The interior’s economic relief

Study maps the process of industrial deconcentration in the State of São Paulo

LÉO RAMOSBandeirantes Highway, towards the interior of the state: expansion of the development axisLÉO RAMOS

The process of industrial deconcentration in the State of São Paulo, which started in the 1970s, has profoundly altered its map and the territory: the capital’s metropolitan sprawl has expanded towards the Paraíba Valley, Sorocaba and the regions of Campinas and Ribeirão Preto, specialist urban conglomerates have formed along the highway network and medium size cities have taken over the leadership in the markets surrounding them. “The interior is no longer a flat area. It has economic ‘relief’” says Eliseu Severio Sposito from the Geography Department of the Faculty of Science and Technology (FCT) of the Paulista State University (Unesp) in Presidente Prudente.

Heading up a group of researchers, Sposito coordinated a project that mapped out the movement and characteristics of the process of industrial deconcentration  in the state. They found, for example, that many companies moved plants to the interior, but kept their headquarters and their boards in the city of São Paulo. This divorce of management from the production processes, which Sposito calls “productive disjunction,” follows the “logic of capitalist accumulation” of reducing production costs, which in the 1980s grew significantly in the metropolis. In the case of São Paulo this logic endowed industrial deconcentration with a peculiar character. “The process was limited to a well-defined area and by extension to the national territory. It was not clear or strong in the medium size cities in the west of the state,” says Sposito. The researchers used information from the Brazilian Institute of Geography and Statistics (IBGE), the State Data Analysis System Foundation (Seade) and the Social Information Annual Report (Rais), among other organizations.

Development axes
The determining factors of the new economic geography of the state, the development axes around which the migrating industries are concentrated and the new conformation of the cities were analyzed in the project The new map of industry at the beginning of the 21st century: new industrial dynamics and the territory, coordinated by Sposito, which began in 2006 and finished in 2011. The initiative brought together 11 researchers from Unesp’s Space and Regional Redefinitions Production Group (Gasperr), as well as from the University of São Paulo (USP), the Federal University of Paraná (UFPR) and State University of the West of Paraná (Unioeste). The group has already published dozens of articles that will be published as three books and is promising to edit a digital atlas with around 400 maps that describe the new economic geography of São Paulo.

The current geographic configuration of the state does not show an homogenous territory: it reveals a Metropolitan Region that has “overflowed” in the direction of four administrative regions – Campinas, São José dos Campos, Sorocaba and Santos – and maintains a centrality relative to the other areas of production and consumption in the state, according to the analysis of Maria Encarnação Beltrão Sposito from the Geography Department at Unesp in Presidente Prudente. “This formation characterizes a macro-metropolis, if we wish to adopt the idea of François Ascher in producing the concept of the new spatial configurations of Paris and its basin of influence,” says Maria Encarnação.

GM assembly line in São José dos Campos, in the Paraíba Valley region: in the interior, but close to the capital

LUCAS LACAZ RUIZ/FOLHAPRESS GM assembly line in São José dos Campos, in the Paraíba Valley region: in the interior, but close to the capitalLUCAS LACAZ RUIZ/FOLHAPRESS 

The new cartography is translated into a map interlaced with development axes, the orientation of which are the road and information networks, rail-river corridors and a waterway, around which large industrial companies gather, with access to the Brazilian and global markets via four cargo airports and the port of Santos. Similar dynamics are found in urban conglomerates formed by medium size cities, in which small and medium- size suppliers of goods and services at the local and regional level prevail. Linked by development axes, the macro-metropolis and the interior of the state form the biggest and most diversified industrial park in Brazil, with a 33% share in the Brazilian Gross Domestic Product (GDP).

To understand the new map of the territory of São Paulo, the researchers investigated the evolution of industry in São Paulo in the light of historical materialism and the spinoffs that have occurred as a result of the transformations observed in the 20 the and 21st centuries. From this perspective, they explain industrial deconcentration as the result of a transition from the Ford system of production, based on the strategy of the assembly line and mass production, in which the relationship between company and territory is strong, to a flexible capital accumulation system, where investments do not recognize frontiers and boundaries and also guide the globalization process of companies. “Location needs start being dictated by access to transportation, by the possibilities of connection to the Internet, to satellites and telecommunications,” says Arthur Magon Whitaker, from FCT/Unesp. “Relative distances become more and more important than absolute distances,” he wrote in A discussion on the production concept of urban space, which will form part of the group’s publication.

Public investment
The decentralization of industry was supported by public investments, particularly state investments and by the reorganization of the territory to meet corporate demands and allow for the greater fluidity and territorial competitiveness of companies, according to the analysis of Márcio Rogério da Silveira, who was a teacher at Unesp, in his study on transport and logistics systems in the State of São Paulo. In 2007, the road network in São Paulo covered more than 198,000 km. Of this total, 5,000 km of highways, precisely those with the greatest flow of transport, which are dual carriageways and connected to the capital, were already operated by private concessions. “The highways are the skeleton of the state’s economic growth,” emphasizes Sposito. The state also has four large airports, through which passengers and cargo of high added value circulate. Viracopos Airport in Campinas is the country’s second largest cargo terminal.

072-077_Industria_197-1DrümThe transport infrastructure, associated with the availability of a qualified and specialist labor force, sponsored what Sandra Lencioni, from USP’s School of Literature and Human Sciences calls “concentrated deconcentration.” In the administrative regions that surround the capital, the indicators show that growth in added value was greater than the number of industrial units, showing the movement of better capitalized and/or large or medium size companies, is the example that Maria Encarnação gives. In other regions (Marília, for example), although the share in the total of the state in added value has grown, the data show that this movement is the result of the increase in the number of companies.

