Economy & Energy
Year VIII -No 42:
February-March 2004  
ISSN 1518-2932

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e&e No 42

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Distribution of the Hydraulic Potential in a Hydrographic Basin

Sustainable Development


Capital Productivity in Brazil from 1950 to 2000

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Sustainable Development

Two articles published by Gazeta Mercantil on January 19, 2004 are noteworthy considering that the country needs to generate jobs and find a way to sustainable development.

In Pernambuco an environmental license was granted to a petroleum refinery that will process 30 thousand bbl/day, demanding an investment of US$ 90 million (about 270 million reais) and generating 300 direct jobs.

In the hinterland of Bahia a new footwear fabrication center will be established, demanding R$ 6 million and generating 3,200 direct jobs.

These two undertakings examples show that in the Pernambuco refinery 1.1 jobs per million reais invested will be created whereas in the footwear fabrication center this ratio is 533, corresponding to more 485 jobs in the latter case for the same amount invested.

These articles take me back to previous analysis based on data of Gazeta Mercantil’s  annual research including ten thousand companies which confirm that petroleum exploration, production and refining are capital- and technology-intensive and little labor-intensive. For example, Petrobrás, with assets of about 100 billion reais generates about 70 thousand direct jobs (of which 50% are subcontracted). The ratio between jobs and assets is 0.7 jobs per million reais.

Using the same reasoning for analyzing other results of the study on large refineries, one notices that the discrepancy between investments and jobs is still larger. A refinery that produces 200 bbl/day may need an investment of 2.8 billion dollars (8.4 billion reais), depending on its complexity and it will generate 700 direct jobs. A ratio of 0.08 job per million reais invested.

Petrobrás invests about 20 billion reais annually, an amount that is between 8 and 10% of the total investments of the country and that practically does not add new jobs to the market.

Assuming that Petrobrás would invest 10% of its investments (two billion reais) in bio-fuels and considering a conservative figure of 50 direct jobs per million reais, we would have more 100 thousand jobs each year. Probably the alternative is not very attractive to Petrobrás but it seems to be highly positive for Brazil’s sustainable development.

The low aggregated value of exports – on the average we export US$ 230/t and import US$ 520/t – indicates also the low presence of labor and know-how in a good part of the Brazilian industrial processes, not considering the low volume of the country’s external trade relative to the GDP when compared to other emerging countries.

More important than actions pertaining to the administration of our governments, that in the last 23 years presented only some economic growth “bubbles”, is to establish in the country a long term planning process that includes 5, 6 or 10 mandates and permits to better use the investment resources according to an ample view that includes sectors that generate jobs and welfare for the population such as education, health, housing, agriculture, footwear, textiles, tourism, electric-electronic industries, transport materials etc.

Only 20% of the National Bank for Economic and Social Development resources are invested in small undertakings and these are large job generators.

Let’s hope that our heads of state, governors and congressmen devote themselves to lead this process of long term thinking and to create mechanisms of stable commitments and rules that go beyond mandates, corporative interests and ideological convictions so that within some years we may have a vigorous economic growth and a substantial improvement of the Brazilian population per capita income.

According to news published by the Bio-diesel Brasil News Agency
on 01/23/04 in the final report of the Inter-Ministerial Study Group that studied the viability of bio-diesel, constituted by representatives of the Agrarian Development , Agriculture, National Integration and Cities Ministries, the cost of each job in the bio-diesel production, considering familial agriculture, industry, commerce and distribution, is R$4.9 thousand. In round numbers, this cost corresponds to 200 jobs per million reais invested.

On the other hand, in what concerns soybean production, which is extensive, the cost of each job is R$ 80 thousand corresponding to 12.5 jobs per million reais invested.

Therefore, the assumption of 10% of Petrobrás’ investments (two billion reais annually) could add to the market between 25 thousand to 400 thousand jobs each year in a scale from 0% to 100% of familial  agriculture participation in bio-diesel production.

With such different possibilities of jobs generation, once again we would need an adequate planning of a national production and distribution project for bio-diesel that would seek a balance between capital and labor that would benefit both the capital and the job and a better income distribution.

João Antonio Moreira Patusco

on 01/21/2004

(Addendum on 01/23/2004)


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