TRUE_ECONOMIC_DEVELOPMENT

199

The public sector needs to help the farm worker
adapt to new productive and technological structures by
introducing appropriate organizational changes and
convincing the farmer that he will receive more income
from his work.

To ensure growth and modernization of produc-
tion it is necessary to create an effective external sup-
port structure: credit, marketing, research and technical
assistance.

200

SIXTH PART

CONCLUSIONS

201

"The world continues to see an in-
crease in the number of miserable people

in the last 25 years, including in Latin
America. With these results, the fight
against poverty will be more difficult than

governments expected. "

WORLD BANK
August 26, 2008

202

The achievement of economic development has
been the greatest aspiration of almost every country in
the world. The story about this experience is fascinating
and at the same time daunting.

The origin of modern development began after
World War II. In a literal sense, this phenomenon
worked for a quarter of the world's population, accord-
ing to a report on human development in the United Na-
tions (UNDP) program. While this occurred on one side
of the world, in another more than 800 million people
have seen malnutrition and underemployment today.

According to studies conducted by the World In-
stitute for Disengagement of Economic Research at the
United Nations University ( Muhammad Yunes, 2008),
only 1% of the richest have 40% of their assets . Mean-
while, half of the planet's population accounts for only
1% of goods worldwide.

To address this tragedy, Pope Benedict XVI said
there is "a need to eliminate the structural causes linked
to the system of governance of the world economy,
which allocates most of the planet's resources to a mi-
nority of the population." In fact, the world has become
more and more economically polarized both between
countries and within countries. The United Nations De-
velopment Program administrator, Gustave Speth, ex-
plained that "if longer- term trends continue, economic
disparities between industrial and developing countries
will shift from unfair to inhumane."

203

Exceptions to this situation are the countries of
East Asia and Southeast Asia that grew faster and
achieved better results in the distribution of income and
assets such as land and credit. In other countries, even
with income stagnation, they have made progress in ed-
ucation, health and access to water.

It is becoming increasingly clear, however, that
the most successful strategies are those based on
growth in people and their productive potential and that
have created employment opportunities. In order to un-
derstand the extent of poverty, as explained exhaust-
ively in this book, this element must be taken into ac-
count. That is, the poverty of human and not only in-
come capacities , as remarked by the Nobel Prize in
Economics Amartya Sen, in his book "Development
with Freedom, 2002" and many other renowned econo-
mists.

In this regard, there seems to be no doubt that there
is no universal formula for countries to achieve good
results in their development aspirations. On the other
hand, there is agreement that successful economic de-
velopment is due to economic growth parallel to human
development.

Countries like Brazil need to better equate growth
with the fight against poverty by improving education
and aiding human development. Fellowship programs
need new approaches to employment, equity, improve-

204

ments in social health services, and new patterns of en-
ergy consumption and environmental preservation. A
new vision is needed on the role of globalization in or-
der to take advantage of the opportunities of interna-
tionalization of the economy and knowledge. We are
faced with what the aforementioned economist Gustave
Speth called "an opportunity and a moral imperative to
reverse the negative trends of recent times and to en-
force positive patterns of sustainable human develop-
ment."

This is the vision I sought to offer in this book on
"True Economic Development." That is, one must try
for the quality of growth because this process can gen-
erate good growth or bad growth that requires correc-
tive action by the government.

By experience of what happened with the eco-
nomic history of many countries, the United Nations
identified at least five types of growth: jobless growth
(the case of Northeast Brazil); inhumane growth, with
excessive concentration of income (Brazil); growth
without right of opinion (the use of democracy and free-
dom from); and growth without a future, when the con-
servation of the environment is not respected.

The concept of Brazilian economic development
should be understood as a positive change in the eco-
nomic status of the 50% of the population that is below
the poverty line and lives in deplorable conditions. If
growth does not help improve their lives, it is not about

205

real economic development. It may be called progress,
industrialization, anything, but it is not economic de-
velopment as demonstrated in the course of this book.

It is fair to say that poverty is certainly not a recent
problem in Brazil. In the same way, every administra-
tion of the federal government in the last decades has
conceived and announced some plan to surpass it. Con-
sequently, it is important for these changes to take place
in the nature of this phenomenon, its causes, its persis-
tence, and the need for a more efficient way of eradi-
cating it.

