HOW TO CONFRONT THE GLOBAL, STRUCTURAL AND MANAGEMENT CRISIS IN BAHIAi

Fernando Alcoforadoii

State of Bahia in Brazil is faced today with multiple threats to their economic, social and environmental foremost among them: 1) the decline in exports; 2) the decline in GDP growth; 3) insufficient domestic savings; 4) depression economic; 5) deindustrialization of Bahia; 6) raising the Brazil Cost; 7) increasing regional inequalities; 8) the worsening of social and environmental problems of Bahia; 9) the worsening of the structural problems of Bahia and, 10) the crisis management in the public sector of the State of Bahia.

1. Threat of falling exports of Bahia

Table 1, below, shows the evolution of the trade balance of Bahia from 2000 to 2011 .

Table 1 - Balance of trade - Bahia (US$ million)

Year Exports Imports Balance2000 1944 2242 -2982001 2 122 2286 -1642002 2 412 1878 5352003 3 261 1946 13152004 4 066 3021 10462005 5 990 3351 26392006 6 773 4475 22982007 7 409 5415 19942008 8 699 6310 23892009 7 011 4673 23382010 8 886 6706 21802011 11 016 7749 3267Source : MDIC

With regard to international trade, the trade balance of Bahia, after negative results in the early 2000s, successive surpluses recorded from 2002, reaching $ 3.3 billion in 2011. The Bahia exports grew on average 17.1 % from 2000 to 2011, compared to 15 % recorded in Brazil. In 2007, 19.73 % of exports from Bahia were bound for the United States, Argentina 12.15%, Netherlands 9.57 % and China 7.7 %, among others. Despite the international crisis, the Bahia exports remained at growth in the latest period, anchored in high commodity prices and the growing economies of China and Argentina, important destinations of foreign sales in the State of Bahia.

To the extent that remains stagnant United States and the European Union economy, China's slowdown and the decline in Argentina's, exports of Bahia may be seriously affected in the coming years. Faced with the threat of future fall in exports, the government of Bahia should strive to develop new productive activities primarily for the supply of the domestic market of Bahia and the country supported the potential existing in its territory. The Bahia government should also develop actions for the restructuring of economic sectors that produce intermediate goods accounted for 72 %

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of exports from Bahia that are affected by the fall in exports in the light of the impacts of the global crisis on their production levels .

2. Threat of decline in GDP growth in Bahia

The economic structure of Bahia has great spatial and sectoral concentration. Industrial activity is concentrated primarily in the Metropolitan Region of Salvador (RMS); grain production in the West; irrigated fruit growing in the hinterland of San Francisco, and the production of cellulose, in the extreme south of the state of Bahia- the four poles of dynamic Bahia economy. Moreover, about two thirds of its territory lies in the semiarid region that, besides presenting drought that affect economic activity, has its economic base supported on family farms.

Regarding the sectoral distribution, the Bahia is characterized by the production of intermediate goods and raw materials for export abroad and to the industry in other regions of Brazil. The decline in Bahia exports of intermediate goods and raw materials associated with the likely decline in Brazil's economic growth already observed at the time contribute significantly to the decline in economic growth of the State of Bahia.Figure 1, below, shows the evolution of GDP Bahia compared with the evolution of Brazil's GDP.

Figure 1 - Annual growth rate of GDP of Bahia and Brazil

2003 2004 2005 2006 2007 2008 2009 2010

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Analysis of Figure 1 reveals that the evolution of the GDP of Bahia bears a strong correlation with that of Brazil. As there isn´t a favorable GDP growth in Brazil in the coming years, Bahia will present performance similar to Brazil. It should be noted that the Gross Domestic Product (GDP ) of Bahia grew 2 % in 2011 according to estimates from the Superintendence of Economic and Social Studies of Bahia (SEI), reflecting the dynamism of agriculture - which expanded 9.8%, led by grain production in the West region- and the service sector - which grew 3.6 % , driven by retail. On the other hand, GDP growth was limited by the performance of the industrial sector, which fell 2.9 % in 2011, largely due to falling demand in the international market.

