(Part Two)

The Brazilian geography

Most of Brazil's territory does not lie within these Southern Cone lands. Instead, roughly one-third of Brazil's 8.5 million square kilometers is composed of vast tracts of challenging jungle, with the Amazon Basin being the most intractable of all. While there are many potential opportunities to exploit minerals, they come with external pagedaunting infrastructure costscall_made.

South of the Amazon Basin lies a unique region known as the cerrado, a vast tropical savannah with extremely acidic soils. However, because the heat and humidity is far less intense than in the jungle, the cerrado can be made economically viable by brute force. The cost, however, is extreme. In addition to the massive infrastructure challenges – the cerrado lacks any navigable rivers – the land must in essence be terraformed for use: cleared, leveled and fertilized on an industrial scale to make it amenable to traditional crops. There is also the issue of distance. The cerrado is an inland region, so shipping any supplies to or produce from the region comes at a hefty transport cost. Brazil has spent the greater part of the past three generations engaged in precisely this sort of grand effort.

Luckily for the Brazilians, not all of Brazil's lands are so difficult. About 600,000 square kilometers of Brazil is considered traditionally arable. While this represents only 7 percent of the country's total land area, that still constitutes a piece of arable territory roughly the size of Texas or France. All of that land lies in the country's southern reaches. But much of that territory lies in the interior, where it is not easily accessible. Brazil's true core territories are less than one quarter of this 7 percent, about the size of Tunisia, straddling the area where the tropical zone gives way to the temperate lands of the Southern Cone. These areas formed the core of Brazil's original settlements in the early colonial period, and these lands formed the population core of Brazil for the first three centuries of its existence. As such, the topography of these lands has had an almost deterministic impact on Brazil's development. Understanding that topography and its legacy is central to understanding what is empowering Brazil to evolve – and hampering Brazil from evolving – into a major power in the years to come.

Two obvious characteristics stand out regarding this core Brazilian region. First, it is semi-tropical, so development in the region faces a somewhat less intense version of the challenges described above for fully tropical zones. Second, and more critical, the Brazilian interior is a raised plateau – called the Brazilian Shield – which directly abuts Brazil's Atlantic coast along nearly the entirety of the country's southeastern perimeter. The drop from the shield to the Atlantic is quite steep, with most of the coast appearing as a wall when viewed from the ocean – the source of the dramatic backdrops of most Brazilian coastal cities. This wall is called the external pageGrand Escarpmentcall_made, and most Brazilian cities in this core region – Rio de Janeiro, Vitoria, Santos and Porto Alegre – are located on small, isolated pockets of relatively flat land where the escarpment falls to the sea.

The primary problem this enclave topography presents is achieving economies of scale. In normal development patterns, cities form around some sort of core economic asset, typically a river's head of navigation (the maximum inland point that a sizable cargo vessel can reach) or a port or nexus of other transport options. The city then spreads out, typically growing along the transport corridors, reflecting that access to those transport corridors provides greater economic opportunities and lower economic costs. So long as somewhat flat land remains available, the city can continue growing at low cost. In time, nearby cities often start merging into each other, allowing them to share labor, capital, infrastructure and services. Economies of scale proliferate and such megacities begin generating massive amounts of capital and skilled labor from the synergies.

Megacities – such as New York City, Los Angeles, London, Paris, Tokyo, Buenos Aires, Istanbul and Shanghai – form the core of the global economic system. This "standard" development pattern has been repeated the world over. The premier American example is the "megalopolis" region of cities on the American Eastern Seaboard stretching from Washington to Boston, encompassing such major locations as Baltimore, Philadelphia, New York, Hartford and Providence. In Europe, a similar conglomeration contains the many cities of the German Rhine Valley. In both cases, major and minor cities alike merge into an urban/suburban conglomeration where the resources of each location are shared with and bolstered by the others. In all such cases, the common characteristic is the existence of land upon which to expand.