Poverty, it must be stressed, is more than a demo-
graphic category or a socioeconomic class. Poverty is
also an attitude of life. In this respect, people have a
concern for community, society and low self- esteem.
These behaviors influence the nature of productive pro-
cess, their survival strategies and their relationships
with other people.

As a result, it is impossible not to design with the
misery in which more than 25 million people live in
northeastern Brazil or more than one billion in the
world. Every year, for example, 10 million people die
in underdeveloped countries as a result of hunger and
controllable diseases. According to a study of Organi-
zation World Health dial (WHO), Brazil is one of the
worst health conditions, especially the Northeast. To
give you an idea, Brazil occupies the position of num-
ber 125. Of the 191 countries evaluated, Brazil is

206

ranked as Burma, China, Vietnam, Nepal, Peru and
Cambodia. In these countries, the quality gap in this
sector "causes inhuman suffering, injustice, inequality
and denial of individual health rights," according to
WHO director Christopher Murrou.

The main issue, intimately linked to persistent
poverty and the increase of inequality between the rich-
est and the poorest, is the search for a modality of de-
velopment in which there is peace and harmony for all.

In the late 1990s, the renowned economist Joseph
Stiglitz (Nobel Prize for Economics) became a world-
wide reference in economic development issues. He
then said: "I think we should all have a certain degree
of humility in recognizing that we are not winning the
fight against growing poverty.”

In this sense, the social doctrine of the Church of-
fers a new alternative of development that allows us to
lay the foundations for the building of a society cen-
tered on "man, not money or ideology." I argue that
without this and other similar values, the underdevel-
oped countries will not make real progress. It must also
be said that the peoples of the Third World need to feel
respected in their dignity and in their rights as citizens.

Development as treated in this book is not an end
in itself, as Professor Manuel de Unciti (Third World,
1997) explains: "We must invent a model of human de-
velopment not only in objectives but, above all, in their

207

procedures. “To conclude, it is opportune to evoke the
late Pope Paul VI, who stated:

"True development ... is for everyone and for eve-
ryone the transition from less humane conditions to
more humane conditions ... the passage from misery to
possession of the necessary, the victory over the social
scourges, the widening of knowledge, the acquisition of
culture.”

208

POSFACTION

Dr. José Nicácio de Oliveira

Dr. José Nicácio de Oliveira be-
longed to the pioneering technical team
of Banco do Nordeste do Brasil, where
he held several positions and, for many
years, the important head of the Tech-
nical Office of Economic Studies of the
Northeast (ETENE) of this Institution.

209

The book "The True Economic Development", by
Professor Pedro Sisnando Leite, represents the crown-
ing of the author's studies and reflections on the subject
during many years of activities in teaching, economic
research, development and execution of development
programs , study trips and participation in seminars in
Brazil and abroad.

The work is centered in the search for the under-
standing of the process, in the formulation of policies
and in the examination of experiences aimed at the pro-
motion of what it calls a true development or integral
development: the improvement of the living conditions
of society as a whole in its economic, social, cultural,
institutional, environmental and human dimensions,
seeking to reduce poverty and inequality without un-
dermining growth.

To indicate the magnitude of the challenge of
adopting a development model that leads to a signifi-
cant reduction in poverty and inequality, it shows that
out of the 6.5 billion of the world's population, three
billion people live in poverty, with incomes of up to US
$ 2.00 per day, of which 50% are in extreme poverty or
indigence, with up to US $ 1.00 per day. It should also
be mentioned that 46% of all poverty is concentrated in
South Asia, 23% in sub-Saharan Africa and 6% in Latin
America and the Caribbean.

In the Brazilian case, of the 189 million inhabit-
ants (2007), about 30% are poor and 15% indigent,

210

while the Northeast, which is a central concern in the
book, has 28% of the country's population, but concen-
trates 47% of total of the poor and 56% of the indigent.
It is the Northeast, thus, the largest and poorest of the
regions of the country, although it has undergone im-
portant changes in the last four decades, with the adop-
tion of policies and actions of regional bodies.