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Bahia’s GDP recorded a growth of 2.2 % in the 2nd quarter of 2013, compared to the previous quarter. According to projections made by Banco Itaú, the average GDP growth of Bahia will stay at 1.8 % between the years 2011 and 2015 and 2.6 % between 2016 and 2020, which approximates the GDP growth in Brazil designed also 2.6% [See the article Bahia deverá crescer 1,8% por ano até 2015 (Bahia expected to grow 1.8% per year until 2015) available on website < http://www.sudic.ba.gov.br/Noticia.aspx? n=350 available on the website>].

To avoid the drop in economic growth and make the Bahia State grow at high rates, it is imperative that the federal government promotes the use of economic potentials in the state with the support of the government of the State of Bahia based on a development plan focused on policy import substitution and the adoption of policies that contribute to increase savings in the public sector and the private sector to raise the rate of investment in Brazil to 25 % of GDP.

Additionally, the government of Bahia need to strive federal government to adopt policies of fiscal and financial incentives to promote investments in all regions of Brazil, especially in the North and Northeast where is the State of Bahia. In turn, the government of the State of Bahia need to draw up a development plan also focused on policy of import substitution and the use of existing economic potentials in their territories. But for this to happen, it is indispensable that federal government in Brazil and the government of the State of Bahia recover its investment capacity not only to invest in infrastructure, but also provide incentives for the private sector to feel attracted to invest .

3. Threat of insufficient domestic savings in Bahia

Bahia presents many difficulties to increase their savings rate to promote public and private growth. In general, Bahia has always sought to attract foreign capital from other regions of Brazil and abroad for investment in the productive sector in its recent history. Between 1970 and 1980, with financing at subsidized interest rates, tax exemptions and tax incentives with the investment of considerable resources coming repayable public bodies to encourage the development of the country, the industrial districts were deployed inside RMS (Center Industrial of Aratu and Petrochemical Complex of Camaçari) and riding the park of intermediate goods concentrated in segments of the chemical / petrochemical and non-metallic minerals. The deployment of Ford plant and other industrial enterprises that occurred from 1980 to the present time in the State of Bahia relied on tax incentives offered by the State of Bahia government.

To increase public sector savings in Bahia, which the state government needs to do is, on the one hand, to renegotiate the repayment of domestic debt stretching it for a certain period of time and on the other, make its current expenses are reduced dramatically or grow less than the Gross Domestic Product (GDP) to dispose of funds for public investments, especially in poor economic infrastructure (energy, transport and communications) and social (education, health, housing and sanitation). Thus, the conditions would be created for the public sector can invest and finance from its own resources, and not borrowing as currently occurs. It is also necessary to encourage increased private savings for investment decreasing the tax burden and reducing the "spread" banking.

It should be noted that the payment of the Public Debt of Bahia in 2011 reached R$ 1,415,394,618.00 (5.22 % of the budget) and the Interest and charges equivalent to R$

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503,486,354.00 (1.86 % of the budget) and amortization amounted to R$ 911,908,264.00 (3.36 % of the budget). It should be noted that the amount of investments in 2011 amounted to R$ 1,752,502,441.00 (6.46 % of the budget). These figures show that the state government of Bahia could renegotiate the debt service payment by stretching a longer time investment that could at most double. The composition of the Public Debt by Creditor Bahia in 2011 is presented in Figure 2 below.

Figure 2 - Breakdown of debt by creditor of Bahia in 2011

If the government of Bahia wants to renegotiate the payment of its debt with creditors, could articulate how Treasury (federal government) and federal banks accounted for 76.31 % of total public debt.

4. Threat of economic depression of Bahia

If it does not change the direction of the Brazilian economy, the recession will deepen in Brazil with plummeting demand, a framework uncontrollable mass unemployment, widespread bankruptcy of companies (including industry), low levels of production and investments. In these circumstances, the depression will be installed in Brazil and in the State of Bahia that will face the same problems in the United States and the European Union since 2008 and Japan since the 1990s. To avoid economic depression in Bahia, it must, first of all, to avoid an economic depression in Brazil working with the federal government in the preparation of a development strategic and systemic plan contributing to the elimination of existing and potential economic threats, enhancing existing strengths in the Brazilian economy and the State of Bahia and the use of existing opportunities and potential in Bahia.