That land is precisely what Brazil's core territory lacks. The Grand Escarpment comes right down to the ocean throughout the Brazilian southern coast. Brazil's cities, therefore, are forced to develop on small enclaves of relatively flat land in the few areas where the escarpment has not pushed all the way to the sea. The lack of a coastal plain means no small cities can form between the major cities. Any infrastructure built by one city never serves another city, and linking the cities requires climbing up the escarpment onto the shield itself, traversing the shield and then going back down the escarpment to the other cities, a difficult and costly endeavor in terms of both time and engineering. Because Brazil does not have direct access to the navigable rivers of the Rio de la Plata region, it has to scrounge for capital to apply to this capital-intensive project. Absolute limitations on land area also drive up the cost of that land, injecting strong inflation into the mix right at the beginning and raising development costs. Enclavic geography is not something that can be "grown out of" or "developed around." The topography is constant, and these cities simply cannot synergize each other – a modern, low capital-cost city cannot be built on the side of a cliff. Moreover, since these enclaves are Brazil's primary points of interaction with the outside world, they represent a constant, permanent restriction on Brazil's ability to grow.

To this day, Brazil has very few major highways and railways because even where the topography does allow for the possibility, the costs still are much higher than in flatter lands farther south. The country lacks a major coastal road system, as the escarpment is simply too steep and too close to the coast. Following the Brazilian coastline makes clear how Brazil's coastal roads are almost exclusively two-lane, and the coastal cities – while dramatic – are tiny and crammed into whatever pockets of land they can find. And most of the country is still without a rail network; much of that soy, corn and rice that the country has become famous for exporting reaches the country's ports by truck, the most expensive way to transport bulk goods.

The Grand Escarpment drops almost directly down to the coast in most portions of southern Brazil. This photograph vividly illustrates how the Grand Escarpment starkly limits Rio de Janeiro's development. Brazil's southern coastal cities have developed along similar patterns, lacking the traditional hinterlands of major cities elsewhere in the world.

The one exception to the rule is Sao Paulo state, centered on the city of the same name. Only Sao Paulo has sufficient flat lands to follow a more standard development pattern and thus achieve any economies of scale. It is also the only portion of Brazil that possesses anything resembling the modern, integrated infrastructure that follows more traditional development patterns. Unsurprisingly, this single state accounts for more than one-third of Brazil's gross domestic product (GDP) despite only serving as home to one-fifth of the country's population. As recently as 1950, Sao Paulo state produced more than one-half Brazil's economic output.

Unfortunately, Sao Paulo is not a coastal city. The escarpment at Sao Paulo is too steep and the coastal enclave – the port of Santos – is too small to take full advantage of Sao Paulo's potential. Sao Paulo sits at an elevation of about 800 meters atop the Brazilian Shield, some 70 kilometers inland. (In comparison, the U.S. city at the Mississippi River's head of navigation, Minneapolis, Minn., sits at less than 200 meters elevation despite being 3,000 kilometers inland.) This sharp elevation change helps mitigate the climatic impact of the region's near-tropical conditions that predominate on the coast, but comes at the dauntingly high capital and engineering costs required to link the city and state to the coast. So while Sao Paulo is indeed a major economic center, it is not one deeply hardwired into Brazil's coastal cities or to the world at large.

The lack of economies of scale and the difficulty of integrating local infrastructure forces bottlenecks. The worst of those bottlenecks occur where the coastal enclaves interact with the outside world – in Brazil's ports – and it is here that Brazil faces the biggest limiting factor in achieving economic breakout. Brazil is correctly thought of as a external pagemajor exporter of any number of raw commoditiescall_made, but the hostility of its geography to shipping and the inability of its cities to integrate have curtailed port development drastically. The top seven Brazilian ports combined have less loading capacity than external pagethe top U.S. port, New Orleanscall_made, and all Brazilian ports combined have considerably less loading capacity than the top two U.S. ports, New Orleans and Houston.

