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RS economic analysis at FEE: the central role of external nexus

Since its beginning, the Economics and Statistics Foundation (FEE) has conceived the analysis of social and economic conditions of the State of Rio Grande do Sul as its main task. The several papers organized as The 25 years of political economy of Rio Grande do Sul, published in 1976, deal with the local industrial structure and dynamics, both being considered as “inseparably connected to the Brazilian national economy” (1976, p. 19, translation mine)[1]. At that time, researchers at the FEE were working on the singularities of the economic system within the boundaries of the state, in the context of the import-substitution industrialization model that was taking place at the national level.

This particular model of industrialization lasted from the 1930s to the late 1970s. The Brazilian economy was dealing, for most of that period, with external constraints on its growth. Particularly in the 1970s, the national government was seeking to maintain rates of economic growth and accumulation at high levels, apart from creating and increasing production capacity in key sectors. Given the natural tendency of import coefficients to rise when the rate of accumulation is high, the development of those key sectors was a strategy to offset this movement and to increase the degree of autonomy of the domestic industrial system in the long run.

The debate over the specific manner the state’s economy was linked to the Brazilian economy was very fruitful and the FEE contributions were always fundamental. Certainly, many changes have happened since then and hence it would be an error for researchers to adopt today exactly the same analytical lens. Nevertheless, one central methodological rule must be maintained: any explanation about what happens in the state’s economic system cannot deal exclusively, or even predominantly, with the facts, dynamics or structures within it. In a nutshell: the external nexus are central to understand the current problems in Rio Grande do Sul.

The brief yet strong development cycle in Brazil in the 2000s was only possible because of a huge favorable change in global conditions, compared to those of the 1980s and even the 1990s. For some time, the external constraints on growth were strongly mitigated, allowing the national government to run a set of policies resulting in acceleration of growth, income distribution and the reduction of poverty levels. The differences between the structural changes associated with this cycle and those of the 1970s could not be more evident. Besides the contrast in distributive issues, there was, as expected, a significant pressure on import coefficients to rise, but this time efforts to counteract it by import-substitution policies were absent.

Therefore, for researchers interested in studying the state’s economic conditions, an accurate understanding of  the current dynamics of the national and international economy, alongside their links with the regional economy, cannot be taken for granted. At this moment, the Brazilian economy resumes the dependence on its export performance in order to have its external constraints relaxed once again. The role and the possibilities for the state’s primary and industrial exports are topics to be discussed by this first edition of Panorama Internacional FEE.

From an internationalist perspective, Robson Valdez analyzes the role of the BRICS as effective and potential markets for the state’s exports. In the same purposeful stance, Bruno Jubran and Ricardo Leães address perspectives for an important industrial export nexus in Rio Grande do Sul: agricultural capital goods. Interviewed by Panorama, Luciano D’Andrea presents a comprehensive evaluation of the potential of exports from Rio Grande do Sul. Carlos Paiva brings us some of his work on the state’s import coefficients associated with exports and investment as categories of final demand. Closing this first edition, Clarissa Black stresses the exogenous character of a central variable in the economic performance of Rio Grande do Sul: soybean prices. She puts into perspective the popular view that takes the Chinese demand as the only determinant to these movements.

[1]  FUNDAÇÃO DE ECONOMIA E ESTATÍSTICA (RS). Análise da indústria de transformação no Rio Grande do Sul. Porto Alegre: FEE, 1976. (25 anos de economia gaúcha, v. 4). Available at <http://cdn.fee.tche.br/publicacoes/digitalizacao/25-anos-economia-gaucha/vol-4.pdf>.