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Usam Ni Anaai~ -cI )V Z'j Jt A-,IonIN i 7/- I / LIMIT DISTRIBUTION The distribution of this document is controlled and its contents may not be L 4'~~ ( discussed with unauthorized persons. I, 9 ;, '~'~' P C o0 east eS~tudy ri,4~kvpfFM' iZT EIT usam nianaai~ I, j :1 ~ K;~ NOVEMBER 25, 1963 I XzcQL-v 14 ~ RIO DE JANEIRO - RECIFE Ask C' '-V 'i. t j _ ­ q n p ' F - 3 p CI A L gORTREAST STUDy a 5)3. - - I'- November 25, 1963 -4 Rio de Janeiro Re oife Reoaie Group' 3 &,/6/­ Downgrade 1 2 4 at -Year intervals; not automatically declassiiea LIMITED OFFICIAL USE November 25, .1963 INTRODUCTORY MEMORANDUM Subject: Special Northeast Study. This is ai2 advance "dqvaft" copy of the Special Northeast Study just completed by USAID/Brazil. It does not represent an officially cleared document and final approved copies will be distributed later. In the meantime, however, it has been decided to make a limited distribution of the study in its present form in order to facilitate comments and suggestions and to serve as valuable background information for current .discussions of important USAID/Brazil program matters. The decision to undertake this study was made some months ago. It was clear that an over-all review was desirable and would assist the Mission greatly in the preparation of its FY 1965 Country Assistance Program proposals for Brazil. Such a-study would also serve as important background in helping to prepare various elements of the U.S. Government for the joint review early in 1964 called for by the Northeast Agreement. It was also clear that the study could not be made on a part-time basis by the regular Mission staff headquartered in Recife, which was already over-burdened and under heavy pressure to fulfill the commitment called for-by the Agreement. Accordingly, it was decided to form a special Task Group to make the study, collect the data, and prepare the report. Donor Lion, Assistant Director, USAID/Brazil, was designated to head the group on a full-time basis. Northeast Program Director John Dieffenderfer and his staff gave all-out support to the group. Substantial direct contributions, some also on a full-time basis, were made by Alan Bogatay, Alvanir de Carvalho, George Hawbaker, James Haynes, Bernard Immerdauer and I. J. Javrotsky of USAID/Recife; Thomas J. O'Donnell of Consulate/Recife ; and S. Michael Maia, Joga J. Vieira and Maria J. M. Costa of USAID/Rio. The team began work in Recife c September 9th and was officially disbanded early in November upon completion of the rough draft of the report. Readers of the repo't will, I believe, recognize the ezoellent work done by this group in such a short period of time. It is IM7rPED WFFICIAL USE UdtL)AS..! LIMITED OPPIQI!L USE only to be regrettld-'that tsubitantially -more time could not have been allowed now for this important assignment. Many of the findings, conclusions and recommendations flowing from this study are reflected in the FY 1965 CAP submission. For example, the decision to integrate the Northeast program more fully into the national program for Brazil is one of the direct results of the study, 0A the other hand, some conclusions and recommendations require further analysis and discussion before final proposals will be ready. I wish to draw attention to one conclusion of the report