Twenty-three thousand kilometers, about 14.2915 miles, of railroads were built mostly with private resources, making GDP between 10 and 38 percent larger than it would be without them, creating one of the most robust economical growth in the world.
The information, which looks like another infrastructure program that the Brazilian government will launch, is real data from a period of about 60 years for Brazil, more precisely between the 1850s and 1910s and is in the book “Railways in Brazil. growth of the Brazilian economy from 1854 to 1913,” by Professor William Summerhill.
The Brazilian translation of the book was launched on Tuesday (7) in an event at Insper, in São Paulo, sponsored by the entrepreneur Guilherme Quintella, EDLP (Luz Participações Station), with the presence of UCLA professor (University of California Los Angeles), who explained part of his research work, which ended almost two decades ago, which resulted in the book now only translated into Portuguese.
In order to have an idea of the importance of the railways at that time, the country today has almost 30 thousand kilometers of railroads, with only 10,000 being operational. The extension of new railroads built in this century does not reach 1,5 thousand kilometers.
In the presentation, Summerhill pointed to some events that caused the railway process to take off in Brazil after 1854, with the beginning of the construction of the first railroad. From Independence until 1854, according to him, no railroad was built for one reason: the government limited, in a decree of 1834, the tariff ceiling.
After changing this concept and opening up to private investment, including ensuring a minimum rate of return for loans that financed construction, the country began to see several companies appear in the sector. In the study, Summerhill shows that although there was a compensation-return mechanism above 12% that was shared by the concessionaire and below 6% was compensated by the government-private railroads used little of the mechanism considering the long term. Most generated enough returns to support themselves.
According to him, the mechanism that developed the railways in the country stopped working as there were exchange problems. As the guarantee of return was in foreign currency, the costs ended up being too expensive and the government was nationalizing the concessions to avoid paying the compensation in pound, and that led the system to stagnation.
Lack of planning
Prior to Summerhill’s speech, Brazil’s World Bank infrastructure director, Paul Procee, the MP’s attorney at the TCU (Brazilian Court of Audit), Júlio Marcelo de Oliveira, and the transport coordinator at the Ministry of Competition of Fazenda, Fábio Coelho Barbosa, debated on the current situation that led the country to lose the capacity to build infrastructure.
The common point to all: the lack of planning. with the weakening of the organs responsible for this function, plays a much higher role than others, such as the lack of funding or the performance of the control bodies.
Julio Marcelo and Fábio Barbosa pointed to the haste with which governments try to develop infrastructure projects, with an eye on the electoral calendar, which causes projects to be rushed and presented without the necessary maturity. Júlio specifically mentioned the current processes of renewal of the railway concessions and the concession of the North-South Railway as examples.
Process recalled that the government has improved the coordination of actions among ministries of the area in the last two years, such as the greater role given to EPL (Planning and Logistics Company) and the PPI (Investment Partnership Program). However, he says that the improvement is still insufficient, and further progress is needed.