The abnormal Prosperity of Brazilian Coffee

The coffee industry is both a driving force and a shackle.

The coffee industry played a pivotal role in Brazil's modern economic structure, providing the driving force for urbanization, industrialization and modernization.

First, the large amount of export foreign exchange generated by the post-independence coffee economy provided the necessary financial security for Brazil's early industrialization. 1889-1919 In 2010, Brazil's industrial enterprises increased from 626 to 13566. Brazilian industrial output doubled during World War I and tripled in 1923. In addition, Brazil's industrial sector has broken through the scope of light industry, with metallurgical, chemical and pharmaceutical industries accounting for a certain proportion. This industrial development provided the basis for Brazil's industrialization thereafter.

Second, the infrastructure created by the coffee economy provided essential conditions for Brazil's early industrialization. In 1852, the Brazilian government enacted a law encouraging railway construction. Subsequently, Brazil set off an upsurge in railway construction, forming a railway network centered on Sao Paulo City, connecting important ports and coffee-producing areas such as Rio de Janeiro City, Santos Port and Campinas. In 1920, Brazil's railway mileage reached 27,000 kilometers. By 1915, 104 power stations had been built. Transportation and electricity played a leading role in the industrialization process.

Third, the development of the coffee industry attracted a large number of immigrants, not only achieving the prosperity of export economies such as coffee, but also promoting Brazil's urbanization process. A number of cities have emerged near the coffee industry belt and have gradually become important industrial bases in Brazil, with a rapid increase in urban population. Especially in Sao Paulo state, from 1.38 million in 1890 to 4.59 million in 1920, the capital city of Sao Paulo became the financial center, management center and distribution center of imported industrial products in southeastern Brazil.

At the same time, we should also see that the overheated coffee industry has brought many disadvantages to Brazil's economic and political life.

First of all, although coffee farming has led to the development of many industries in the surrounding areas, the impact is more vertical than horizontal. All the urban infrastructure, transportation and export processing industries related to coffee export economy have been developed rapidly, and vice versa has not changed significantly.

Second, Brazil's industrial layout is deeply influenced by the coffee industry. The former coffee growing center is still Brazil's industrial heartland. In 1907, the coffee-rich state of São Paulo and the Federal District accounted for 49% of Brazil's industrial output, rising to 52% in 1920. This highly concentrated industrial distribution is irrational and creates an imbalance in the development of Brazil's regions.

Third, the coffee economy has led to the formation of a "coffee oligarchy" in Brazil. Coffee plantation owners with huge wealth controlled the political, economic and diplomatic power of the country by manipulating elections and forming political alliances. Between 1894 and 1930, for example, Brazil's presidents came from the "coffee triangle" of Sao Paulo, Rio de Janeiro and Minas Gerais.

Finally, excessive reliance on coffee for export as a mono-product has led to severe structural dislocations in the economy, deepening the dependency and vulnerability of the Brazilian economy. In the 1930s, the great economic crisis in western countries hit Brazil's coffee economy hard, which led to a domestic movement against "coffee oligarchy" politics. After Vargas came to power through a coup in 1930, he implemented a nationalist economic policy and started the process of import-substitution industrialization. In the mid-1950s, Brazil's industrial output exceeded agricultural output for the first time, and the industrial system began to take shape. However, due to the absence of large-scale land ownership to eradicate traditional agriculture, changes in the old political and economic structure of rural areas were very limited, and industrial development lacked internal demand and motivation.