Brazil offers an eloquent example that growth can
occur without development, without a generalized in-
crease in income and employment. This country has a
long history of high growth rates compared to other
countries. For 116 years (1870-1986), it grew at the av-
erage rate of 4.4%, the highest in the world, being sur-
passed only by Japan in terms of per capita growth:
2.1% against 2.4% of that country.

Other periods are also illustrative: during 40 years
(1940-1980), it reached the average rate of 7.0%, regis-
tering 8.3% in 1967-1980 and 11.1% in 1968-1973,
with a maximum of 13.9 % in 1973. From there it
plunged into two decades lost in the 1980s and 1990s,
followed by a period of reactivation and now, like other
countries, a slowdown due to the financial crisis that is
spreading throughout the world. Note also that wealth
is much more concentrated than income: 1% of richest
people receive 17% of income, but they own 53% of
wealth stock (factories, housing, land, etc.). A basic ob-
servation, in the end, is that Brazil grew uneven, with a
high concentration of income.

211

Celso Furtado (In Search of a New Model, 2002)
says that it is scandalous in Brazil between the average
consumer and the rich, indicating that in India the rich-
est 20% have an income four times higher than the av-
erage 20% poorest, while in Brazil the difference is 33
times, with the country almost as a world champion of
inequalities. And that countries with per capita income
similar to Brazil have 10% of poor, while Brazil has
34%.

It should be added that the high consumption pat-
terns of our so-called upper class, which mimics the
pattern of US consumption in a country with ten times
less per capita income, lead to the sterilization of a sub-
stantial part of the savings and increase dependence in-
vestment efforts. In Brazil, income is not concentrated
to increase savings, but to raise the consumption of the
richest.

It should be stressed that a basic statement, which
expresses the positive vision and position of Professor
Pedro Sisnando in the face of this generalized inequal-
ity, is that "integral development is possible, provided
we believe in it and work with the firm intention of pri-
oritizing the solidarity and the dignity of the human per-
son ".

Confronting the problem, in its breadth and com-
plexity, necessarily requires the adoption of various
public policies and actions, within an overall and long-
term vision.

212

Among the policies and instruments aimed at re-
ducing poverty and inequality, I would like to highlight
the contribution that can be made by small enterprises,
which are always mentioned in political discourse and
in development plans. However, without the sweeping,
persistent and decisive actions necessary to generate
the results that would be expected with the intensifica-
tion of its development.

On the other hand, the case of rural development
associated with the idea of internalization of develop-
ment, as the author proposes, constitutes a special strat-
egy to combat poverty through the use of small busi-
ness, combining the increase of rural, industrial and ser-
vice activities. The objective is to create new dynamism
in rural areas and cities with the aim of reducing emi-
gration in search of better living conditions in con-
gested metropolises, where poverty and marginaliza-
tion are often found.

This multifaceted rural development approach,
with the support of the small enterprise, revealing a ru-
ral family business (with a 38% share of agricultural
production), is gaining increasing importance and at-
tention because it is considered more and more as a
holder of a great untapped potential for action to reduce
poverty and inequalities, given that it is in rural areas
that these limitations and negative aspects are present
in a more pronounced way.

213

In the case of this emphasis on small business, this
is not a pact with backwardness, but the adoption of Ig-
nacy Sachs (Social Inclusion by Work, 2003) in the
sense that the small business owner should be regarded
as an architect of the future and not as a remnant of the
past. Thus, instead of just trying to redistribute an in-
come that was produced in a concentrated way in larger
modern companies, also seek to deconcentrate the own
production or income generation through the small
company and even the microenterprise. Attention
should also be given to the exploration of opportunities
in the field of solidarity economy.

It is a correction of emphasis in favor of this broad
segment that generates most jobs, as a way of unlocking
their development, with incentives and benefits tradi-
tionally granted only to larger companies, which has
contributed to reinforce the trend to the concentration
of income inherent in the free play of market forces.
This support must go through the adaptations required
by its purpose.

One does not, of course, think of building a dy-
namic and prosperous economic system with only
small enterprises, as it would not be the case to try to
do so only with large companies, although they play an
important role in the dynamization and modernization
of the economy. To consider, therefore, that a basic ob-
jective is also to deconcentrate production and income,

214

taking full advantage of the potential of "entrepreneur-
ship" of the population, a valuable resource that can not
be wasted.

