Underdevelopment in Latin America

How can international relations theory explain this growth of Brazil, yet still address the high levels of poverty in the country? 

The below graph shows the high levels of income inequality present in Brazil. The closer to 100% the Gini coefficient is, the more unequal the society is. The graph below shows that Brazil is now around 60%, which is one of the highest in the world. The following pictures show the kind of poverty experienced alongside the wealth. 

Source of graph

Modernization theory assumes the underdevelopment of countries is a stage in a society’s progress to being a developed country. Countries develop by being integrated into the world market. In the 1990s, Brazil underwent trade liberalisation which allowed the growth that placed the country firmly in the world market. The high levels of income inequality within the country would be explained by the existence of a dual society. Different parts of society have different levels of contact with the capitalist market. The parts with the most contact become the richest, while the ones with the least end up the poorest creating the dual society. 

Andre Gunder Frank, a German American development economist and sociologist in his famous book the The Development of Underdevelopment 1966 disagreed with modernization theory and focused instead on a world systems approach. This focuses on the role of  social and economic history in creating underdevelopment. Frank used Marxist concepts to explain economic inequality between and in countries. The Development of Underdevelopment focused on dependency theory and how the resources of poor countries flowed to rich countries. This system worsened the situation of the former while allowing the latter to prosper. Frank argued that modernization theory normalised the problem allowing people to think that the underdevelopment was a normal stage of development in which countries will eventually progress from. Frank argued that history shows that underdevelopment was neither original nor traditional and that developed countries were never underdeveloped, although they were undeveloped.

At the time of writing the Development of Underdevelopment, Frank used Brazil as an example of how underdevelopment was created through capitalist relations. Even though Brazil recently underwent enormous national economic growth, Frank’s account is still relevant. The Northeast, Minas Gerais interior, North, and the Center-South regions of Brazil were incorporated into the metropolis by becoming export economies in the 16^th century. After the 16^th century the international interest in the first three regions declined, leaving these regions to their own development. The below map shows that the first three of these regions are some of the poorest areas in the country. 

Source of map

Frank explained his theory by arguing for two main hypothesises which centered on how the capitalist system advanced the metropoles while under developing the satellites. Satellites were the regions that provided resources to the metropole, which usually but not always was a colonising power. Frank's first hypothesis was that satellites experience their greatest economic growth and industrial development when their ties to the metropolis were weakest. Support of thesis comes from looking at Japan which was resource poor compared to rich Latin America. At the end of the century Japan was able to industrialise rapidly because it did not have its development restricted as was the case with the satellites. Looking at Latin America during periods of temporary isolation provides further evidence for this theory. According to Frank, Argentina, Brazil and Mexico had their largest industrialisation growth during the world wars which helped by loosening trade and investment ties. This can be seen in Sao Paulo, Brazil’s richest city, who had its biggest industrial development during the first world war, and continued through the second bringing great wealth to the region.

Geographic and economic isolation of regions also provided the loosening of ties to the metropoles. Frank used  Sao Paulo’s poor integration and weak ties with the capitalist and mercantile (heavy govt regulation of export) system as an example of this. During the 17^th and 18^th century Sao Paulo became a major manufacturing centre and exporter. Frank considers it was the weak ties to the metropole at this stage which allowed the state to be able to generate its own growth. Support from this can be seen from Sao Paulo’s GDP today which is the highest in the country (see map below). Modernization theory would respond that this was evidence of a dual society as this region later began producing coffee which firmly entrenched the region into the capitalist market. Frank however argues that this city actually served as a metropole that created internal satellite, which is what worsened the underdevelopment of the other areas. Frank argues that it was trade expansion and the spread of economic liberalism which choked off and reversed manufacturing development. 

Map source

Frank's second hypothesis was that the regions, which are the most underdeveloped today, had the closest relations to the metropolis in the past. This contradicts the theory that isolation is what is responsible for underdevelopment. Frank argues that Latin America was an example of super satellite development that progressed to ultra-underdevelopment. North Eastern Brazil, previously a major exporter of sugar and the ex mining district of Minas Gerais were regions that provided key materials for the metropolis. Frank argues that when the market for these materials disappeared, the metropolis abandoned the regions and they were left to develop on their own but in the existing economic, political, and social structure of capitalist dependency. This idea is also relevant in refuting the idea of the dual society. Because even if being incorporated into the capitalist system allowed development for a period of time, the structure of the system meant that the satellites were neither self generating or self perpetuating. When the colonial powers removed their presence these exploitative structures remained. Once interest or usefulness of these states waned, they were left to their own development but were set up with the dependency on the structure.