Moreover, the Bahia government should strengthen existing strengths in its economy by adopting strategies for strengthening their agricultural, industrial and mineral production sectors, its energy, transport and communications infrastructure and their poles of growth and development which are located its main economic structures. Strengthening the existing economic strengths in Bahia requires the adoption of the

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following strategies: 1) encouraging investment in increased productivity and increased agricultural, mineral and industry production covering all regions of Bahia; 2) encouraging investment in strengthening energy, transportation and communication infrastructure across all regions of Bahia; and 3) structuring the axes of development of Bahia (São Francisco, Chapada, Extremo Sul, Mata Atlântica, Metropolitano, Grande Recôncavo, Planalto e Nordeste - Map 1 ) economically integrating together the poles of growth and development of Bahia (Salvador, Camaçari, Feira de Santana, Vitória da Conquista, Itapetinga, Lençóis, Jequié, Ilhéus, Itabuna, Porto Seguro, Eunápolis, Teixeira de Freitas, Juazeiro, Irecê, Guanambi, Bom Jesus da Lapa e Barreiras - Map 2).

Map 1 - Axes Development of Bahia

Source : Magalhães, Cláudia et alli. Eixo Nordeste: Desempenho Econômico e Perspectivas. Desenbahia, 2001.

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Map 2 - Poles of growth and development of Bahia

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Source : PORTO, Edgard; CARVALHO, Edmilson. A espacialização da economia baiana, o Mercosul e outras regiões. In: SEI: A Bahia no Mercosul. Salvador, 1996.

The Bahia government should also take advantage of the economic opportunities existing and potential strategies for taking advantage of its vast natural resources (water resources, mineral resources, farmland, renewable energy solar and wind, etc.). These opportunities should be identified and evaluated for their viability for use, then prepare investment plans aimed at economic and social development of Bahia. In this sense, the necessary strategies contemplate the preparation of investment plans covering all regions of Bahia for the exploitation of natural resources in the fields of energy (hydropower, wind power plants, solar power plants, biomass, oil exploration in the deep ocean layer pre salt), mineral, agricultural and industrial.

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To be successful in implementing these strategies, it is important that federal and Bahia government have sufficient financial resources to be obtained with the renegotiation of their public debt and reducing your expenses costing, as well the Bahia government is structured in a network which is a kind of overall organizational structure that operates according to a logic chart circular or star-shaped, the center of which is the lead organization. Around this main organization (federal government) are several other entities (state governments, municipalities and state and public enterprises) that articulate with the first. The operation of this type of organization usually relies on modern computer systems and telecommunications that enable centralized management and control of all processes.

5. Threat of deindustrialization of Bahia

The current economic policy of the federal government is contributing to the de-industrialization of Brazil which tends to deepen if nothing is done to reverse it. The share of industry in Brazilian GDP (Gross Domestic Product) fell in 2011 to the levels of 1956, when President Juscelino Kubitschek (JK) gave impetus to the industrialization of the country by launching his Target Plan, which promised to make the Brazil forward "50 years in 5". In 1956 during the JK government, industry accounted for 13.8 % of GDP [See the article by Reinaldo Azevedo, under the title O PT da desindustrialização - Participação da indústria no PIB recua aos anos 50 (The PT of deindustrialization - Participation of industry in GDP eases to 50), available at the website <http://veja.abril.com.br/blog/reinaldo/geral/o-pt-da-desindustrializacao-participacao-da-industria-no-pib-recua-aos-anos-50/>].

The Bahia industry is sensitive to international market conditions. In 2011, the industrial output accumulated decrease of 4.3% in Bahia, according to the Monthly Industrial Survey - Regional ( PIM - PF) of IBGE , which partly explains the slowdown in global activity. In the twelve months to May 2013, industrial activity in the State of Bahia increased 0.3 %, compared with the 1.8% drop observed nationwide.

Figure 3 below shows the structure of each sector participation in the total GDP of Bahia from 2000 to 2008.

Figure 3 - Structure of Each Sector Participation in Total GDP of Bahia - Selected Years - ( in% )

Source : SEI/Coordenação de Contas Regionais (2012).

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Analysis of Figure 3 reveals that the secondary sector (industry) who participated with 50 % of the GDP of Bahia in 2000 was below 40 % in 2008 featuring the existence of a process of deindustrialization. It appears, therefore, that the process of de-industrialization occurring in Bahia is manifested in a range less severe than in Brazil as a whole. However, Bahia will not be immune to the deindustrialization process that records. The existence of expensive energy, bank "spreads" the biggest in the world, valued exchange rate, huge tax cost and logistics poor tend to undermine the competitiveness of the Bahia internally and externally. One of the problems that are demanding urgent solutions in Brazil and in Bahia are the precarious transport infrastructure and logistics bottleneck that contribute to the increased costs that make the prices of products of the manufacturing industry in Brazil become 30% more expensive than those made elsewhere.

