Routes of engineering for development of a sovereign nation


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Routes of engineering for development of a sovereign nation

  1. 1. 1 ROUTES OF ENGINEERING FOR DEVELOPMENT OF A SOVEREIGN NATION Fernando Alcoforado * Sovereignty is a higher authority that can not be limited by any other power . The exact understanding of the concept of sovereignty is necessary for understanding the state phenomenon, since there is no perfect state without sovereignty. Sovereignty is one, whole and universal. Can not be restricted to any kind unless, of course, those arising from the imperatives of peaceful coexistence in terms of sovereign nations under international law. According to this concept can be said that Brazil is not a sovereign country because it is limited in its action by other global powers both domestically and in the outside resulting from the action of the big capitalist powers and multinational or transnational companies. Technological, economic and financial dependency of Brazil in relation to the outside is a limiting factor in exercise of its sovereignty. The dependence undermines the sovereignty. Before pointing out the routes of Engineering for the development of a sovereign nation in Brazil, it is necessary to outline what it would take to do that sovereignty is exercised in fact in the Country. Sovereignty shall be exercised only with effectiveness by certain nation if it holds abundant natural resources, having an educated and highly skilled population, have economic infrastructure (energy, transport and communications) and social (education, health, sanitation and housing) compatible with the needs of the nation, possessing ample resources of knowledge (universities and institutions of science, technology and innovation) and has a highly developed and owned predominantly national economic structure (agriculture, industry and services). It can be stated that Brazil holds abundant natural resources and has a well developed agricultural structure. However, Brazil has weaknesses regarding the education and skills of its population, has problems and bottlenecks in the energy, transport and communications sectors, is quite deficient in its infrastructure of education, health, sanitation and housing, it does not hold broad knowledge resources in quantity and quality that prevent the development of science, technology and innovation, and is faced with a severe process of deindustrialization and denationalization of Brazilian industry. The Brazilian Engineering can provide important contributions in solving problems and bottlenecks in the energy, transport and communications, overcoming the deficiencies in sanitation infrastructure and housing in Brazil and in the development of science, technology and innovation sectors. About deindustrialization and denationalization of Brazilian industry, it should be noted that both problems have worsened from the opening of the Brazilian economy in the 1990s when it entered the neoliberal model in Brazil. Since 1990, the Brazilian industry lost competitiveness due to barriers represented by “Brazil Cost” (high public deficit of R$ 2 trillion, high real interest rates, elevated spread banking, the highest tax burden of 35 % of GDP, higher costs labor, high costs of the pension system, complex and inefficient tax laws, high cost of electricity, poor infrastructure and lack of skilled labor)..
  2. 2. 2 De-industrialization of Brazil is a process that is ongoing and likely to deepen if nothing is done to reverse it. Industry participation in the Brazilian GDP (Gross Domestic Product) fell in 2011 to the levels of 1956, when President Juscelino Kubitschek gave impetus to the industrialization of the Country by launching his Target Plan, which promised to make the Brazil forward "50 years in 5" (Figure 1). In 1956 during the JK government, industry accounted for 13.8 % of GDP [See the article by Reinaldo Azevedo, under the title O PT da desindustrialização - Participação da indústria no PIB recua aos anos 50 (The PT of deindustrialization - Participation of industry in GDP eases to 50), available at the website < da-desindustrializacao-participacao-da-industria-no-pib-recua-aos-anos-50/>). The weakening of the Brazilian industry was decisive for half of foreign direct investment in Brazil was aimed at the acquisition of many of them resulting in denationalization. Both problems greatly undermine the Brazilian Engineering because they contribute to the fall in demand for engineers and service consultancy and construction industry. Figure 1 - BRAZILIAN INDUSTRY PARTICIPATION IN FORMATION OF GDP The denationalization of the Brazilian economy is still evident when one notes that of the 50 largest Brazilian companies, 26 are foreign, according to the Census of Foreign Capital in Brazil. More than half of Brazil's leading-edge sectors (automotive, aerospace, electronics, information technology, pharmaceutical, telecommunications, agribusiness and mining) companies are in the hands of foreign capital. Foreign capital is present in 17,605 Brazilian companies that account for 63 % of Gross Domestic Product (GDP), and has control of 36 % of the banking sector and has 25 % of Bradesco Bank shares and 20 % of the shares of the Bank of Brazil. Even Petrobras, due to the 9478 Law 1997 that broke the state oil monopoly, now has 52 % of its capital under private control, and 35 % of this capital is foreign. Not to
