A gritty haze is suspended over a central expressway squeezed between skyscrapers, packed with automobiles and redolent of sugar cane alcohol burned as fuel.
It is morning in Sao Paulo. Buses recklessly plunge down access ramps into thickets of narrow streets, and brakes and horns blend into a single endless screech. Unmuffled engines pop like weapons. Whiskered beggars stretch out on pavement smeared with soot and lift their hands seeking handouts from the streams of harried commuters.
Clusters of glass, concrete and brick towers sprout aimlessly for miles in all directions. Beyond them are thousands of acres of landscape sown with rail tracks and the low, bare rectangles of assembly plants. Hillsides are draped with a quiltwork of brick huts, stained tin roofs, weedy red earth and gullies that are open sewers.
On a street corner in the lower-class Sao Paulo district of Santa Amaro, Roque Francisco Cardozo, an unemployed plastics worker, joins a knot of idle men. His legs are covered with pink blisters from exposure to industrial wastes. "Sao Paulo," he announces to the circle, "is a passion and an illusion for the people. It offers everything and nothing."
This is a vision of crisis, a powerful choked megalopolis that is an emblem of what has become of Latin America's biggest and strongest country. The state of Sao Paulo has grown so fast that it produces more than all but 16 nations in the world. Now, partly because of that surge, it has reached a paralysis of explosive proportions.
With it, Brazil has moved from a model of Third World growth to a model of its potential collapse. It is the scene of a social and political unraveling that could destabilize an entire continent, and a slow transformation of the way development among western nations works.
Latin America's emerging superpower has reached a turning point. In its past is the record of one of the world's most dynamic development spurts--a boom that was directed by a conservative military government and assisted by the models and the businessmen of the industrialized countries, above all the United States.
Financed largely by huge investments by multinational corporations and loans from international banks, the growth was structured around the familiar icons of economic dynamism, the automobile and the freeway, and expressed in the expansion of urban population, incomes and consumer goods.
Then, just as Brazil was beginning to be recognized as an important economic--and eventually strategic--power, it slipped into decline. After years of financing from foreign sources, it could no longer manage an $82 billion foreign debt. For a year it has teetered on the brink of financial collapse.
At the same time, after almost three years of economic recession, social imbalances exacerbated by the growth spurt are threatening to kindle a different kind of catastrophe. Rioting broke out for two days in Sao Paulo in April. Since then, the ranks of the estimated 750,000 unemployed and 1.1 million underemployed in the city have continued to grow.
Like many other Third World countries, Brazil appears to be headed toward fundamental changes in the way it grows and the part it plays in the division of industry, wealth and technology among the world's rich and poor nations.
The transformations it is facing range from shifts in some of the world's industry from North toward South to the technological revolution represented by automation and computers. It is also seeking ways to develop what are some of the world's richest untapped resources--ranging from minerals to farmland--and satisfy the demands of a population of 125 million.
This series will outline Brazil's development crisis, tracing its origins in the industrial boom that began in the 1950s and defining the new course created by the economic upheavals of oil shocks, debt crisis, recession and technological change.
It is a story that is common to Latin America and much of the developing world, and one in which Brazil's fate as Latin America's economic giant will be particularly important. The fifth largest country in the world, with a territory roughly the size of the continental United States, Brazil also holds about half of South America's population. Its economic and political health--or destabilization--tend to shape much of the region.
For decades, its progress has been so swift that whole schools of development theory sprouted up in Latin America around the "Brazilian miracle." The per capita income nearly quadrupled to almost $2,000 in the decade between 1970 and 1980. And between 1968 and 1973, annual growth rates averaged 11 percent.
Brazil became the eighth most productive economy in the world, and Sao Paulo one of the world's mightiest industrial cities. It now houses about 13 million people and exports products ranging from steel, chemicals and automobiles to airplanes, arms and electronics.
Threaded into that economic explosion, however, have been deep social imbalances and inevitably destructive inefficiencies.
While Brazilian technology and industry leapt ahead, agricultural production did not. And because Brazilian planners believed that growth alone could solve long-standing social problems, few efforts were made to spread the new wealth through the population or close the historic gulf between rich and poor, so common in Latin America.
Consequently, tens of millions of Brazilians were almost unaffected by the long boom, and the gap in income and living standards grew so wide that Brazilians now speak of the existence of two separate nations within their borders--an industrialized, affluent Belgium and a desperately poor India.
The measures of that division are sometimes startling. In the 1970s, the number of Brazilian homes with refrigerators and televisions roughly doubled. But a mid-1970s study showed that only 30 percent of Sao Paulo homes were connected to sewers and half had no piped water.
Today, Brazil is developing a $1 billion space program, but 38 percent of its population has been estimated by international health organizations to be malnourished and about 25 percent remains illiterate.
While planners fixed on overall growth figures as proof that a nationalistic dream of Brazil as a superpower was coming true, the relative inefficiency of new firms and farmland was not necessarily corrected. Meanwhile, the government spent $52 billion in eight years through 1981 on massive, sometimes wasteful development projects, including nuclear plants, hydroelectric dams, merchant fleets and subway systems.
After building its industries and cities around the automobile, Brazil--with little petroleum-- also was hit hard by the oil price increases of the 1970s. Between 1973 and 1982, despite efforts to save energy, it spent $55.4 billion on imported petroleum.