To avoid deindustrialization of Bahia, the Bahia government should strive for the federal government to adopt an industrial policy that contributes to effectiveness for permanent reduction of production costs in Brazil industry against Asian countries, especially China, that can only occur in four ways: 1) reducing the Brazil Cost with falling tax burden and improving the logistics infrastructure in Brazil; 2) increased productivity of the industry with the growing of its levels of efficiency and effectiveness and strengthening their supply chains; 3) selective and permanent relief industry by reducing the tax burden incident on it; and, 4) combating predatory competition of imported products with the restriction or limitation of its entry into the domestic market.

Alongside all this, the government of Bahia should adopt measures aimed at : 1) to overcome the huge problems of Bahia education at all levels to increase the supply and training of human resources; 2) the development of knowledge resources by adopting programs for implementation of R & D centers, further education institutions, technology acquisition and attracting brains from abroad; 3) adequate resource allocation for energy infrastructure, transport and communications by establishing effective programs to eliminate bottlenecks; and, 4) fostering the links between the supply chains of companies and their suppliers to eliminate gaps.

6. Threat of rising of Brazil Cost

Brazil Cost is one of the biggest barriers to the development of the country and fundamentally results of: 1) the endemic corruption in the Brazilian public sector whose annual cost in Brazil is around 41.5 and 69.1 billion dollars; 2) the high deficit public (R$ 2 trillion); 3) the high real interest rates; and 4) the high " spread" banking; 5) the highest tax burden (35 % of GDP) of the world's largest; 6) the high labor costs ; 7) the high costs of the pension system; 8) the tax law complex and inefficient; 9) the high cost of electricity; 10) poor infrastructure (blackouts in the electricity sector and saturation of ports, airports , roads and railways); and , 11) the lack of skilled labor.

All these problems need to be overcome by the federal government to eliminate the Brazil Cost. These solutions should be complemented by the adoption of measures aimed at: 1) a drastic reduction of the tax burden by lowering the cost of government spending and government debt burden by reducing the Selic interest rate, reducing the "spread" banking and conducting a thorough reform of the state and public administration in Brazil; 2) the drastic reduction of public debt with the decrease in interest rates Selic, 3) eliminating the logistical bottleneck with incentives for public and private investment in energy, transportation and communications infrastructure, 4) deployment of networked organizational structure in the Brazilian state to raise levels of

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efficiency and effectiveness of public administration in Brazil; and, 5) combating corruption with achieving political reform and a reform of the state and public administration through a Constituent Assembly exclusive.

In turn, the government of State of Bahia can collaborate in solving these problems by fighting against corruption, reducing the cost of public spending, improving existing infrastructure and helping to eliminate the shortage of skilled labor. Corruption can be eliminated since there is transparency of their actions by the government of Bahia, the cost of government of Bahia spending can be reduced since there is decrease in the number of departments and commissioned positions, and the elimination of poor infrastructure can be accomplished with investments and proper maintenance of the power sector, ports, airports, highways and railways.

All these problems need to be overcome to eliminate the Brazil Cost. These solutions should be complemented by the adoption of measures aimed at: 1) eliminating the logistical bottleneck with incentives to public and private investments in energy, transportation and communications infrastructure; 2) the deployment of networked organization in the State of Bahia to raise their levels of efficiency and effectiveness; and, 3) curb corruption endeavoring to carry out political reform and a reform of the state and public administration through a Constituent Assembly exclusive.

7. Threat of increasing regional inequalities

Regional inequalities Bahia concern basically the following: 1) excessive economic concentration in RMS - Metropolitan Region of Salvador (Capital of the State of Bahia) - The RMS concentrate 70 % of the manufacturing industry in Bahia and is responsible for 35-40 % of the state GDP; 2) Decline in development of the region of Bahia cocoa - The revenue from cocoa has represented about 80 % of the Bahia exports in mid- 1970. Today, the State of Bahia has the condition of cocoa importer. The cocoa sector debt hits R$ 1 billion; and, 3) Underdevelopment of the semiarid region of Bahia -A semiarid region covers about 70 % of the area of Bahia state, is characterized by having water scarcity and extreme poverty, as well as having one agricultural of low productivity, fledgling industry and activities related to trade and services underdeveloped compared to the most dynamic regions of Bahia.

