LATIN AMERICAN PERSPECTIVES 10.1177/0094582X03261184AraújoARTICLE / WHAT NORTHEAST? Northeast, Northeasts What Northeast? by Tânia Bacelar de Araújo Translated by Paulo Simões This article focuses on the characteristics and direction of the economic activities of the Brazilian Northeast and their place within the national con- text and highlights some of the social ramifications of recent changes. “Northeast” is here defined as the geographic area that extends from Maranhão to Bahia,1 and the period analyzed is from the 1960s to 1992. I first present a brief description of the economic growth of the Northeast, confirm- ing the influence it has had on broader national economic movements from the so-called Brazilian Miracle (1968–1973) through the deceleration of the late 1970s to the crisis of the 1980s and early 1990s, with the predominance of financial accumulation. Throughout this initial analysis, the region will be considered as a whole. I proceed with an attempt to increase awareness of the differences that exist within the Northeast, pointing to new areas of dynamism, different state and metropolitan trajectories, and areas of resistance to change. I go on to examine the most important regional and subregional economic relation- ships and to compare the Northeast and its subdivisions with other regions in Brazil and overseas. Social questions and the persistence of poverty in the Northeast will also be analyzed, taking into consideration the national con- text and internal regional differentiation. Given the importance of govern- ment action in shaping regional economic realities, the role of public policy will be examined with particular interest. Tânia Bacelar de Araújo is a professor at the Federal University of Pernambuco. Paulo Simões is a graduate student in history at the University of California, Irvine. This article is a revised ver- sion of an article with the same title published in Araújo’s Heranças e urgências (2000). LATIN AMERICAN PERSPECTIVES, Issue 135, Vol. 31 No. 2, March 2004 16-41 DOI: 10.1177/0094582X03261184 © 2004 Latin American Perspectives 16 Araújo / WHAT NORTHEAST? 17 THE RECENT EVOLUTION OF THE NORTHEASTERN ECONOMY The Northeast makes up 20 percent of the Brazilian territory, houses 29 percent of the country’s population, and produces approximately 14 percent of the nation’s total output (as measured by the gross national product [GNP]), 12 percent of the nation’s industrial production, and almost 21 per- cent of its agricultural production. It should be pointed out initially that 23 percent of the urban and 46 percent of the rural population of Brazil lives in the Northeast. In contrast, the Southeast, which is responsible for 38 percent of the nation’s agricultural production, contains only 21 percent of the coun- try’s rural population. As we shall see, the slow growth that for many decades characterized the Northeastern economy (GTDN, 1967) has been replaced by strong dynamism in the numerous activities that have developed in the region. Yet poverty—an ancient trait that the economic vitality of recent decades has not been able to alter significantly—continues to be one of the most important problems of the Northeast. A survey by the Instituto de Planejamento Econômico e Social (Institute for Economic and Social Plan- ning—IPEA) showed that in 1990, of the 32 million needy Brazilians, 17.3 million (55 percent of the national total) lived in the Northeast. More than10 million lived in the region’s rural zone. Thus, with 46 percent of the nation’s rural population, the Northeast contained 63 percent of its rural poor. Of the nation’s urban poor, almost 46 percent lived in the Northeast (IPEA, 1993). GENERAL GROWTH Edited by Celso Furtado in the late 1950s, the report of the Grupo de Trabalho para o Desenvolvimento do Nordeste (Study Group for the Devel- opment of the Northeast—GTDN), which established the initial plan of action of the Superintendência do Desenvolvimento do Nordeste (Northeast Development Agency—SUDENE), revealed that in the preceding decades the most important characteristic of regional production had been its limited dynamism. While industry was driving the economic growth of the South- east, the old raw-materials/export sector of the Northeast was beginning to show its incapacity to sustain economic development. One of the central pro- posals of the GTDN report (as that document came to be known) was to stim- ulate industrialization in the Northeast as a way of overcoming the problems generated by its archaic agro-export base. Starting in the 1960s, impelled by fiscal incentives (principally inputs from the Fundo de Investimento no Nordeste and exemption from income 18 LATIN AMERICAN PERSPECTIVES taxes) and investments by large state enterprises such as Petrobrás (in Bahia) and the Vale do Rio Doce Company (in Maranhão), aided by public credit, mainly from the Banco Nacional de Desenvolvimento (National Develop- ment Bank—BNDES) and the