which I consider especially important, namely, that in reviewing program achievements; it is evident U.S. assistance in the Northeast should be regarded as a successful example of the use of aid as an instrument of U.S. policy. This accomplishment is especially noteworthy when consideration is given to some of the problems encountered. The report itself consists of four parts; Part I, SUMMARY, contains in one chapter t4 assumptions, issues, findings, conclusions and recommendation0 of the total study. Part II, THE -ORTHEAST, contains five chapters which describe and analyze the Northeast economy and certain non­ economic forces affecting development in the Northeast. Part III. DEVELOPMENT EFFORTS SINCE THE NORTHEAST AGREEMENT, consists of three chapters which present the background of-the Northeast Agreement and review development efforts since the Agreement by both the United States and Bratil. Part IV, IPLEIENTATION OF U.S. POLICY IN THE NORTHEAST, consists of two chapters, one a -profile onSUDENE, the other .a discussion of AID policy with respect to the Northeast. Jack B. kubish Wirector, USAmArasi LIMITED OF.?ICIAL USE SPECIAL TORTHEAST S TABLE OF CONTENTS Page NQ INTRODUCTORY MEMORANDUM PART I. SUMMARY Chapter I. Issued, Assumptions, Findings, 1 Conclusions and Recommendations PART II, TE NORTHEAST Chapter II. Economic Summary - 19 Chapter 111. Agriculture 34 Chapter IV. Industry * 42 Chapter V. Other Economic Sectors and Factors 58 Chapter VI. Selected Non-Economic Forces 86 PART III. DEVELOPMENT EFFORTS SINCE THE NORTHEAST AGREEMENT Chapter VII. Background of the Northeast.-Agreement 98 Chapter VIII. Post-Agreement Brazilian Efforts :110 Chapter IX. Post-Ag-reement U.S., Efforts 1120 PART IV. IMPLEMENTATION OF U. S. POLICY IN THE NORTHEAST Chapter X., Profile: SUDENE .130 Chapter XI. Strategy and Implementation of U. S; Policy 146 APPENDIX 4, STATISTICAL TABLES APPENDIX B. NORTHEAST AGRICITLTUREs TECHNICAL SUPPLEMENT APPENDIX C. SOURCE IHATERIALS APPENDIX-D,- THE NORTHEAST AGREEMENT CHARTS I PER CAPITA INCOME TRENDS 20 II SHARE OF NATIONAL 1NCOME. THE NORTHEAST AND REST OF BRAZIL, 1950-1960 20 III INDEX OF REAL INCOME GROWTH. THE NORTHEAST AND REST OF BRAZIL, 1950-1960 20 IV NORTHEAST URBAN AND RURAL POPULATION DISTRIBUTION. ACTUAL 1940-1960; PROJECTED 1970 25 V SELECTED 'COMPARISONS, AREA AND POPULATION 29 VI DROUGHT POLYGON MEASURES 29 VII COST OF LIVING TRENDS IN THE -NORTHEAST -AND BRAZIL9 1950-1960 31 VIII RELATIVE IMPORTANCE IN VALUE OF PRINCIPAL NORTHEAST AGRICULTURAL CROPS IN 1950 AND 35 1960 IX THE NORTHEAST AREA UNDER SUDENE JURISDICTION ,AND POLYGON OF DROUGHTS 105 EXHIBITS I SPECIA INCENTIVES TO PRIVATE 'INVESTfElT IN NORTHEAST BRAZIL 53 II SUMMALT( OF FEDERAL ACTIVITY IN THE NORTEEAST, 1877-1959 105 III SUMMARY OF NON-BRAZILIAN ASSISTANCE IN THE NORTHEAST, 1942 - APRIL 13, 1963 107 IV MAJOR REGIONAL AND 174TTQNAL DEVELOPMENT ENTITIES OPERATING WN NORTHEAST BRAZIL 111 V PARTIAL ESTIMATES, PLlAITED CONTRIBUTIONS TO NORTHEAST DrVELOPMENT, By PROGRAM BY BRAZILIAN ENTITIES, 1 ?Y'63 - FY'64 1.3 VI SUDENE APPROPRIATION AND ESTIMATED OBLIGATIONS, BY SECTOR, CALENDER YEARS 1962 AND 1963 115 VII NON-USAID, NON-BRAZILIAN ENTITIES PARTICIPATING DIRECTLY IN NORTHEAST DEVELOPIMENT 129 UNC[ASI~L~Page Nq TEXT TABLES I ESTIMATE OF CAPITAL REQUIREMENTS TO RAISE PER CAPITA INCOME OF THE NORTHEAST TO