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Infrastructure and Industry

 

PAC projects integrate the country’s regions

The North and Northeast occupy a central position in the largest group of structuring works and projects ever undertaken by the country. Most of the transportation projects underway or already completed are in these regions: the waterways and ports will fill a historical gap in the Amazon region and roads and railways, such as New Transnordestina, West-East Railway and North-South Railway, will bring wealth generated in the Northeast and North interior regions to the state capitals and ports.

(Learn more on the PAC pages)

With Lula and Dilma, the role of Petrobras also changed and Brazil’s largest company began investing in the development of the country and not only to compensate stockholders over the short term. Instead of simply expanding existing refineries in the Southeast, three new refineries are being built in Ceará, Maranhão and Pernambuco to meet future pre-salt demand. When it changed its purchasing policy and stopped importing oil exploration platforms and oil tankers, Petrobras was crucial to the revival of the shipbuilding industry in Rio de Janeiro and the establishment of new shipyards in Rio Grande do Sul, Alagoas, Bahia, Maranhão and Pernambuco.

(Learn more on the Pre-Salt pages)

World Cup vs. Regional Inequalities

More than just a sporting event, the Fifa World Cup football competition became a lever to further reduce regional inequalities. Not coincidentally, the Northeast hosted four of the tournament’s venues (Fortaleza, Natal, Recife and Salvador) and the North and Center-West, two others (Manaus and Cuiabá).
In addition to expansion of their airports, the capitals were turned into vast construction sites to receive BRTs (stations and dedicated lanes for express bus lines) and LRVs (Light Rail Vehicles), completely changing the way workers get back and forth to work.

(Learn more on the PAC pages)A Arena das Dunas, em Natal, é um dos quatro novos estádios construídos ou reformados no Nordeste para a Copa do Mundo. Foto: Danilo Borges/Portal da Copa

Constitutional Financing Funds are used to reduce inequality within a single region

The North, Northeast and Center-West Constitutional Funds were created through the 1988 Constitution to help reduce regional inequalities. In 2001, when the then federal government closed Sudene and Sudam, those Constitutional Funds have become the only alternatives available to finance projects in the three regions. Even so, this only existed on paper. In practice, the resources often simply were not invested, as if the money did not exist.

In the Lula and Dilma governments, everything changed. The use of funds began to comply with a new condition defined in the National Regional Development Policy: resources are now allocated to private projects also capable of reducing existing inequalities within the same region to avoid a concentration of resources in capitals and key cities.

Public banks invest more money than anticipated

The funds invested are now higher than the mandatory transfers from the National Treasury because public banks that manage the funds (BNB, Banco da Amazônia and Banco do Brasil in the Center-West) also use equity funds, stemming from financial investments and settlement of previous funding operations for successful projects.

Development Funds stimulate the economy and generate jobs

The Regional Development Funds were created to finance companies and public and private infrastructure projects or those capable of generating thousands of jobs and stimulating productive activities.

In the Amazon, the Regional Development Fund (ADF) established in 2006 was responsible for generating 60,000 jobs (2011) thanks to the release of R$ 1.189 billion, mainly for the power generation, agro-industrial and telephone sectors. Since 2014, fish processing and warehouse distribution companies also started to receive funding from the FDA.

The Northeast Development Fund (FDNE), established in 2001, is financing projects for sustainable development of wind power generation, irrigated fruit growing in the São Francisco River Valley and part of the Transnordestina railroad project, which received R$ 2.7 billion from the Fund. In 2011, the FDNE invested more than R$ 1,784 billion in the region.

The overall funds’ limits were expanded in 2013. While in the case of the FDA, the limit remained at R$ 1.15 billion, the FNDE increased to R$ 2 billion.

The Lula government created the Center-West Development Fund in 2009 and, by the end of 2013, it was ready to operate with more than R$ 1.4billion.  Projects in Goiás, Mato Grosso, Mato Grosso do Sul and Distrito Federal are already being analyzed and were to begin receiving funds in 2014.

 

Wind power projects have been the recipients of investments from the Northeast Development Fund (FNDE) Photo: Publicity-Blog do Planalto

Local Production Arrangements gain new momentum in the Lula and Dilma governments

Until 2003, the Local Production Arrangements, or APLs, represented a term that was either snubbed or scorned by those whose duty was to promote national development. Only the large projects were on their radar screens. When the Lula government began to prioritize the APLs for BNDES financing and integrated actions involving 33 public and private institutions, including the Ministries of Development, Industry and Foreign Trade and Science and Technology, Brazil finally began supporting micro and small business owners responsible for generating jobs and income in their communities.

For Lula and Dilma, financing the APLs means Brazil's cultural diversity is reflected in economic diversity, because there are resources to support supply chains ranging from the producer of goat cheese in Bahia to nut harvesters in Amapá, a hair stylist in São Paulo to the producer of handmade shawls and hammocks in the backcountry of Paraíba.

Learn more about APLs here and here.