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Creating a Competitive Market

Creating a Competitive Market

May 17
Comunidad de Ponta Da Terra, Amazonas, Brazil

In Amazonas, it’s impossible to study economic development without spending significant time away from the city of Manaus. Manaus is responsible for over 90 percent of Amazonas’ economic strength, so continued development in the city is a priority. But in the rural areas of Amazonas, where half the population lives, you begin to realize that 50 percent of the population is subsisting on 10 percent of the state’s income.

There are two seemingly distinct types of rural living in Amazonas. There are those areas connected to Manaus by road, and those connected by the Rio Negro. They seem distinct for multiple reasons; prior studies have taught us that road construction and deforestation were significantly related. On the four-hour bus ride to Balbina, the effects of deforestation are obvious. Although we usually think of deforestation on a rather industrial scale, deforestation in Amazonas often just looks like the more productive utilization of land by small localities (I am assuming anywhere from 100-200 people). The quality of living appeared much higher on this side of Manaus; I once saw a pool and houses looked like they were much better constructed. I think there’s something about being near a road—whether it’s easier for people to transport goods to Manaus or to gain access to agricultural tools—that has allowed these individuals to flourish relative to those living in the rural Rio Negro region.

On the other hand, we spent five days on a boat in the Rio Negro (a total of 17 hours from Manaus) and visited two different rural communities for a day a piece, exploring their paths through the rainforest, their agricultural patches, and their facilities, which included one-room schools, homes, small pharmacies, and of course, soccer fields. We played a few games of soccer (the Americans went 2-0 against our hosts’ best players, thanks to the fact that we had two varsity athletes and another three high school soccer players in our group). Along the way, we asked lots of questions, learning as much as we could about what it means to exist in rural Amazonas.

The Comunidad de Ponta Da Terra (The Community at the Tip of the Earth) has 100 people, 18 families, seven boats, six kayaks, two soccer fields, one volleyball court and a single one-room school. Each family has its own small home. The homes aren’t well constructed and they have no windows. I saw only three young men (aged 18-25), as many have joined the military. The community educates its residents until the fourth grade when formal education stops. They receive negligible wages from middle men who bring their products to Manaus; a monopoly allows these merchants to offer literal pennies for agricultural products that they can sell after transport at margins well over 30 times (and up to 60 times) the price paid for each commodity. The communities suffer from a lack of education and few resources. Community members possess an impressive knowledge of plants, passed down over thousands of years. So I was surprised that their agricultural pursuits were not more streamlined. Today, there is a vast amount of scientific information and data available that can help people improve their farming practices. Accessing that information is difficult, however.

The Comunidad de Frederico Muchado was similar to the Comunidad de Ponta Da Terra but slightly larger, with a population of 180 people. The community appeared to enjoy an improved standard of living. With better houses, more deforestation, and more comprehensive agricultural projects, this community offered a classroom education to students until the fourth grade, and through the Federal University of Amazonas (UFAM) was able to offer Internet access to teachers to help educate students through the eighth grade. Even with these improvements, the community’s conditions were far worse than those of the communities connected to Manaus via road.

These communities suffer from limited human capital, but especially from a lack of competition in goods transfer. We learned about ancient communities like the Maghribi Traders who are organizing and unionizing to fight the evils of collective action and the fundamental problems of trade. I believe this is the first step to enhancing the welfare of the Amazonian people residing in the rainforest. If people can receive a fair price for their goods, there will be more capacity to support education.


Early Observations

May 9
Manaus, Brazil

Blogging has been difficult. We just got back from a five-day tour on the Amazon River, with no cell service and no Wi-Fi access for hundreds of kilometers. But there are lots of stories to share.

Our first week was largely spent touring Manaus, attending lectures at local universities, namely the Federal University of Amazonas in Manaus (UFAM), and getting to know some of the locals our age.

Manaus is the spinal city in the state of Amazonas (the largest of the 26 states in Brazil, geographically). Making up 90 percent of the state’s GDP and over half of its population, Manaus is the beneficiary of a free trade agreement intended to open up commerce in poor Northeastern Brazil while similarly enhancing the usefulness of Amazon resources.

Most people are surprised we have come to Manaus. It’s not a tourist destination like Rio de Janeiro. The streets are in general disrepair and graffiti dominates all corners of the city. Public transit thrives, roads are crowded, and there’s very little law enforcement. Trash is everywhere and trash cans are nowhere. Stray dogs roam all over. The city is physically falling apart, although the people appear to be fairing somewhat better.

A combination of poverty, corruption and fraud are to blame for the city’s disrepair. There are large, crumbling apartment complexes without occupants, merchants who are struggling to maintain their storefronts and failing infrastructure—people walk on uneven and broken sidewalks and drive on roads with potholes that are eight feet in circumference and almost three feet deep. But the city 20 years ago? Fifty years ago? I bet it was really something to see.

Lectures have been informal but have added to my understanding of the state’s history and policies. Understanding the urban rainforest dynamic takes time; it’s a complicated issue. Rainforest sustainability goals have been reached; studies are still in the observational stages, but it looks as if policy recommendations have been effective, deforestation goals have been achieved with ease, and the environment is well cared for. It’s development that needs much work, and I plan on addressing that in my next post.

As for the people? I have traveled very little but would have assumed there would be big differences between American and Brazilian culture. I figured Brazil and America would have some similarities but some fundamental differences. I was surprised to find so many English-speaking young adults throwing up peace signs, using selfie sticks, posting Instagram photos with more hashtags than there are people in the picture. Having met many young Brazilians, I’ve come to realize that we’re pretty similar. Beyond the language differences, I feel no divide.

Many of the people I’m living with are also studying abroad; our house has six people from four continents living under one roof. One of my housemates (Worth Smith) had sent a quote he found in a Steve Jobs biography by Walter Isaacson, which I think is fitting to share:

“The Professor explained how the coffee was made very different from anywhere else, and I realized, ‘So ******* what?’ Which kids in Turkey even give a shit about Turkish coffee? All day I had looked at young people in Istanbul. They were all drinking what everyone in the world drinks, and they were wearing clothes that look like they were bought at the Gap, and they were all using cell phones. They were like kids everywhere else. It hit me that, for young people, this whole world is the same now… We’re just one world now.”

It’s not that I want to belittle the experience and the joys of meeting and indulging in a new culture. But as globalization and development continues, we won’t just share a common humanity—we’ll also share a common experience and language. Ultimately, I think there will be a new global culture. In this future global society, it’s possible that national boundaries will matter less.

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About Lee Buchanan

Lee Buchanan is a junior from Potsdam, New York. He’s majoring in economics and minoring in mathematics and philosophy. Lee is an assistant to Washington and Lee University’s men’s basketball team coaches and enjoys participating in athletics and training in his free time. He is involved in Greek life and is a member of the Junior Leadership Committee. Lee is interested in national economic development and global poverty and is particularly excited to study the ways in which Brazil has struggled to balance economic growth with environmental responsibility.

“As an Economics major, I find national economic development to be one of the most fascinating questions facing our time. Investigating the Brazilian narrative of development through an interdisciplinary lens will equip us with a comprehensive understanding beyond the concepts and vernacular required to dissect problems facing the need to balance economic growth with environmental responsibility. The trip may also shed light on the foundations of global poverty, all while allowing us to experience an entirely new people and culture. I couldn’t be more excited to begin our journey.”

  • Class Year: 2016
  • Major: Economics
  • Minors: Mathematics and Philosophy
  • Hometown: Potsdam, N.Y.
ECON 259 Course Description