  3. 3. 3 mention that the National Petroleum Agency (ANP) and the Ministry of Energy Mines follow the policy of privatizing our oil to international oil companies as he did recently with the auction field Libra of pre-salt layer. Recently, to increase the participation of foreign capital in Brazil, the federal government sent for the approval of Congress on the 20th of last April a provisional measure (MP) that allows an increase from the current 20 % up to 49 % of foreign capital in Brazilian airlines, besides deciding to privatize airports and ports by the end of the year. One indicator of the degree of dependence of Brazil against the international financial system is the growth in remittances of profits abroad (Figure 2) demonstrating how large the field of international monopolies on the national economy is. Figure 2 shows the increasing trend from 2003 to 2011 the remittance of profits to abroad by foreign companies operating in Brazil. Figure 2 – REMITTANCES OF PROFITS TO ABROAD - 2003-2011 * Estimate Source : Central Bank of Brazil On the problems of economic and social infrastructure in Brazil, it should be noted that, under Article Brasil precisa investir R$ 100 bi ao ano em infraestrutura (Brazil needs to invest R$ 100 billion per year in infrastructure), posted on the website < must - invest - 100 - r -bi - the - year -in- infrastructure >, is informed that "the country would have to invest additional 2.5 trillion reais in the next 25 years to achieve the investment of 4 % of GDP sector, minimum necessary to achieve a reasonable level of modernization”. Brazil would need to invest additional R$ 2.5 trillion over the next 25 years to double the level of investment in the current 2 % to 4 % of the Gross Domestic Product (GDP) sector, according to calculations by economist Claudio Frischtak , Inter . B Consulting. Paulo Fleury linked to the Institute of Logistics and Supply Chain published article in September 2011 under the title Infraestrutura: situação atual e investimentos planejados (Infrastructure: Current and planned investments) in which estimated the necessary investments in ports (R$ 42.9 billion), railways (R$ 130.8 billion) and roadways (R$ 811.7 billion), totaling R$ 985.4 billion. Adding this value to the required
  4. 4. 4 to ports and inland waterways (R$ 10.9 billion) , airports (R$ 9.3 billion), power sector (R$ 293.9 billion), oil and gas (R$ 75.3 billion), sanitation (R$ 270 billion) and telecommunications (R$ 19.7 billion) totaled R$ 1,664.5 billion. In turn, the health sector requires investments of R$ 83 billion per year reported on the website < mais-para-melhorar-a-saude-no-brasil-20110921.html>, education sector needs investment of R$ 16.9 billion / year to get quality education in Brazil reported on the website < investimentos-em-educacao-ainda-sao-mal-distribuidos-aponta-ocde> and public housing requires R$ 160 billion to eliminate the housing shortage reported in <> website. The total investment in economic infrastructure (energy, transport and communications) and social infrastructure (education, health, sanitation and housing) corresponds to R$ 1,924.4 billion, which is almost R$ 2 trillion. According to Luiz Nelson Porto Araújo, author of the study A Infraestrutura Brasileira - Desafios e Oportunidades (The Brazilian Infrastructure- Challenges and Opportunities), data from the Organization for Economic Cooperation and Development (OECD) show that, among the world's largest economies, Brazil is the country with the lowest rate of investment in infrastructure sector in relation to GDP. While China has invested 40 % of GDP in infrastructure in 2007 and India, 33.8 % in the same period, Brazil has allocated only 15.7% (See the website < . br/noticias/a-falta-de-infraestrutura_80871.html >). In article Brasil perde competitividade por problemas na infraestrutura (Brazil loses competitiveness by problems in infrastructure), is informed that Brazil lost eight positions in competitiveness ranking of the World Economic Forum. According to the Global Competitiveness Report for 2013-2014, released by the World Economic Forum, Brazil fell from 48th to 56th place in the overall index (See the website < infraestrutrutura-competitividade-congresso-abtc-05092013>). The cause of the deterioration in competitiveness ranking is due to poor infrastructure. In