Interview of the month: Carlos Manso

Development model for Amazonas focuses on bioeconomics

Basic premise of the innovative proposal is to keep the forest standing

Specialist in regional development, Carlos Alberto Manso, economist based in Ceará, focuses his studies on social vulnerability. According to him, it is important that the country can find development models that favor the poorest. According to the researcher’s thesis, increasing the productivity of the low-income population generates positive impacts on the entire economy of a region or country. Very high social inequality, Manso argues, acts as a brake on national economic growth.

In order to offer a complementary economic model to what has existed for decades in the State of Amazonas, Manaus Free Zone, Manso carried out a prospective analysis of the economy of Manaus and Amazonas. The result of the work, as the economist explains in this month’s interview, points to four action axes, all based on the region’s biodiversity, as a way of generating jobs for the region. 

To achieve this, there are a number of critical factors that need to be addressed by the entire community in the region. One of the basic premises of the innovative economic model presented in the study “A new economy for Amazonas: Manaus Free Zone and Bioeconomy”, is that the forest is kept standing”.      

Instituto Escolhas – In the specific case of less developed regions of the country, such as the North and Northeast, is it justified to defend state subsidies to stimulate economic growth? 

Carlos Manso – To me, the less state intervention the better, but given a very acute condition of social vulnerability, the state has to carry out some interventions because it is not the market that will solve the problem of low productivity of the poorest people. Northern and Northeastern Brazil are regions with their own conditions. In these two locations, there is an acute and persistent state of social vulnerability, and market strength to solve problems is always limited.

Escolhas – So, are subsidies essential in the Amazon?

Manso – Subsidies [R$23 billion in incentives to companies in the Free Zone], usually cause huge distortions. Therefore, a challenge in terms of public policy must be faced so that, despite subsidies, there is more effectiveness and less distortion. Public policies need to be well designed, because in low-income regions there is no margin for error, public accounts are already very fragile. 

Escolhas – When you talk about distortions, is this the case with the Free Zone model?

Manso – The Free Zone is also an expensive matter to me. It is a model that survives on tax incentives but at the same time there is a state with very high social vulnerability, with poverty and very strong social fragility, especially in the countryside. It is a very challenging and challenging situation for economists. The Manaus Industrial Center model has not been revised over time. There were no adjustments. It was part of a national policy that soon afterwards ceased to exist. We have a lot of difficulties making national plans. At the time [the center’s tax incentives were created in a federal decree of February 1967], the idea had some foundation because it was part of an economic occupation plan. Things have changed, life is dynamic, but the model has remained the same. It is aimed at the domestic market, which distorts investment allocations within Brazil. There is no concern of integrating Free Zone production with global chains or competitiveness. . The costs and difficulties of setting up a business are decided through tax incentives. It is like a game with the result already programmed. There is no stimulus for technology absorption. The model offers local benefits, but its cost is divided across the nation. There is a clear dependence on national policy decisions.      

Escolhas – What were the major challenges to carry out the study, which presents a complementary model of development for the Amazon?

Manso – Escolhas proposed to answer the question of how it would be possible to boost the economy of the Amazon so that it would be independent of national decisions. At no time do we imagine an immediate break from the Free Zone because we are aware that the state economy is explained by it. Our model shows that there are action paths that can give many economic results for the region, much more than the existing model today. Results that can be achieved from the rich biodiversity of the region and keeping the forest standing.  

Escolhas – What are the axes of economic development that you have identified?

Manso – The prospective analysis we carried out involved talking to people who have a deep knowledge of the development of the Amazon. They are from the private and public sectors and also from academia. From this we come to four axes of opportunity: bioeconomy, digital transformation economy hub, ecotourism and fish farming. The axes are complementary to each other. When we talk about bioeconomics we are referring to the development of processes for converting a certain extract or other substance into a high value added product. The bioeconomy allows sustainability, a very important guideline for keeping the forest standing, and the use of local inputs. Something very relevant is also that our proposal foresees the insertion of production in the global chains. Bioeconomy is part of a globalized economy because consumers around the world demand these types of products. 

Escolhas – What are the characteristics of the other axes?

Manso – The second axis in importance is that of digital transformation. There is important state legislation in the region that complements the federal computer law. The development of this axis also meets a global challenge, which is to increase the employment of young people. Regarding ecotourism, it is an economic sector that benefits from the intensive labor that exists in the region. Fish farming has the potential to bring dynamism inland and generate income for people with low skills. 

Escolhas – What are the major obstacles for implementation of the model? Is there an ideal situation for it to be implemented?

Manso – The study has a list of obstacles that need to be faced. However, I prefer to see the glass as half full. Instead of obstacles, I see the factors we have mapped as items that need to be worked on to give dynamism to the axes mentioned above. For example, physical infrastructure, marketing, people training, research and development projects are needed. Each area has its specific critical factors. This is a very important contribution of the study. 

Escolhas – Can you name some examples?

Manso – In the case of bioeconomics, for example, we need to have specific courses in this area in the region, which does not currently exist. In ecotourism and fish farming, entrepreneurship management is required. In addition to marketing, another shortage that exists in the Amazon.

Escolhas – Where does the forecast for investments come from? 

Tame – All this movement needs to involve the tripartite model. There has to be participation of the state, but also of the private sector and academia. It needs to have the three pillars, the state, business and universities

Escolhas – The study foresees the creation of 218 thousand jobs. Under what conditions will they be created?

Manso – If all the critical factors are dealt with properly and the forward-thinking we draw are clearly pursued, there will be an increase in demand in the state. We calculate economic growth rates, validate with our interlocutors, and arrive at the number of jobs presented. There has to be a lot of effort, it is true, for all challenges to be met, but it is a well-crafted exercise in realism. The proposals are totally feasible, remembering that the Free Zone plan foresees the maintenance of 100 thousand jobs at the hub. With a vigorous ecosystem of innovation, to generate technological, productive, industrial, social development and with the three spheres of government, with companies and universities synchronized, the results can be obtained. 

Escolhas – What are the future visions that Escolhas mapped for Amazonas?

Manso – The dynamism of the axes allows us to imagine some scenarios. Amazonas can be a species of Scandinavia if the green furniture segment is properly developed, or it is an important gastronomic pole of the forest, as is Lima in Peru. There are other possible comparisons. Manaus can become a green fashion hub, as Milan is for conventional fashion, or Paris for world ecotourism. There is even the comparison with Silicon Valley. Manaus could also become a major technological reference for biodiversity. Our proposal is a contribution to the debate on the region’s development.  

Escolhas – Is your model for Amazonas replicable for other regions of Brazil?

Manso – it is fully replicable. An innovation ecosystem focused on bioeconomics makes sense for the Amazon. In other regions, local vocations need to be respected. In Santa Catarina we can have an ecosystem focused on IT. In Ceará, based on renewable energy and so on. What changes are the adjustments, but the research model, funding model and how to bring academia, government and business together are the same. The idea is to have a model that does not depend on subsidies or tax incentives. Incentives must exist, but not for production. They must be for development of the idea, for innovation to be fruitful, but not for production, as with the Free Zone.