To eliminate or reduce regional inequalities becomes essential:

• To develop plans systemic and strategic of development for the State of Bahia as a whole and for each region.

• To strengthen and integrate their poles of growth and development (Salvador, Camaçari, Feira de Santana, Vitória da Conquista, Itapetinga, Lençóis, Jequié, Ilhéus, Itabuna, Porto Seguro, Eunápolis, Teixeira de Freitas, Juazeiro, Irecê, Guanambi, Bom Jesus da Lapa, Barreiras,, among others) to be connected to each other by roads (highways, railways and waterways).

• To strengthen the axes of development of Bahia : 1) São Francisco; 2) Chapada; 3) Extremo Sul; 4) Mata Atlântica; 5) Metropolitano; 6) Grande Recôncavo; 7) Planalto; and, 8) Nordeste.

• To harness the endogenous development potential of each municipality and each region with the use of factors of production (capital, human resources, knowledge resources, research and development, information and institutions, among others).

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• To optimize and improve existing factors of production (human resources, physical resources, knowledge resources and capital ) .

• To promote proper allocation of economic infrastructure (energy, transport and communications) and social (education, health, sanitation and housing).

• To promote the integration of the São Francisco River basin to the basins of other rivers in Bahia and deployment of dams at strategic points of its territory to eliminate or reduce water scarcity in semi-arid.

• To expand the existing industrial structure with the increase of their competitiveness, to develop micro, small and medium enterprises and to promote the development of the shipbuilding industry .

• To make the industry on the Bahia less dependent of São Paulo with the expansion of the local processing industry.

• To create a competitive business environment that contributes to the innovation of products and processes.

• To make the government of the State of Bahia to operate as Network to ensure, through the Department of Planning with the support of the State Secretariats sectoral integration in the actions of all public organizations in the implementation of strategic development plans.

• To establish UEDRs - Units Strategic of Regional Development to operate in the network in each region covered by the development priorities of Bahia which are connected to the Department of Planning and would articulate in each region its municipalities actions, all organs of federal, state and municipal organizations, besides civil society .

• To work with the federal government to provide tax and financial incentives for the development of backward regions.

• To provide fiscal and financial incentives from the State of Bahia government for the development of backward regions.

8. Threat of worsening social and environmental problems of Bahia

The Index FIRJAN Municipal Development (IFDM ) examined indicators of education, health, employment and income of all municipalities in Brazil. The study was done by the economic team of the Federation of Industries of the State of Rio de Janeiro (Firjan). Social indicators show Bahia between poverty and development (http://atarde.uol.com.br/noticias/5626617). With an index of 0.6093, a range that goes from 0.0 to 1.0, Bahia occupies the 20th place among the 27 states of Brazil. No municipality in the State of Bahia is part of the select club of 226 Brazilian cities where the population lives in a high level of development (between 0.8 and 1.0).

The worst social indicators are in the trenches of Bahia. Ten municipalities still occupy the range from low development indices which are 0.0 to 0.4. 186 municipalities in Bahia are among the 500 worst Brazil IFDM. The misery of Bahia in Brazil only wins, in order, to Maranhão, Piauí, Ceará and Alagoas. Among the 27 states that make up the Brazilian federative unit, Bahia is in fifth place in terms of misery, and its population,

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most basically lives in the semiarid region, but also in the Metropolitan Region of Salvador.

The semiarid region of Bahia is a difficult challenge to overcome because is one of the most inhospitable regions of the planet. The government of the State of Bahia does nothing, does not help, to develop that region. There isn´t a plan for the development of the region and developmental agencies, like SUDENE and DNOCS, that should participate in planning to overcome poverty, failed. Bahia occupies the 6th position of the country's GDP, that is, the sixth richest state of Brazil. However is the 20th in regard to the Human Development Index (HDI). Bahia is the fourth state with the highest concentration of income in Brazil. The extreme poverty of Bahia makes it as the 5th most miserable in the ranking of the states of Brazil .

