads thanks to its sugar cane ethanol and growing biodiesel production; renewable energy – 47% of the country’s energy is already green, a world record; and climate change – Brazil’s Amazon is vital to the planet’s health.

“Brazil’s natural knowledge economy offers more opportunities for internal [national] research than our manufacturing industry,” he says. Brazil wouldn’t be the first nation to get rich on its resources, but it aims to be the first to do so without destroying its own economy or environment. (continue reading… )

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