THE 1960 LEVEL OF THE REST OF BRAZIL 22 II ESTIMATED CAPABILITY OF AGRICULTURAL RESOURCES TO SUPPORT RURAL POPULATIONS IN THE NORTHEAST, GOIAS, MATO GROSSO AND RONDONIA, 1960 23 III PERCENT DISTRIBUTION OF ECONOMICALLY ACTIVE POPULATION BY SECTOR, 1940-1960 30 IV PRICE TREND COMPARISONS, 1950-1960 32 V MANUELCTURIG IN TIHE NORTHEAST, SELECTED STATES, 1959 45 VI AVERAGE TRAFFIC J)EMSITY, MAIN? NORTHEAST RAIL- ROADSJND COMJEARISON WITH RAILROADS IN CENTER. SOUTH- 65 VII OPERATIONAL DEFICITS OF NORTHEAST RAILROADS 66 VIII COMPARATIVE INDICES OF VOLUME OF FREIGHT 66 .. CARRIED BY THE RAILROADS AND OF AGRICULTURAL AND INDUSTRIAL PRODUCTION IN THE NORTHEAST, 66 1957-1961 TX ]UMBER AND TYPES OF LOCOMOTIVES IN USE IN NORTHEAST RAILROADS, 1962 67 X VOLUME OF OCJGO HANDLED AT THE ORGANIZED PORTS IN THE NORTHSAST, 1957-4961 68 XI AVEIRAGE SHARE OF NORTHEAST WORTS, BY STATES, AS PECENT OF TOTAL BRAZI' EXPORTS, 1954-1962 77 XII VALS OF NORTHEAST FORE-;Gi A9D DOMESTIC EXPORTS A?' PERCENT OF NORTHEAST OME, 1950 AMN 1955­ 60 . 77 XIII: VALUE OF FOREIGN .BXPORTS 'PER CAPITA, NORTHEAST AND REST OF BRIlL 1 9 5, 1955, 1960 79 XIV GOVERNMENT OF BRAZIL FINIAL CONMITIENTS UNDER THE NORTHEAST- AGREEMENT 111 XV SUMMARY STATiJS OF NORTHEAST PROGRAM AS OF SEPTEMBER 30, 1963 - . 129 T APPENDIX A . 1. AREA, POPULATION AND DENSITY BY STATES, NORTHEAST BRAZIL, 1960 2, AREA 9F DROUGHT POLYG0N; BY STATES, 1960 3. POPULATION GROWTH RATES Y STATES, NORTHEAST BRAZILs 1940, - 1950, 1960. 4, POPULATION PROJECTIQN Tq 1970, BY 'STATES, NORTHEAST BRAZIL 5. COMPARATIVE POPULATION .PROJECTIONS, NORTHEAST BRAZIL, 1960, 1965, 1970 6. POPULATION DISTRIBUTION 1DY AGE GROUPS FOR NORTHBAST AnD REST OF BRAZIL: ACTUAL FOR 1940--1950; 2STIMATE FOR 1960; PROJECTION FOR 1970-.. ' -. 7, POPULATION MIGRATION INTO AND OUT OF THE NORTHEAST, 1950 8. OUT-MIGRATION AND INT4A-REWlONIAL POPULATION MOVEMENT, AN) COMDINED' MOVEMENT AS PERCENT OF POPULATION, BY REGIONS, 1950 9, INDICATED' RURAL AND URJ3AN POPULATION MOVEMENTS$ THE NORTH-- EAST AND BRAZIL, 1950-1960 10. URBAN AND RURAL POPULATION, NORTHEAST AND REST OR BRAZIL, 1940, 1950, -1960 11. PERCENT DISTRIBUTION .OF URBAN AND RURAL POPULATIONs 3Y STATES, NORTHEAST BRAZIL, 1940, 1950, 1960 12. POPULATION OF PRINCIPAL URBAN AREAS, NORTHEAST BRAZIL, 1950-1960 13, PERCENT CHANGE IN POPULATIONJ .lY SIZE $OF POPULATION CENTER, BY STATES, NORTEAST. BRAZIL, 1950-1960 14. POPULATION INCREASE IN NORTHEASTERN CITIES OF 20,000 AND OVER, 1950-1960 15, NUMBER OF CITIES BY SIZE OF POPULATION, BY STATE, NORTHEAST BRAZIL, 1950-1960 16. TRENDS IN ECONOMICALLY ACTIVE POPULATION, NORTHEAST BRAZIL, 1940, 1950, 1960 17, ECONOMICALLY ACTIVE POPULATIONQ.Y MAJOR SECTOR;, 1940, 1950 AND ESTIMATED FOR 1960, NORTHEAST BRAZIL 18. - PERCENT INCREASES IN ECONOMICALLY ACTIVE POPULATION 3BY MAJOR SECTOR, NORTHEAST AND REST OF BRAZIL, 1940-1960 19. PERCENT DISTRIBUTION- OF NATIONAL INCOME, BY STATES, NORTH- EAST BRAZIL, 1950-1960 A 1 20. INCOME BY SECTORS$ NORTHEAST AND REST OF BRAZIL, 1950-1960 21. PERCENT INCREASE IN INCOME, BT .SECTORS, NORTHEAST AND REST I OF BRAZIL, 1949-1955, 1955-1960;, 1949-1960 22. PER CAPITA -INCOME AS A PERCENT OF NATIONAL AVERAGE IN NORTH- ,I EAST BRAZIL, 1950-1960 23. INCOME AND ECONOMICALLY ACTIVE POPULATION BY SECTORS, NORTH- EAST AND REST' OP BRAZIL, 1960 24.
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