Carlos Emmanuel da Fonseca Barreto
The proverb says, "all roads lead to Rome," but in Brazil a single road leads to a region ranking among the world's highest in rate of development. The economic boom that the state of Minas Gerais, (translated general mines), is experiencing is due to the expansion of a highway that connects the state's capital, Belo Horizonte, to São Paulo, the economic heart of South America. The 590 kilometers (366 miles) of the Fernão Dias highway is leading the state to a steady 10% growth per year in industrial activity, a figure attained only in China. The New York Times appointed Minas as the region on the planet with the highest growth outside the belt formed by the Asian Tigers. In past years, the south of Minas alone received $5.6 billion in capitalized investments towards new factories, creating approximately 83,000 new jobs.
The state has contributed outstandingly to the country's GDP (Gross Domestic Product). Between 1981 and 1992, Brazilian industry grew 6% but Minas reached 20% growth while in second place, the state of Paraná, grew 14% and the powerful state of São Paulo a miserable 4%. Minas Gerais has a population of 16 million people, producing $40 billion annually, a figure equal to Chile's economy. The state's economy surpasses Hungary, Puerto Rico, Peru, and many other smaller countries. Minas today represents the second biggest economy in Brazil surpassing the long time second place Rio de Janeiro, and only behind giant São Paulo.
The significance of this growth is such that the United States Ambassador to Brazil, Melvyn Levitsky, has mentioned opening a Consulate in the state's capital by the end of the year. American Airlines saw the sun rising in Belo Horizonte long before the Ambassador, and on April 3rd, started daily flights from Dallas/Fort Worth. More travelers means increased demand for hospitality, and investments have been pouring into the hotel business. A $12 million investment has just opened its doors, the four-star Mérit Hotel.
Another two five-star hotels will require a $75 million investment and will open by 1996. Belo Horizonte was considered by the Population Crisis Committee in Washington, the Brazilian capital with the best quality of life. The state government has also created incentives for partnerships between local government offices and private enterprises to invest in landscaping of the city's parks and squares. The state as a whole has been witnessing what is called "the domino effect," where one event leads to another, a giant snowball that shows no signs of faltering.
The locomotive of this economic growth is the implementation of the Fernão Dias highway. "The construction project of the highway will require an investment of $540 million, but it is much more than just a duplication," states Paulo Paiva, Secretary of Urban Planning of Minas Gerais. "It is a new axle of development being built, the partnership with São Paulo." The region has easy access to the two biggest participating markets in the country's GDP.
Over the past two years, an increasing number of entrepreneurs from São Paulo are moving to the region due to the availability of raw resources, proper infrastructure, fiscal incentives, and above all, locality. Moreover, the state-run electric power company, Cemig, promises energy in abundance to support the continuous growth of the area. Cemig plans in partnership with the private sector to build 15 new hydroelectric power plants along the five rivers that run through the region. It has been estimated that 20,000 new small, medium and large sized businesses will emerge in the hilly area south of Minas in the next few years.
Another positive factor is that in Minas the industries find an environment free of strikes by unions and lower operating costs. Fiat Automóveis, the biggest subsidiary of Italy's Fiat Spa, has been operating there for 11 years without any strikes. For its employees, the region offers a much better quality of life. The residential areas are sacred according to local governments. Ample avenues lined with trees provide a welcome invitation for residents to enjoy long walks and bicycle rides. The region also has a highly qualified work force, the great majority of the population has a high school diploma. In terms of higher education, the cities in the south of Minas offer 48 different university courses and 24 technical training schools.
The most important city in the hilly south of Minas is Pouso Alegre. The city was chosen from 50,000 other cities in Brazil as one of the 10 best for living and for business. It has 83,000 inhabitants, an airport and the largest industrial sectors in the region with 800 industries varying from food and clothing to metal-mechanics and automobiles. The giant shoe manufacturer Alpargatas chose the city to locate its biggest manufacturing plant. Another newcomer is JPX, a producer of jeeps with technology from the French Auverland.
They have just built a plant there, but future plans are to buy all parts presently used in their factory from auto-parts manufacturers that are moving to the area. General Motors is also considering building in Pouso Alegre a plant to produce the Corsa model. Refinações de Milho Brasil, a corn mill corporation, is old and well known to local people. They believe in the region's potential for development and invested $60 million implementing new technology in their factory.
Santa Rita do Sapucaí with 27,000 inhabitants is the Brazilian Silicon Valley. There are 78 firms exporting computer chips and electronic components alone. The city has also computer manufacturers and telecommunication industries. Varginha has 90,000 inhabitants and it is called the "dry-port." It has the first custom house in the interior of the country. From there the products leave packed inside locked containers that go directly to the ships. A simple and practical way to solve the bureaucracy of exports and a major reason why exports grew 80% in the past few years in Minas.
Minas also has Alfenas and Lavras which have respectively 54,000 and 67,000 inhabitants. They both have very good infra-structures and their industrial sectors are mainly textiles. There are other attractions in the region, located at a high altitude with mild climate and natural spas with therapeutic baths. Poços de Caldas is the region's retreat and center of tourism. The industry is the city's main source of income.
When the new road opens, the distance between São Paulo and Belo Horizonte will shorten to a one and a half hour journey and growth will enter a new era. "The duplication of the Fernão Dias Highway will have a greater economic impact on the country than the opening of the Via Dutra," a highway connecting Rio de Janeiro to São Paulo, stated professor Clélio Campolina from the Federal University of Minas Gerais. Even before its completion, the highway has generated for the region 77 new projects and investments totaling $350 million. What would be the figure one year after the inauguration of the new highway?