The oil, the projects and the expansion after the mid-1970s were paid for in large part with foreign loans, borrowed from international banks swelling with the deposits of excess dollars by oil-exporting nations. The result was the largest foreign debt in the world and increasing dependence on outside finance and the shifts in a turbulent world economy.
Now, at a time of generalized economic instability, Brazil seems to have been crippled by the weaknesses of both the developed and the developing world.
"Brazil is having its first crisis of an industrialized country, and it hits us in a moment when we are neither one nor the other," said Fernando Henrique Cardozo, one of the country's most respected sociologists.
Like the United States, Japan, and Western Europe, Brazil's industry has been hurt badly by the rising oil prices, high interest rates and the drop in world trade. Steel production dropped by 15 percent between 1980 and 1982 and auto production by 26 percent, and last year exports fell by 13.3 percent while unemployment soared.
Simultaneously, Brazil has suffered the classic problems of a developing country. The relative value of the mineral and agricultural products that are still the majority of its exports have declined sharply in relation to what it imports from industrialized countries. When Mexico and Argentina began to stumble on foreign debt payments last year, undiscriminating bankers just as quickly cut off loans to Brazil, precipitating its debt-payment crisis.
Moreover, Brazil is like its less developed neighbors in lacking the social programs or political flexibility to handle a major industrial recession in urban areas.
"What scares me is not that the government will lose control of the socioeconomic situation," said Cardozo, "but that it has already lost control of it."
For at least the next several years, most Brazilian leaders in and outside of government expect their country to walk a tightrope between the pressures of its foreign debt and shortage of capital and those of vital social and business sectors that cannot bear the costs of unemployment, rising prices and funding cutbacks.
But that is not the only critical transition the country must make. The short-term emergency also has appeared to spell an end in Brazil to the old formulas for stable progress.
"Brazil during decades developed its industry and its type of modernization like the countries of the northern hemisphere," said Renato Ticoulat, the president of the Brazilian Rural Association. "For the northern hemisphere, the illuminated vision of the world was that economic modernization would bring peace and contentment by itself. But the world has changed a lot, and this can no longer be supported."
Even with a world recovery and the end of its debt problem, Brazil will probably never again expand its economy at double-digit rates with the push of foreign-based capital and loans, according to economists, businessmen and politicians interviewed during a month-long tour of the country.
After the past growth, these leaders say, there also will be little room for the quick expansion of the nation's business and industry while economic inequalities and other social barriers remain unaddressed.
Yet, Brazil must grow quickly. With an annual population growth rate of 2.4 percent, it must grow economically by 6 to 7 percent a year just to prevent current unemployment from increasing. And with the current collapse of its economy, it will have to expand at 8 percent a year from 1984 to 1987 simply to restore per-capita income to the level reached in 1980, economists say.
Some politicians believe that the current crisis already is creating pressures that Brazil's brittle political system may be unable to bear. During the past four years, the ruling military has carried out a slow move toward democracy. Last year more Brazilians than Americans voted in state, congressional and local elections, and large business and citizen sectors grew to have real influence for the first time in nearly 20 years.
Many of these newly enfranchised Brazilians, it is said, cannot easily accept the idea that the boom in their country is over. "Brazil is a country that has always grown. It's a way of living accustomed to growth," said Rafael de Almeida Magalhaes, a prominent leader in the opposition Brazilian Democratic Movement.
"It is impossible for Brazilians to believe that there will be unemployment and that they will have social problems, but that is what is happening," he said. "The atmosphere is becoming passionate, and in a passionate atmosphere, the only people who have influence are extremists."
Beyond the immediate political dangers, however, other Brazilian leaders already can trace the shape of the changes that seem to lie ahead.
One new phenomenon can be found in the auto industry, the sector that formed the foundation for Brazilian industrial expansion under the leadership of large multinational companies. Brazil's major American-owned auto producers are integrating their plants into the production system of "world cars," vehicles that combine the resources of manufacturing bases around the world.
Executives have begun to talk of Brazil's transformation as a second-level manufacturing base for supply of its internal and regional markets into an international center of heavy industry, displacing older factories in the United States and Europe.
Another, contrasting development lies in the computer industry, which many economists believe will play the past role of auto and steel sectors in international economic growth in the future.
There, despite heavy economic pressures, the Brazilian government has largely limited the market to national firms and capital. In this way, it is seeking to prepare Brazilian enterprises to take the kind of leadership role in development held by multinationals in the past.
Perhaps the most important signals of change, however, can be found in the major urban centers like Sao Paulo, where growth seems to be clogged by its own side effects of pollution, congestion and overpopulation.
Even as unemployment grows in Sao Paulo, an average of 1,000 more people arrive in the city each day to search for jobs. About a third of those who work now make less than $75 a month.
It was a march of the unemployed, largely from the shantytowns and poor neighborhoods in Santa Amaro, that led to the violent rioting in April. Now, say the political organizers in those southern districts, the time for economic improvements is running out.
"We are going to give the government a few months, a deadline," said Dora Lopez, a shantytown organizer. "We will wait until September. Then we are going to go to the palace of government and collect."
On the government's response, then and over the coming months, will hang much of the Brazilian future. Next: The shantytowns