this regard, Brazil ranked 114th place and disability has been identified as a major problem for doing business in Brazil. And when it is analyzed transport, placing further worsens. Quality of roads Brazil reached the 120th position, ports 131st, airports 123 th, and railways 103 th place. The study assesses 148 economies based on 5600 data from international organizations. Data from the Institute of Applied Economic Research (IPEA), an agency of the federal government, point out that logistics costs in Brazil reaches 6.7% of Gross Domestic Product (GDP). In the United States, for example, the value is approximately 4% of GDP. In contrast, investment in the transportation system here in Brazil is approximately 0.6 % of GDP, while in the United States reaches 7.7%. "To meet the demand, it´s necessary to multiply by five the investment in roads, ports, airports and railways", says coordinator of Infrastructure of IPEA, Carlos Campos (See the website < cargas-infraestrutrutura-competitividade-congresso-abtc-05092013>). It is undisputed that there is no development in a country that does not have the infrastructure well planned, implemented and constantly conservation system. The development process in Brazil is being highly compromised by the existing poor
  5. 5. 5 infrastructure. It should be noted that it is technically and economically proven that investments in infrastructure enable sustainable development cycles, translating into growth of Gross Domestic Product (GDP). This is a sector in which the presence of Engineering is essential. The analysis of indicators of countries like China, India and South Korea (which invest respectively in total, including economic infrastructure, 48 % , 37 % and 28 % of its GDP ) suggests a relationship between economic growth and investment in transport, energy and telecommunications. Unfortunately, Brazil is intended only 15.7% of GDP. The focus of the Chinese to modernize the ports was critical to increase its foreign trade, while investments in airports led to the increased flow of people and cargo. Due to lack of public resources, the Brazilian government has adopted the policy of privatization of some infrastructure such as the energy, transport, communications, education, among others. However, privatization of infrastructure systems in Brazil will not solve its problems in this area. It only happens with the solution of the issue of high federal debt (R$ 1.95 trillion), which includes internal and external indebtedness, representing 67 % of GDP (R$ 2.25 trillion). If there is a reversal of the increasing trend of rising domestic debt and pay interest and repay principal in that today the federal government allocates almost 50 % of the federal government budget policy to that end, the imbalance between demand and availability of resources to meet the needs of Brazil in economic and social infrastructure will accentuate it with the passage of time to the detriment of the population and the national productive sector. Figure 3 shows the evolution of the public debt of Brazil from 1994 to 2009. Figure 3 - EVOLUTION OF INTERNAL DEBT IN BRAZIL Source : The evolution of the federal government budget with the allocation of expenditures from 1995 to 2011 is shown in Figure 4 below:
  6. 6. 6 Figure 4 - EVOLUTION OF THE GENERAL BUDGET OF THE BRAZIL GOVERNMENT WITH THE USE OF SPENDING Source : The analysis of Figure 4 reveals that there has been growing allocation of budget resources for the payment of interest and repayments of domestic debt. The funds from the federal government budget set for 2013 is shown in Figure 5 below: Figure 5 - USE OF PROCEEDS OF THE FEDERAL GOVERNMENT BUDGET IN 2013 Source : The analysis of Figure 5 reveals that the higher expenses of the Brazilian government in 2013 are interest and amortization of debt corresponding to 43.98 % of the budget on
  7. 7. 7 social welfare corresponding to 22.47 % of the budget and transfers the states and municipalities that correspond to 10.21 % of the budget. Besides the high expenditure on payment of the public debt service, high interest rate Selic adopted by the Central Bank of the federal government, the fifth largest in the entire world economy, well as the growing public sector deficit decisively contribute to the continued increase in public debt in Brazil. Maintained the trend to allocate more resources for the payment of interest and amortization of debt, there will be fewer resources available (federal, state and local) government to invest in economic and social infrastructure. For the Brazilian government have resources for investment in economic and social infrastructure, must necessarily renegotiate with domestic and foreign banks (creditors 55% of public debt), mutual funds (21 % of creditors public debt), funds pension (16 % of creditors public debt) and non-financial companies (creditors of 8 % of the public debt) reduction