Sergio de Oliveira Birchal. Entrepreneurship in Nineteenth-Century Brazil: The Formation of a Business Environment. New York: St. Martin's Press, 1999. xiii + 233 pp. $65.00 (cloth), ISBN 978-0-312-21716-7.
Reviewed by Ralph Lee Woodward (Department of History, Texas Christian University)
Published on EH.Net (November, 1999)
This well-researched monograph, based on the author's Ph.D. thesis at the University of London, examines the emergence of entrepreneurship in the Brazilian province of Minas Gerais during the nineteenth century, suggesting that it is an example of economic development and business formation in "latecomer" economies. The author's stated purpose is to show how the emergence of an entrepreneur class in the interior province of Minas Gerais differed somewhat from such development in Sao Paulo or Rio de Janeiro. The study centers on non-agricultural enterprises, specifically the iron, the transport, the textile, and the electricity-generating industries, and deals principally with the latter half of the nineteenth century.
The author is a lecturer in Economics and Business at the UNA School of Business in Belo Horizonte. Based on a broad array of business and government records and reports in the province, he first provides an overview of Brazilian and Mineiro economic history in the nineteenth century. A second chapter focuses on the formation of the Mineiro entrepreneur, with a brief review of the literature followed by careful analysis of the social and economic background of the Mineiro businessman. While acknowledging that the businessmen in Minas Gerais possessed most of the characteristics of their counterparts in Rio or Sao Paulo, he also finds that they had significantly different social and ethnic backgrounds and that immigrants were less important in Minas Gerais. Local residents constituted the main source of entrepreneurs in nineteenth-century Minas Gerais.
The third chapter explores the organizational structures of the Minas Gerais business firms, comparing them to Max Weber's "traditional" or "bureaucratic" types. He comes easily to the conclusion that most Mineiro firms were traditional, small family affairs. "Their limited scale never required the development of a more complex organization of the firm and mineiro entrepreneurs continued to manage their firms with old-century techniques" (p. 69). In analyzing the four industries mentioned above, Oliveira Birchal provides considerable statistical data on the size, structure, and activities of several firms. He adds, however, that toward the end of the century there was a trend toward more bureaucratic organization, even though the mineiro economy "continued to be dominated by traditional firms which became more numerous and specialized towards the end of the century" (p. 127). He notes that this was the same phenomena that preceded the rise of large and modern enterprises and of managerial capitalism in the United States, Britain, and Germany. "Therefore, it is reasonable to conclude that from the organizational point of view the business environment in nineteenth-century Minas Gerais was characteristic of the first stage of capitalist development-traditional and personal capitalism" (p. 127).
The final chapter discusses the role of technology in these firms and their heavy dependence on and absorption of foreign technical knowledge and the limits to the development of an indigenous technology during the nineteenth century. The process of bringing advanced foreign technology to Minas Gerais was notably slow, and much of the author's discussion here focuses on the last two decades of the century. From his examination of technology the author concludes that Minas Gerais was "an inhospitable environment for the entrepreneur. . . . The narrowness of the capacity of the nineteenth-century mineiro economy to absorb and refine imported technology was due to a lack of skills and entrepreneurship, which was confirmed by the failure to develop a capital goods industry" (p. 183).
This study "strongly supports the view that economic development of backward countries does not necessarily follow the same path taken by advanced economies" (p. 184). Among the differences it notes from development of "more advanced countries" is the absence of "self-made" businessmen coming from the bottom of the social ladder by the strength of their own efforts. Such Horatio Alger figures were notably absent in Minas Gerais as business leaders usually came from the upper class and businesses were usually family ventures. Moreover, strategies and internal organization of these firms often resulted from considerations unrelated to the market, the social or political contexts being more important factors. And, the lack of indigenous technology and a capital-goods industry "imposed solutions to problems that entrepreneurs in more technologically advanced countries rarely had to worry about" (pp. 184-85).
It is clear from this study that social and cultural factors are major determinants of economic development. To the extent that Minas Gerais' historical development is unique, the reasons may be found in its social, ethnic, and cultural patterns as Oliveira Birchal has demonstrated. These or other social and cultural characteristics certainly help to explain why some regions have succeeded in implementing a modern capitalist economy more rapidly than others. This case study of one such region thus makes an important contribution to the literature on the development of "latecomer" economies.
Ralph Lee Woodward is Neville G. Penrose Professor of Latin American Studies in the Department of History, Texas Christian University, Fort Worth, Texas. The third edition of his Central America: A Nation Divided (Oxford University Press) appeared in 1999. He is currently writing a history of merchant guilds (consulados de comercio) in the Spanish World, 1200-1900.
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Ralph Lee Woodward. Review of Birchal, Sergio de Oliveira, Entrepreneurship in Nineteenth-Century Brazil: The Formation of a Business Environment.
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