Banco do Nordeste do Brasil (Northeastern Bank of Brazil—BNB), and with the resources of local, national, and multi- national enterprises, urban activities (especially industry) played an increas- ing role in the Northeast’s economy and drove its productive growth. Between 1967 and 1989, agriculture and the raising of livestock declined from 27.4 percent to 18.9 percent of the region’s GNP, though in 1990 (because of a drought that affected production in the semiarid region) this percentage dropped further to 12.1 percent. Meanwhile, industry grew from 22.6 percent to 29.3 percent and tertiary production from 49.9 percent to 58.6 percent, according to SUDENE’s statistics for the period. In the early 1960s, the recently created SUDENE concentrated its efforts and federal funds on researching the natural resources of the Northeast (par- ticularly mineral resources) and expanding the region’s economic infrastruc- ture (transportation and electrical energy, above all). These investments were important motivators for the subsequent growth of private investments in both the industrial and the tertiary sector. On the whole, the Northeast was the region with the highest level of GNP growth during the 1960s, 1970s, and 1980s. Between 1960 and 1988, the Northeastern economy surpassed aver- age national growth figures by 10 percent, and between 1965 and 1985 the GNP generated in the Northeast grew an average of 6.3 percent per year, more than that of Japan (5.5 percent per year) during the same period (Maia Gomes, 1991). Comparing the rhythm of the Northeast’s productive growth with that of the nation shows clearly that the poor performance that had prevailed until the 1950s did not continue in the following decades. During the 1960s and 1970s the productive activities of the Northeast accompanied the rhythm of Brazilian growth, and in the 1980s they demonstrated levels higher than the national average (Guimarães Neto and Araújo, 1990). Using data from the Instituto Brasileiro de Geografia e Estatística (Brazilian Institute for Geogra- phy and Statistics—IBGE) and SUDENE and comparing the performance of the total Brazilian economy with that of the Northeast, Duarte (1989) demon- strated a distinct improvement of indexes of the relative participation of the Northeast in the nation’s economy: between 1970 and 1987, the proportion of the GNP increased from 12.6 percent to 15.8 percent, per capita GNP rela- tive to the national average went from 45.8 percent to 54.4 percent, industrial production increased from 9.6 percent to 10.5 percent, and tertiary produc- tion increased from 12.4 percent to 15.8 percent. In addition, the share in the value of the tax on the circulation of goods and services of the Northeastern Araújo / WHAT NORTHEAST? 19 states relative to the Brazilian total rose from 9.2 percent in 1975 to 12.5 per- cent in 1987 (Duarte, 1989). Only in the case of livestock production did the Northeast show a decline in relation to the national average—from 22.5 per- cent in 1970 to 19 percent in 1990. This was mostly due, however, to the greater growth of other regions, especially the Midwest. In total, between 1960 and 1990 the Northeast’s total GNP increased by almost six times, from US$8.6 billion to US$50 billion (Araújo, 1992). Comparison of the economic performance levels of the Northeast with national averages reveals that regional growth tended to match the cyclical oscillations of the nation’s total production. During the “economic miracle,” national growth extended to the Northeast: regional GNP grew 7 percent in real terms between 1967 and 1973 while the Brazilian average was 11 per- cent. Even when, after the first oil crisis, the Brazilian economy decelerated, decreasing from a growth rate of 11 percent per year to little more than 7 per- cent between 1974 and 1980, the economic activities established in the Northeast grew 7.4 percent during the period. In the 1980s, however, when national production presented even more modest levels, Northeastern pro- duction, despite demonstrating less of a decline than that of other regions (especially when its industrial activities are compared with those of the Southeast), did not differ from the national pattern. In the early 1990s, the deepening recession promoted during the Collor administration affected both Brazil and the Northeast in the same manner. Economic integration caused by capital accumulation in previous decades had, as Oliveira (1990) and Guimarães Neto (1989) have shown, tied the eco- nomic growth of the Northeast to the general trend of the national economy. From this perspective, at this point one of the central theses of the GTDN report became obsolete: one no longer found a Northeastern economy mired in stagnation side by side with a strong Central South. Integration had brought together diverse regional economies. This integration did not, of course, homogenize the productive structures of the various regions of the country.