Sustainable Industry

Towards green productivism

By Daniel Vargas, professor at the Fundação Getúlio Vargas School of Economics in São Paulo (FGV/EESP) and Coordinator of the FGV Bioeconomy Observatory*

 

Brazil’s development over the coming years will require an extra effort to strengthen the country’s economy and expand its production capacity. Brazil should embrace “green productivism”.

By productivism, I mean the commitment to the accelerated expansion of Brazil’s industrial activity across the various sectors and segments. By green, I mean approaching the environment not as a problem, but as an opportunity, as a strategic asset for Brazil before the world.

The foundations of our economy were laid in 1930-1980, when Brazil ignited the three central engines of its economy: industry, mining and agriculture. In the 1980s, as democracy was restored two new commitments were introduced: the fight against social exclusion and, from the 1990s, the fight against environmental degradation.

The socio-environmental values ​​gave rise to major innovations in the country. We launched a social protection network to fight inequality. It provides social security and assistance to marginalized populations and regions, just like the Bolsa Família program. Against environmental degradation, we built an extensive command and control structure led by the Ministry of the Environment that relies on satellite monitoring and surveillance coverage.

The impacts of the socio-environmental agenda were notable. Poverty and inequality have consistently declined in Brazil within a short time span. Migratory flows in poor regions of the country were reversed. We became familiar with consumer democracy – retail trade and installment plans, TVs, stoves, and refrigerators – while Brazil became an environmental benchmark. Deforestation in the Amazon fell dramatically, from almost 30,000 km2 per year in the 1990s to 4,500 km2 in 2012. This was all in conjunction with ambitious land demarcation programs.

Despite its merits, the socio-environmental vision concealed a limit. It was never devoted to driving change in the country’s industrial base. It failed to sow the seeds of technological advancement in the industrial sector. It failed to drive significant gains in skills and productivity at a time of growing competition in the world.

The exception was the country’s thriving agribusiness, which corroborates the thesis. As commodity prices were high in the international market, Brazil sailed in a blue sky. As prices fell, the trade balance went into the red. With no cash and no production alternatives, the State’s financing capacity was exhausted as of 2013. Poverty, deforestation and the crisis made a comeback.

What challenge is facing Brazil now? Kick-starting its industrial capacity under democratic tenets and in line with socio-environmental values. To achieve this, however, it will not be enough to insist on the old conjunction between a socio-environmental superstructure and an evanescent industrial sector. The entire economy needs boosting by strengthening agribusiness and building a more sustainable industrial sector.

Green productivism shifts socio-environmental commitments from the margins to the center of production dynamics. Social inclusion and environmental conservation became values ​​embedded to the companies’ own business model and policies. Placing high stakes on growth and on the ability of our economy to prosper involves cumulative gains in inclusion and sustainability.

In other words, social is no longer an adjective, a compensation – important, though insufficient – for the pain and suffering of the people, and has become itself part of the production apparatus. By the same token, environmental is no longer a police station for ‘you can’t do this’ or ‘it’s forbidden’, and goes on to become a resource, an asset, an opportunity to generate green income and wealth.

There are different routes to start a productivist project, which must consider the unique features of Brazil’s individual regions. Amidst variations, however, a basic element covers the entire territory: the high stakes on science and knowledge about the ‘green,’ as a promising means to revamp and rekindle the country’s industrial capacity.

Although Brazil is endowed with one of the largest natural resources on the planet due to our biodiversity, our forests, our soil and our waters, these comparative advantages should be transformed into competitive advantages. Through innovation and new advances, Brazil could convert living and preserved nature into a source of capital and income for the entire country.

 

 

* Daniel Vargas holds a PhD and a master’s degree in Law from Harvard University, and has held different positions in the Federal Government, such as Secretary for Sustainable Development and Executive Secretary at the Secretariat for Strategic Affairs of the Presidency of the Republic.