|Economy &Energy Year III - No 15 July/August 1999||PERSPECTIVES FOR THE BRAZILIAN INDUSTRY
English Version: Frida Eidelman
The desire to forecast the development of economic activities is increased in times of crisis The problem is specially important for countries that have the potential to develop diversified activities, like Brazil which is continental in extent, has idle and non- or scantly qualified manpower and has a chronic shortage of capital. Therefore, the possible development models should be discussed.
The success of the industrialized countries provokes a tendency to mimesis that is not justifiable due to the continuous environmental changes that characterize production. In the fifties, considering that the country should be industrialized so that the people could have a better quality of life, President Juscelino Kubistcheck launched a program of goals based on an ambitious electrical energy generation. The JK years still bring nostalgia in a large sector of society and several Presidents tried to rekindle the development mystique through the industrial way. The industrial model made the GNP grow at an average rate of 5.4% yearly between 1960 and 1990 but produced some undesirable results such as the sharp income concentration, urbanization beyond the levels permitted by the infrastructure of our cities and the loss in quality of several public services as education and health.. In order to resume the model it would be necessary to re-evaluate the world economic environment.
If we admit Marx's premise that the production mode determines the organization of society, it should be investigated if our social problems are in some way related to the industrial development model and magnified by the desire of "competitive insertion into the world economy". For this purpose we lack capital and technical education (acknowledged as a way of capitalization) while we have abundance of cultivable land and people eager to find a way to survive with dignity through their own labor. Therefore, to discuss the viability of the industrial model is a central issue for our society.
Economic models have traditionally used indicators of the production volume. The electrical energy demand is an interesting indicator because it represents both a quantitative and qualitative measurement of demand since the modern production processes, that demand strict control, are more and more dependent on electricity. Therefore, we propose to examine the perspectives of the Brazilian economy using as indicators the electrical energy demand, the production volume of some industries and the participation of the industrial production in the GNP. Using data from the Brazilian Energy Balance (1997 version) - BEN/97 and the methodology of logistic projection already presented in previous e&e issues, we will try to delimitate the economic development horizon via industry.
The data was taken from BEN/97 and they record the evolution of electrical energy demand by the industrial sector. As the electrical generation in Brazil is based on hydraulic power, what imposes restrictions on energy trade, we can consider the generation system and electricity use as being isolated in terms of the restrictions established in the probabilistic deduction of the logistic law.( number 1 issue of e&e). Repeating the algorithm already applied to other studies, the average demands are calculated in regular time intervals that are long enough to smooth the data and short enough to have samples that are statistically representative. The systematic energy accounting is relatively recent (the Brazilian Energy Balance was issued from 1970 on) so that, in order to satisfy the methodology requirements the triennial demand variation was used. With longer historical series it is possible to elaborate "smoother" projections such as in the case of petroleum reserves presented in the previous e&e issue. By fitting the calculated rate to the logistic law differential equation
dN/dt = a N ( N* - N )
where N is the demand in the mid year of the considered interval, dN/dt is the variation of the average demand rate in the interval and N* is the maximum demand value, it is possible to determine the maximum demand in the development model under consideration. If the average rate variation fits the parabolic law, the final demand can be calculated as being twice the demand when its maximum growth rate occurs (see e&e No 1).
The data elaborated using values from BEN are shown in the following table:
The parabolic fitting of the table data are shown the graphic above.
In spite of the small number of data, it can be seen that the fitting is reasonable (r= 0.838), permitting the use of electricity demand as an indicator for an exploratory examination of the development perspective.
The demand variation is maximum for a demand around 69 TWh/a so that N* = 138 TWh/a Once this parameter is determined the demand evolution can be forecast by fitting the observed data to the integral function, namely, N = N* / (1 + k e - a N* t ), where k is a constant to be determined in order to complete the projection. Using values of N and t, the k values corresponding to the observed points are calculated and finally one takes the k average value to conclude the projection (results below).
According to the graphic below, the demand will have an asymptotic trend to 138 TWh/y.. In the interval 1994-2020, the average rate of demand increase will be around 0.4% yearly. The industrial production will grow in the same pace, if the correlation production - energy consumption, found out by several authors, is maintained.
PARTICIPATION OF THE INDUSTRIAL PRODUCT IN THE GNP
The industrial production has a decreasing participation in the GNP, as shown in the following graphic elaborated using data from the excellent "Energy and Socio-Economy" section of Brazilian Energy Balance of 1998
The new indicator also foresees the growth model saturation based on industry, what explains the difficulties that the government and enterprises are facing in attempting to resume product growth. The coincidence of results of both indicators suggests, as a cautious approach, that the production should be examined. For this purpose we have chosen two sub-sectors of the transformation industry, namely, steel and automotive industries, both notoriously affected by the crisis as has been disseminated by the media. Besides that, the favor won by the Ford company from the Government to establish itself in Bahia has led to strong controversial argument between those who were favored and those who were not, so this sub-sector is an important thermometer for short-term trends verification.
