The regionalization of the large industry in Brazil: Recife and Salvador in the 70s

Modern industrialization in the Brazilian periphery had its pre-conditions establishedin Bahia in the 1950’s (the Paulo Afonso hydro-electric plant on the São FranciscoRiver, the extraction and refinement of oil near the state capital – Salvador, and highwayconnections with the Brazilian Center-South). The State, therefore, assumed relatively earlyan active role on the regional level. Meanwhile, the resulting flow of money in Salvador ac-centuated the traditional importance of commerce and banking, reinforced since the seventiesby major public works and the building of a petrochemical complex. In Pernambuco, incontrast, the “new industry” promoted by recent governmental incentives has found an oldindustrial experience and produced a more diversified and less capital-intensive activity. Asa result, Recife presents maybe a more pluralistic structure, but lower levels of income andconsumption than Salvador. The article calls attention to the importance of the banking sectorin Bahia, which is behind the failure of early industrialization, while contemporarily it iscritical in the region’s articulation with supra-regional processes. JEL Classification: R11; R12.