- This is a terrible geography for the Brazilian economy: No navigable rivers plus rugged terrain means extremely high transport costs. You can’t transport anything by water—which is 10 to 30 times cheaper than by road. (View Highlight)
- Note: Most crops are grown in O Cerrado, a savannah with no connected large rivers for transporation.
- So after clearing, leveling, fertilizing, and sowing their rugged fields, Brazilians had to communicate them with the world, so they’ve been spending billions painstakingly building roads. (View Highlight)
- But as we saw, road transport is much more expensive than river transport, so a big share of the value of these crops goes to transport rather than Brazilians’ pockets, which means less money to invest in the roads in the first place. The result is few roads, fewer highways and railroads, expensive transport costs, lower agricultural margins, and more poverty. (View Highlight)
- , but it’s nearly 800m high! Compare that with the Mississippi, which can be navigated up to Minneapolis, which is just 200m high and 3,000 km inland. All the land from there to New Orleans can benefit from navigable rivers to ship what they produce. São Paulo can’t do the same even if it’s a stone’s throw away from the ocean! (View Highlight)
- Note: There is a 800m rise from the coast to São Paulo, even if its just 30km from the waterline.
- So São Paulo’s state accounts for 20% of the Brazilian population but a third of its GDP. (View Highlight)
- So when you see images of vertical favelas, that’s the consequence of living in a small, narrow, shoeboxed plain sprinkled with towering mountains. There’s just nowhere else to go. (View Highlight)
- This is the story of nearly every big coastal city in Brazil. They’re all stuck between the Shield and the Sea. (View Highlight)
- Note: Because the mountains rise so steeply close to the water, transporting goods is difficult.
- Since none of these coastal cities are well connected to a rich hinterland, none of them have a lot of money to make from trade, they can’t afford to build great infrastructure, and the vicious circle continues (View Highlight)
- This river basin wants to unite, and whoever controls it is the most powerful country in the region. That’s why Argentina, Brazil, Uruguay, Paraguay, and Bolivia all went to war several times after their independence from Spain and Portugal: They all knew that whoever controlled the region would become wealthier. (View Highlight)
- Given all the issues with Brazil’s geography that we’ve mentioned above, the country needs massive investments in infrastructure and land management to develop. This takes so much money that it was historically impossible for small farmers to set up shop like in the US. But the government couldn’t afford this either, because given these costs, margins were not big enough to generate much taxable wealth.
Only big private capital owners could do it. This is true not just for traditional highly capitalized enterprises like mines. Every farm and road requires big investors to finance them. These investors then own these assets and their profits. This has led Brazil to be a very unequal society. (View Highlight)
- If you have little quality land that is easily available, little capital to invest, and a low level of skilled labor, you have little of everything that it takes to grow as a country. And the moment you grow a bit, you run out of land, skilled labor, or capital, and prices go up. The result is high inflation. (View Highlight)