The interest for steel production is in part due to the delicate environmental situation of the Piracicaba River Basin, object of a CETEC study sponsored by FAPEMIG aiming at defining the typology of waste produced according to the predominant economical model. In this basin is situated the so-called Steel Valley where about 6 million tons of pig iron and steel are produced. The perception that the world steel production is reaching its saturation point poses two important problems, namely, which would be the economical solutions for the Valley population, where its density is 5 times that of the average in Minas Gerais state and what would be the environmental impact due to a possible radical change in the production structure? Aiming at examining this issue, a quick survey was made regarding the steel production evolution in the last 15 years with data from BEN/98. The results are shown in the following graphic.
The graphic shows the fast increase of steel production in the eighties, possibly influenced by the export policy adopted by the Brazilian government in order to compensate the price decrease of our export products in the world market (cf. Carlos Feu Alvim et al. in "Brasil:o Crescimento Possível"- Ed. Bertrand Brasil/1996). Between 1989 and 1990 a sharp production decrease was noticed, followed by a new boom when the production reached a level lower than expected, following the previous trend. Apparently, the decrease recorded in 1990 postponed in 5 or 6 years the production saturation anticipated by the previous sequence (82-89).
Since Brazil is one of the largest steel exporter in the world, one could ask if the present Brazilian production stagnation would be a reflection of the internal economic crisis or, on the opposite, would it reflect a world trend. The answer is found in the international statistics. The graphic that follows was elaborated with data from the Iron and Steel Statistics Bureau/1997 and shows that the trend to saturation is worldwide, therefore, the internal efforts to increase the Brazilian production are innocuous. The resumption of production growth depends on the occurrence of new facts, of essential nature, that might favor the Brazilian product in the world stagnation panorama. A new price decrease would be disastrous for the national industry and even more for the Brazilian society, coping with the unemployment problem. Incidentally, the number of jobs per ton produced dropped about 20% between 1992 and 1997 in the Brazilian steel industry as a consequence of search for competitiveness in the international market that forced industry into automation.
In what concerns the Brazilian steel industry, the new fact could come from the international effort aiming at abating the emission of greenhouse gases what would favor resuming the use of charcoal. It is known that biomass fuels do not contribute essentially to this effect (except in the use of fertilizers and pesticides eventually produced from petroleum), since the emitted carbon is recycled through photosynthesis. Therefore, if Brazil would be favored by the policy of bonus concession for the production of biomass fuels, the steel industry would be able to play a more important role than the alcohol fuel industry.
The production of automotive vehicles for export is a way to add value to the steel industry products. Therefore, it is worth to investigate the possibility of automotive industry expansion worldwide. This topic was examined by Cesare Marchetti, using the logistic projection methodology and he concluded that the automotive industry reached its maximum growth rate in the seventies. We reproduce below our study elaborated with data from the Motor Vehicle Manufacturers Association of the United Sates, Inc. (1990 edition) presented at the Seminar on Transport and Environment, promoted by Scania in São Paulo (Sept/1991).
The world production of vehicles can be studied as an isolated system in terms of the logistic methodology due to the preponderance of motor cars as a transport vehicle in modern society. The database used in this work includes the 1960/1990 period, which is favorable to the logistic methodology.
The graphics show that the production curve inflexion occurred for a fleet equivalent to 69 car/ 1000 inhabitants and as a consequence the maximum fleet will be about 140 cars/ 1000 inhabitants or 1 car for every 7 people. Therefore, we see that the automotive industry, for which some state government are fighting a true fiscal war will be producing in the near future the substitution fleet as long as petroleum is available. The Brazilian fleet has reached 14 million motor cars and light commercial vehicles and the forecast for its saturation is as around 17 million (cf. Carlos Feu Alvim et al., Economy & Energy, No 7) , that is, 1 vehicle/ 10 inhabitants.
The indicators used show that the industry era is completing its boom started with the end of World War II or, as some prefer, the Kondratiev cycle is closing. (2000 -1945 = 55 years). To place all bets in industry, as the Brazilian government is doing, is apparently a secular error. The environment that favored industrial development has changed, shortage petroleum is just beginning and capital income is becoming regressive. In the more advanced countries the service sector is displacing industry as the leading factor for development.
Supported by FAPEMIG