Building a more sustainable Brazil cannot be done on the coast; there simply is not enough land there to feed a growing nation. But climbing up the Grand Escarpment to develop the interior introduces a new problem.

The coastal ridge at the top of the Grand Escarpment also divides drainage basins. Within a few dozen kilometers of the southeastern coast, South American rivers flow west, not east, ultimately emptying into the Rio de la Plata network. As the early Brazilian cities attempted to develop interior hinterlands, those hinterlands found themselves more economically intertwined with Argentine and Paraguayan lands to the south than with their parent communities to the east. For many in the interior it was cheaper, easier and faster to float products down the rivers to the megaport of Buenos Aires than to lug them by land up and over the Brazilian coastal mountain ranges and down the Grand Escarpment to the middling disconnected ports of coastal Brazil. Similarly, it was far easier to sail down the Atlantic coast and up the Rio de la Plata Basin onto the Parana than expend the cost of building on-land infrastructure. Brazil's early efforts to develop integration within its own territories paradoxically led to an economic dependence upon its southern neighbors that weakened intra-Brazilian relationships.

Those southern neighbors took advantage of this situation, leaving Brazil struggling to control its own land. Unlike the U.S. independence experience, in which all of the colonies were part of the same administration and battled as one against their colonial overlord, South America was a patchwork of different entities, all of which fought for their independence in the same 15-year period. Paraguay achieved independence in 1811, Argentina in 1818 and Brazil in 1823. Immediately upon independence, the region's new states struggled for control of the waterways that held the key to being the dominant, integrated economic power of the Southern Cone. Since Brazil was the last of the region's states to break away from its former colonial master, it had the least time to consolidate in preparation for post-independence wars, and its enclave nature made such consolidation far more challenging than that of other Southern Cone states. Brazil accordingly did very badly in the ensuing conflicts.

Those early wars resulted in Uruguay's separation from Brazil and the removal of Brazilian authority to above the heads-of-navigation on all of the Rio de la Plata region's rivers. All of the rivers' navigable lengths were now shared between Argentina, Paraguay and Uruguay, leaving capital-poor Brazil sequestered in its highland semi-tropical territories. Argentina and Paraguay rose rapidly in economic and military might, while Brazil languished with little more than plantation agriculture for more than a century.

The next two generations of regional competition focused on Argentina and Paraguay, which struggled for control of the Rio de la Plata maritime system. That competition came to a head in the 1864-1870 War of the Triple Alliance in which Argentina, Brazil and Uruguay eventually won after a brutal struggle with Paraguay. Fully 90 percent of the male Paraguayan population died in the conflict, nearly destroying Paraguay as a country; its demography did not finally rebalance until the 1990s. With Brazil's wings clipped and its more serious regional rival all but destroyed, Argentina fashioned Paraguay and Uruguay into economic satellites, leveraging the region's river systems to become a global economic power. By 1929 it had the world's fourth-highest per capita GDP. Brazil, in contrast, remained impoverished and relatively isolated for decades.

Nor was Brazil united. Between the economic pull of Argentina and its rivers and the disconnected nature of the enclavic coast, regionalism became a major feature of Brazilian politics. Contact between the various pieces of Brazil was difficult, while contact with the outside world was relatively easy, making integration of all kinds – political, economic, and cultural – often elusive.

Regionalism remains a major issue in Brazilian politics, with strong rivalries triggering divisions among states and between states and the federal government. The preponderance of power at the beginning of the 20th century lay in the hands of the wealthier states, Minas Gerais and Sao Paulo. For many years, control of the central government alternated between the two states. This left Brazil's remaining states isolated politically, prodding them to seek economic opportunities globally while defining their identities locally. For the better part of a century, "Brazil" was less a national concept as much as it was a geographic concept. Rio de Janeiro and Rio Grande do Sul states, for example, in many ways started acting like independent countries. This state of affairs lasted until very recently.