The macro-metropolis is no different from the interior merely because of the size of its companies. “Industrial deconcentration took place in parallel and simultaneously with the intensification in the concentration of innovative industry in the Sao Paulo Metropolitan Region and its surroundings,” says Sandra. That is where the “general production conditions” necessary for the development of cutting edge activities are concentrated: universities, research centers, technological parks and support for research and development (R&D), as well as an extensive network of material circulation, from fiber optics to a significant concentration of services.

In 2010, the State of São Paulo was home to 70% of the high and medium intensity technological industries in the Southeastern Region. Of this total, 75% were located in two administrative regions, São Paulo and Campinas, and employed 79% of the people occupied in industry with a higher education course. “The capacity of leading edge industry to generate wealth indicates that at the heart of the deconcentration process of industry in São Paulo, which seemed to indicate a path for minimizing regional disparities, have created differences of another nature that are  maintaining inequality,” observes Sandra.

Far from the macro-metropolis, in medium size cities companies with local capital predominate and the industrial, service and trade sectors are still linked to the regional consumer market. The distance from São Paulo was recognized as being an obstacle to the diversification and expansion of the industrial park, but led to the strengthening of the centrality of these cities, in the analysis of Sposito. “The nearby local and regional consumer market is the main reason for the predominance of micro and small companies in all sectors of the economy.”

Footwear production line for export in Franca: more jobs on offer

EDSON SILVA/FOLHAPRESS, FOLHA RIBEIRÃOFootwear production line for export in Franca: more jobs on offerEDSON SILVA/FOLHAPRESS, FOLHA RIBEIRÃO

These companies are generally constituted by local capital, employ a labor force that is poorly qualified and badly paid and mostly offer services or basic goods to a consumer market that is not very demanding. “But they are fundamental to the regional economy,” he emphasizes. In the two biggest cities in the west of Sao Paulo, São José do Rio Preto and Bauru, 90% of the companies are micro or small. “In the other cities the proportion is close to 80%,” says Sposito. Retail trade, the repair of personal and domestic objects, commerce, automobile and motorcycle representation, food retail, services provided to companies, accommodation and food, health and social services predominate, according to the National Classification of Economic Activity. Even so, another tendency shows indications changing: there are companies that even though they are located in medium-size or small cities, communicate directly with abroad, without the intermediation of the metropolis.

In Marília, Araçatuba and Presidente Prudente, in the northeast of the state, the prominent activities are related to agriculture, livestock farming and related services. This specialization in these cities makes clear the existence of an urban network in which a “division of labor” between municipalities and regions in the state prevails. “Sao Paulo is the center of this network,” insists Sposito.

The specialization of cities in the interior is reinforced by 39 local production arrangements (LPAs), according to statistics from the Brazilian Service for the Support of Micro and Small Companies (Sebrae), which link some 120 municipalities in the whole state. The LPA of the male footwear production chain in the Franca region, for example, has more than 3,700 micro, small and medium size companies in 5 municipalities, generates 51,000 jobs and produces almost 37 million pairs of shoes a year, according to information from the Department of Science, Technology and Economic Development of São Paulo. The footwear industry serves the national market and is responsible for approximately 3% of the country’s footwear exports.

The export industry business in the interior with foreign markets does not need the metropolis: connection with customers is carried out by means of 30 customs stations in the interior (Eadi) spread throughout the whole state. Also known as dry ports, the EADIs are one of the terminals directly linked by road, railroad or air to the point where the product leaves the plant.

072-077_Industria_197-2The manufacturing industry in the interior that is on the São Paulo export agenda, however, is small: in 2006, just 3 of the 15 administrative regions in the state were responsible for 70% of the exports: São Paulo, Campinas and São José dos Campos. Just 1 of the 210 companies exporting from Franca, for example, had an export portfolio greater than US$ 100 million a year. In most cases, foreign sales did not exceed US $ 1million a year. The same statistics also reveal that the  agroindustry and high technology products have a share that is almost identical in exports: sales of sugar and aircraft, the first and second in the ranking of main exporters, for example, reached US$ 2.5 billion and US$ 2.3 billion, respectively. Sandra cautions, however, that from the point of view of added value the price of commodities and high technology products are unequal: “The value of a ton of integrated circuit, for example, is the equivalent of 21,000 tons of ore,” is the comparison she makes.

Public investments
The state has a central role to play in the process of industrial decentralization. “It organized regional infrastructure, thus speeding up the movement of people, goods and information,” says Sposito. Municipal policies also weighed heavily: cities created industrial districts and used tax incentives to attract companies and expand job supply.

In Sposito’s assessment, the strength of the interior of the state also has historical roots. The coffee economy, he remembers, constituted a network of dynamic cities and a strong consumer market, forming an urban network in the interior. “In the first half of the 20th century it was in the interior where the greatest capitalist accumulation occurred. Private capital financed the construction of warehouses, highways and railroads that were subsequently absorbed by the state.” The same happened with regional banks, which over the last 50 years have been taken over by the major banks.

In the same period a number of companies that had originated in cities in the interior moved to the metropolis. Bradesco, which started in Marília, has its headquarters in Osasco; TAM was also created in Marília and flew to São Paulo; while the Eldorado network began in Catanduva before setting up in the capital. “The economy of São Paulo does not move in just one direction. There are agents in the interior founding companies that move to São Paulo, at the same time that there is a movement of companies towards the interior,” concludes Sposito. The three publications that are being prepared by members of the group and the atlas of São Paulo industry will reveal the map of this intense movement.

The Project
The new industrial map at the beginning of the 21st century: new industrial dynamics and the territory (nº 2004/16069-0); Modality Thematic Project; Coordinator Eliseu Savério Sposito – FCT/Unesp; Investment R$ 196,879.45 (FAPESP)