The aim is to ensure income and purchasing power
for a larger number of people through a strong increase
in smaller productive activities, whose redistribution
process also contributes to the development dynamics
itself. With increased productivity and production, job
creation, training and a sense of personal fulfillment
and elevation of self-esteem. It is, in fact, a process of
redistribution of development itself.

It should be emphasized that the basic idea is an
"upgrade", in which the increase of production and em-
ployment in this sector has support in raising the tech-
nological and organizational level, productivity and
competitiveness. For this, we must go far beyond the
usual and simple opening of credit lines. It is essential
that the state apparatus, going from universities to re-
search institutes, development agencies, public banks,
cooperatives and other entities to engage in the process,
establishing, with high priority and permanently,
planned and integrated, with creative types of partner-
ships, arrangements to ensure that these companies, as
several scholars recommend, have broad access to cap-
ital, technology and markets, including external ones.

To this end, in addition to the adequacy, expansion
and deepening of the actions of existing and new na-

215

tional entities that need to be created, it is also neces-
sary to seek out relevant facilities and experiences
abroad that can be used in the local effort to promote
small business, with the establishment of exchanges in
areas such as finance, technology, capacity building
and market opportunities. On the assumption that other
countries are also engaged in this effort, a network of
cooperation between them can be formed and strength-
ened, benefiting from the creativity and solutions of
each other.

In fact, in order to achieve truly significant results
in this effort to promote small business, with its inser-
tion in the context of the country's development, it is
necessary that institutions with responsibilities in this
area be very well informed and empowered with regard
to the actions and inter -relations to be developed, tak-
ing advantage of some noteworthy experiences in pro-
gress in some communities and regions.

The instruments to be used already exist, but with
very limited action in the face of real needs, needing to
be creatively perfected and expanded, with the possible
addition of new tasks. One area that deserves special
attention is that of cooperatives, including production,
purchase and sale, savings and credit, and consortia for
joint purchases, including for export promotion. An-
other experience that needs to be expanded is incuba-
tors at universities and research institutes for the devel-

216

opment of products and technologies for small compa-
nies, with attention to regional opportunities and pecu-
liarities. It is also important to ensure the access of
small companies to the public procurement system, as
well as the large distribution networks, including those
located abroad, which may favor exports.

Planning must incorporate these conceptions in
practical terms at the three levels of government, be-
coming a decentralized process and experienced by so-
ciety.

This does not mean that charitable giving pro-
grams are dispensable because they depend on the
breadth, severity and persistence of the problem of pov-
erty and inequality. However, it is always important to
keep in mind that what is fundamental is to adopt a
model of development that assures the growing popu-
lations of opportunities for productive activities and
work that guarantees decent conditions of self-sustain-
ability.

When it comes to small businesses, people often
do not realize that they are not all lagging behind, and
how many of them can come in the wake of modern
technology. It is also necessary to consider the availa-
bility of technologies already known, but not suffi-
ciently widespread, which can be advantageous and
easily incorporated into the production process, besides
the fact that small adaptations or simple research results
can give appreciable contributions to the productivity

217

increase of these companies. There are numerous ex-
amples of companies that were born in backyards or
garages and grew so dynamically that they came to the
position of large or even multi-nationals, without ini-
tially counting on the support normally provided to
larger projects.

Accordingly, the adoption of open programs
aimed at strengthening small enterprises may simply
mean the broad exploitation of potentialities and skills
important to the country's development, and an effec-
tive means of combating poverty and inequality.

Another emphasis of the book refers to the basic
matrix of education, science and technology, since de-
velopment is an increasingly intensive process of
knowledge. The increase in productivity occurs largely
through the use of equipment that is more sophisticated
increasingly and which are embodied knowledge in the
form of tangible capital, and knowledge represented by
a growing body of ideas, techniques and skills that are
incorporated people, in the form of intangible capital,
of fundamental importance in modern development.
Thus, at the basis of all is the knowledge in its various
modalities that must also be taken, appropriately, to the
poor populations.

