Geography Reference
In-Depth Information
On the other hand, foreign investments in various key sectors of the
Brazilian economy, such as the automotive industry, sugar refining, and
the steel industry, have increased over recent years. During the 1990s
and early 2000s, foreign MNEs made $20‒$25bn of investments in the
MERCOSUR automotive industries, 80 per cent of which were in Brazil
(UNCTAD 2005). These investments were primarily of a market-seeking
nature, focussed on the large domestic markets. More recently, FDI in the
automotive industry of MERCOSUR, which is dominated by Brazil, is
increasingly focussed on export markets such as Mexico, rather than on
domestic consumption, and this has been helped in part by major currency
devaluations (UNCTAD 2005). Nowadays, the two largest major cities of
Brazil, namely Sao Paulo and Rio de Janeiro, are both ranked just within
the top 50 global financial centres, but more significantly, they are the two
principal financial centres in Latin America (COL 2009; Long Finance
2011).
As in the case of Indonesia, these developments are likely to strengthen
further the very significant regional inequalities of Brazil. Brazil is a
country which exhibits very sharp centre-periphery features which have
proved to be particularly resistant to the wide range of policy instruments
applied over time to reduce sub-national imbalances. The Northeast has
historically been the poorest region in the country, with per capita incomes
about one-half those of the rich Southeast areas (Lall and Shalizi 2003).
Moreover, differences in regional per capita incomes have remained
steady over long periods of time. Per capita income in the Southeast was
2.9 times that of the Northeast in 1939, and 2.8 times in 1992 (World Bank
1998; Lall et al. 2004). Only over recent decades has evidence emerged
of something of an interregional process of convergence taking place,
leading to a narrowing of regional productivity differentials (OECD
2011). However, the ongoing dominance of the large metropolitan regions
around São Paulo and Rio de Janeiro, along with the cities of the south
and east coastal regions (Monteiro Monasterio 2008), means that the eco-
nomic fortunes of the peripheral regions in the North will still be largely
dependent on the behaviour of the core regions, whose own performance
is largely independent of that of the periphery (Perobelli et al. 2008).
Across Latin America as a whole, by 2025, some 315 million people are
expected to be living in almost 200 large cities in Latin America, up from
the current numbers of some 260 million people today (MGI 2011b). This
urban population growth of 65 million people is expected to comprise
some 50 million new workers entering the labour force. Differently to the
case of China, for example, the urban population growth in Latin America
is expected to occur largely within the existing system of large cities,
rather than via the rapid growth of new large cities (MGI 2011b). If such