in expenditure in the payment of debt service lengthening the term of payment of interest and amortization of debt. In addition, the federal government should develop a plan for systemic and integrated development that addresses the solution to the problems of all production systems and infrastructure in Brazil. Without this strategy, Brazil will continue without compromising the necessary infrastructure, as a result, their future development. This solution is a task to be taken over by a new government that meets the necessary competence and political courage to carry out this strategy. This would not be the case that the current government, beyond the demonstrated incompetence in managing the Brazilian public sector, bent to the dictates of domestic and foreign monopolies, especially in the financial system with the blessings granted to them. In addition to the conditioning factors described above lines, sovereignty can only be exercised effectively by certain nation if it is not dependent on strategic natural resources, imported technology and capital from the outside and not having an economic structure (agriculture, industry and services) predominantly in the hands of foreign capital. As stated earlier, Brazil holds strategic natural resources in abundance. However, it is extremely dependent on technology and capital from the outside. Brazilian engineering could be used to promote the development of science, technology and innovation and therefore eliminate the technological dependence of the country from the outside. Figure 6 shows the share of foreign, national and state capital in the Brazilian industry. It appears that in 1999, foreign capital is already dominant in the Brazilian industry. It is observed in Figure 7, the supremacy of foreign capital in the more advanced industries in Brazil. The dependence of the Brazilian industry is not only the capital but also on foreign technology. Brazil ranks 43 in the world ranking technology of United Nations, which directly affects the performance of the industrial country. In the current climate where the law of the strongest prevails in international relations, sovereignty can only be exercised by a nation with effectiveness if it has a military power capable of defending its territory and deter other countries, especially the major powers, to seize the national wealth and defend the nation's interests abroad. Military power is maximized when the nation owns a robust economic structure and highly developed technological capacity to produce weapons and eliminate dependence on external supplies. Brazilian engineering could contribute decisively to promote the development of indigenous technological capacity. Importantly, it is the engineer who
  8. 8. 8 transforms the knowledge developed in the laboratories into products that will improve people's lives. It is the Engineer the main element of the revolutionary silent transformation that takes place in the modern world. Figure 6 - PARTICIPATION OF FOREIGN, NATIONAL AND STATE CAPITAL IN BRAZILIAN INDUSTRY Source : Notes:Red= Foreign; Yellow= National; Green= State Figure 7 - PARTICIPATION OF FOREIGN, NATIONAL AND STATE CAPITAL IN INDUSTRY MORE ADVANCED OF BRAZIL Source : Notes:Red= Foreign; Yellow= National; Green= State Engineering should be understood as a culture open to society, active in promoting its development having as purpose to seek the best quality of life. Since technological development depends crucially on the ability in engineering, it can be stated that education, science, engineering and technology are closely related. Engineers are the most responsible for implementing the innovations generated by the Scientific and
  9. 9. 9 Technological Revolution and the Third Industrial Revolution underway. Engineering is strategic for Brazil's progress and humanity. For the Brazilian Engineering act in defense of national sovereignty, it must overcome its current weaknesses and strengthen to increase the participation of Brazil in the race to innovation globally. The Brazilian situation is disadvantageous because, while the United States, for example, has 800 thousand scientists working in research and development of which 81 % are in companies, 4 % in government and 15 % in higher education institutions, Brazil has only 137 thousand scientists of which 65 % of researchers are in universities, 27 % in companies and 8 % in government. These figures show that, unlike the United States, the contribution of companies in R & D in Brazil is very small. Another aspect to consider is that it is ridiculous to talk of technological innovation in Brazil with denationalized industry and with centers of decisions on production and markets located outside, as is the case of Brazilian industry. All this explains why Brazil remains one of the least innovative countries in the world. The denationalized industry is crucial to Brazil that is