Published by EH.Net (November 1999)
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. Tables, notes, bibliography, and index. $65.00
(cloth), ISBN 0-312-21716-1.
Reviewed for EH.NET by Ralph Lee Woodward, Jr., Department of History,
Texas Christian University.
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
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 demonstrate d. 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,