It can be concluded, then, that fundamental
changes are to be made in a world context in which
three billion people are generally living conditions

218

characterized by hunger, precarious health, poor hous-
ing and illiterate educational patterns, and low quality
of education, it is necessary to march, with relevant
economic and other decisions and policies, towards the
adoption of a model of development as outlined com-
prehensively in this book by Professor Pedro Sisnando
Leite. Insisting on the model that has led to the unsatis-
factory results mentioned, causing human frustrations
and dramas around the world, does not seem to be the
proper path.

The wide-ranging correction of routes that are tak-
ing place to cope with the serious financial crisis that is
spreading throughout the world will still leave, given
its specific objectives, great vulnerabilities, as it moves
away from the broad scenario of poverty and inequality
that divides nations and flagella populations.

That this reinforces the idea that the recurrent
theme of "building a better world", with a significant
and continuous reduction of poverty and inequality,
must be faced with serious and decisive political will.
Better for all, with the formation of true nations and a
more solidary world, and not only for privileged bands
of the population.

Lastly, I would like to thank my friend Pedro Sis-
nando - a friendship consolidated in many years of joint
work in the area of economic research and planning at
the Bank of the Northeast - the high distinction in ded-
icating this book that also expresses conceptions and

219

ideals that we share in an institution basically aimed at
reducing regional inequalities in Brazil and the con-
struction of sustainable economy.

220

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228

THE AUTHOR

PEDRO SISNANDO LEITE is an economist from the
Federal University of Ceará, with a postgraduate de-
gree in rural economics and regional planning in Israel.
He was a technician in economic development at
Banco do Nordeste and, for many years, head of the
Division of Agricultural Studies of this Bank. He
taught, as an adjunct professor and holder of economic
development, in the undergraduate and master's de-
grees in Economic Theory (CAEN) and Rural Econ-
omy of the Federal University of Ceará. In the univer-
sity administration he was Pro-Rector of Planning in
two administrations, in the periods of 1983-87 and
1991-95. He spent much of his academic and profes-
sional life studying developmental experiences in de-
veloped and emerging countries, visiting more than
twenty nations around the world for this purpose. He
has published thirty books on economics of economic
development, planning and regional development. Of
particular note in his scientific contribution is the book
New Approach to Economic Development and Con-
ventional Theories, adopted in many economical col-
leges throughout the country. Another well-known
work by Professor Sisnando, edited by HUCITEC,
from São Paulo, is Scandinavia: Model of develop-
ment, democracy and well-being. About this book, the

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rigorous critic Jânio Quadros wrote in a note to the au-
thor: "Your book is a long and solid lesson in demo-
cratic economics. Ch. 9, for example, is modeling. I
have never read anything with more pedagogical clar-
ity. "An international reference is the book on Strategy
and Planning for Integrated Regional Rural Economic
Development published jointly by Banco do Nordeste,
Federal University of Ceará and Rehovot-Israel Rural-
Urban Studies Center. Editora Vivali, of São Paulo,
published in virtual format eight of its works for the
national and international market
(www.vivali.com.br/psisnando). He has contributed
many articles and essays to newspapers and maga-
zines. He was vice-president of the Brazilian Society
of Rural Economy and Sociology and, as a member of
the International Society of Rural Economy, he has
participated as a guest lecturer in several international
meetings. He was a research fellow at the National Re-
search Council (1988-1992). He served as Secretary of
State of the Secretariat of Rural Development of Ceará,
in 1995-1998 and 1999-2002, in the administration of
the Tasso Jereissati government. During this period, he
implemented some programs to combat poverty in
Ceará, which became a national reference. The book of
Prof. Sisnando, Combating Rural Poverty, addresses
this issue, both from the doctrinal point of view and the
practical solutions adopted to overcome this serious

230

and challenging problem for the rulers of Brazil and the
underdeveloped countries of the 21st century. LCR
Gráfica recently launched an important textbook: Fun-
damentals of Economics: Theory, Practice and Poli-
cies. In turn, Banco do Nordeste do Brasil published
one of its most important works, which was also re-
leased in a virtual format, including in English: The
Fight for Regional and Rural Development in the
World. He is vice-president of the Institute of Ceará
and member of the Cearense Academy of Sciences and
vice-president of the Academy of Social Sciences of
Ceará.