a country that invests little in research, less than 1 % of its GDP, while most industrialized countries is on average level of 3 %. Brazil invests little in education, some 4.5 % of GDP, while in developed countries this figure may reach 7 % or more. In addition, Brazil still has about 10 % of its population illiterate, and that those who read more than 30 % did not know how to interpret what they read in a single newspaper article. They are functionally illiterate. While in developed countries this ratio is zero. For the Brazilian Engineering elevate their level of contribution to the progress of Brazil, it is necessary that the federal government make efforts to improve the quality of education in the country which is very low at all levels. According to the OECD Review 2010 - Programme for International Student Assessment , PISA - Brazil is in 55th place among 65 countries analyzed. Brazil is below Chile, Uruguay, Mexico and Trinidad and Tobago . The two best places are occupied by China and South Korea. Brazilian students in the average level were below average in reading, math and science. However, it is these disciplines that represent the foundation for the formation of the engineer. The absorption of knowledge in current engineering courses in Brazil is not efficient because, besides having an excessive number of specializations in undergraduate, engineering schools absorb much of the school students with failure in Portuguese, mathematics and science. In Brazil, the engineering courses should be restructured in order to form the basic engineering in undergraduate courses and experts in graduate whose duties would be redefined by CONFEA (Federal Board of Engineering and Agronomy) and by CREA (Regional Council of Engineering and Agronomy). Brazil needs confronting and finally resolve the issue of education at all levels of education, the foundation of all public policies, the main one, the one that can produce qualified citizens to participate as protagonists of the accumulation and distribution of wealth process. Hence the importance of engineers as they summarize their training in the knowledge of what to do and how to do, essential to the development of a modern industrial society.
  10. 10. 10 Another major challenge of Brazilian engineering lies in the fact that there are insufficient engineers in Brazil. According to the Federal Board of Engineering and Agronomy (CONFEA), there are 712,400 engineers in Brazil. According to a study by the National Council of Industry (CNI), to meet the demand for engineers, it would be necessary to train 60,000 engineers per year in Brazil. But what happens in Brazil is that only 48,000 get this diploma each year. Meanwhile the number of graduates each year in China, India, Russia and South Korea largely surpasses that of Brazil, as shown in Table 1 below: Table 1 - ENGINEERS TRAINED BY YEAR In terms of engineering, South Korea form every year 80,000 of these professionals, for a population of 45 million people. Brazil graduates 48,000 engineers for a population of 190 million. Also that impresses every 150,000 students entering engineering course in Brazil, only 48,000 are formed, ie only 32 %. This resulted from the poor quality of secondary education, especially in math and science because students are unable to follow the courses of Engineering. Besides the shortage of engineers, Brazil form over 77 % of engineers in just four specialties: Industrial Technician (339,822, or 33.87% of total), civil engineering (201,290, 20.06%), electrical engineering (122,066, 12.16%) and mechanical and metallurgy engineer (109,788, 10.94 %). With concentration in a few specialties, the market is even more lacking in other niches. The Institute of Applied Economic Research (IPEA) predicted that Brazil needs, especially mining engineers, oil and gas, marine and computing. One of the areas most in need of professionals is the oil and gas. IPEA estimates that in 2015, it will be needed 1.155 million engineers if the growth of Brazil GDP is 5 % per year. And with growth of 7 % per year, 1.462 million engineers will be needed. The projection for 2022 indicates the need for 1.565 million engineers in typical occupations. According to IPEA, the oil and gas (including up extraction and refining) continue to expand their demand for these professionals at rates between 13 % and 19 % per year. In Brazil, are formed 48,000 engineers annually in all specializations. According to experts, even to all areas of the oil and gas engineering training, mechanical, electronic or production , is sufficient. Unfortunately, we are still essentially a country of low economic growth, low educational level of the workforce (eight years of schooling on average) and small-scale production of innovation compared to other industrialized or newly industrialized countries. Although we know extract oil from deep sea waters, producing ships and Country Trained China 400,000 Índia 250,000 Russia 100,000 South Korea 80,000 Brazil 48,000
  11. 11. 11 aircraft, it is still insufficient for the size of the social and economic needs of our population. To develop, Brazil will have to strengthen their Engineering and, with the best use of this leverage its economic and social progress and avoid eternal technological dependence on the outside. Brazil is fully developed in different sectors of Engineering. From road construction until the energy sector it is possible to be designed and built in Brazil. In some sectors, including, Brazil is a global benchmark, such as the programs related to Proálcool, oil exploration in deep sea waters, construction of large hydro as Itaipu, the largest in operation until recently, designed, constructed and assembled by Brazilian companies. In Brazil, government action is quite weak in the development of the Country due to lack of a national development plan. Currently, the Brazilian nation requires the adoption of systemic and strategic government planning to contribute to the overcoming of national problems that get worse every day. From the 1980s until the present time, the rulers of Brazil were not able to produce plans that contribute to overcome its huge problems and promote economic and social development of all its regions. It is therefore necessary to break with the policy that has characterized the action of the various governments of Brazil in recent years based solely on specific initiatives. This is the primary action for Brazilian engineering be strengthened and can contribute to the promotion of a sovereign nation and developed in Brazil. The development plan required to Brazil should include an industrial policy point effective solutions aimed at permanently reducing costs of industrial production in Brazil against Asian countries, especially China, which can only occur in four ways : (1) reduction of “Brazil Cost” with falling of tax burden and improving logistics infrastructure in Brazil; (2) increased productivity of the industry with the increment of its levels of efficiency and effectiveness and strengthening their supply chains; (3) depreciation of the currency (Real) with the restriction inflow of dollars or the adoption of a fixed exchange rate; and, (4) selective and permanent relief industry by reducing the tax burden on her incident. These solutions should be complemented by the adoption of measures aimed at: 1) overcoming the huge problems of education in Brazil at all levels with the objective of increasing the "critical mass" of the country; 2) the development of knowledge resources by adopting programs for implementation of R & D centers, strengthening of universities, technology acquisition and attracting brains from abroad; 3) the appropriate allocation of infrastructure resources establishing effective programs to eliminate existing logistical bottlenecks, 4) fostering the links between supply chains of companies and their suppliers to eliminate existing gaps; 5) combating predatory competition from imported with the restriction or limitation of entering the national market products; and, 6) the renegotiation with creditors of public debt to reduce expenditures for payment of debt service by lengthening the term of payment of interest and amortization of debt . These are the routes of Brazilian engineering for the development of a sovereign nation in Brazil. For these routes happen, it is necessary that the Brazilian people elect leaders capable of eliminating the gigantic problems of the Country and are committed to the progress that benefits the entire Brazilian population and the construction of a sovereign
  12. 12. 12 Brazil in the concert of nations. In other words, we need leaders who are able to solve current problems and plan a future of economic and social progress for the benefit of the entire Brazilian population and guarantee the sovereignty of Brazil in a chaotic international environment and of great complexity in which we live. * Alcoforado, Fernando, engineer and doctor of Territorial Planning and Regional Development from the University of Barcelona, a university professor and consultant in strategic planning, business planning, regional planning and planning of energy systems, is the author of Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova (Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado. Universidade de Barcelona,, 2003), Globalização e Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of the Economic and Social Development-The Case of the State of Bahia (VDM Verlag Dr. Muller Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe Planetária (P&A Gráfica e Editora, Salvador, 2010), Amazônia Sustentável- Para o progresso do Brasil e combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011) and Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012), among others.