Income inequality in State of Bahia, measured by the Gini Index, declined in the period 2001 to 2009, but remains higher than that of Brazil, and it is in the twentieth position in the ranking of income distribution. Despite the reduction of 21.2 % in 2001 to 10.1 % in 2009, the number of people living in extreme poverty follows significantly higher than the national average, 5.2%. In 2009, 16.8 % of Bahia was illiterate, compared to 18.7% of the Northeast and 9.7 % of Brazil. In Brazil, in the same year, the average schooling was 7.5 years of study, while in the state of Bahia indicator signaled 6.4 years of study, and its countryside, just 3.9 years.

Bahia has high crime rates higher than in other regions of Brazil and the world. In Salvador, the number of homicides increased five times in ten years that has the homicide rate of 61 per hundred thousand inhabitants, five times more than establishing the United Nations Organization (UN) as bearable for large cities (12 per 100,000). Just as a comparison: São Paulo has reached 8.95 per 100,000 inhabitants in 2011. The increase in violence in the Metropolitan Region of Salvador (RMS) exceeded the rates of major capitals like Rio de Janeiro and São Paulo. It is clear, through research, studies and surveys conducted by the competent bodies, the countries where social inequality is high, also report similarly high rates of other negative factors, such as violence and crime.

Overcoming the current social problems requires the adoption of the following strategies: 1) to strengthen the civil society organizations of Bahia so that they can press the holders of economic power and the federal and the state government to make concessions of a social nature that translate improving the income distribution of Bahia, contemplating also participate in the design of government policy development; 2) to invest in improving the infrastructure of education and health and the public transport system and to increase the supply of affordable housing to meet the demands of society; and, 3) to adopt a policy to prevent and combat crime by providing the majority of the population of Bahia of means minimum for survival as employment, education, health and housing, as well as restructuring the police and the courts to exercise combating crime without the disproportionate use of violence.

The main environmental problems of the State of Bahia are: 1) predation forest rainforest; 2) environmental pollution caused by industries along the coast where is the forest rainforest; 3) degradation of springs, siltation and pollution of rivers due to indiscriminate and predatory use of its waters for irrigation especially in the savanna; 4) gradual destruction of the paths and vegetation with serious impact on wildlife due to increased use of land for farming and grazing in the savannah; 5) vulnerability to desertification “caatinga” due to the weather and terrain present in western Bahia in the

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left margin of the São Francisco River, in the northeast region of Raso da Catarina extending to Ribeira do Amparo southwards and into the state of Pernambuco and the left bank of the Lake Sobradinho; 6) implementation of crops in the savanna that require large amount of water in a region characterized by drought; 7) the occurrence of drought that occurs when the water deficit is prolonged excessively victimizing the people, crops and livestock for lack of water and taking the population of the savanna to tackle the problem of malnutrition and hunger; and, 8) salinization of waters of the dams built in the bush due to soil characteristics, many of which have become unusable for human and animal use.

Likewise the social framework, the environmental situation of the State of Bahia has also extremely serious. Today, very little remains of the lush jungle rainforest, environmental pollution caused by wastewater from the cities of medium and large industries and the waste released into rivers, bays and ocean without proper treatment and degradation of springs, siltation and contamination rivers due to indiscriminate and predatory use of its waters, especially for irrigation, represents a major threat to ecosystems forest, cerrado and caatinga in the state of Bahia.

It appears , also, the gradual destruction of the paths and vegetation with serious impact on wildlife due to increased use of land for farming and grazing in the savannah. Accentuated the vulnerability of the savanna to desertification due to climate and topography present in western Bahia on the left bank of the São Francisco River, Bahia in the northeast region Raso da Catarina extending to Ribeira do Amparo southwards and into the State Pernambuco and the left bank of the Sobradinho.

Occurs in the savanna irrationality to deploy crops that require large amount of water as is the case of beans in Irecê, a region characterized by water deficit when the logical thing would be to use crops adapted to the environment that wouldn´t demand large volume of water. In addition, many dams built to meet the needs of the population, crops and cattle are saline, making it useless for human and animal use.Have not been adopted preventive measures to fight drought by the state government of Bahia which victimize the population, crops and livestock for lack of water and leads the inhabitants of the savanna to tackle the problem of malnutrition and hunger and consequent rural exodus. In this sense, it is urgent to promote the integration of the São Francisco River basins with basins of other rivers in Bahia and deployment of dams at strategic points of its territory to eliminate or reduce water scarcity in semi-arid.

In the State of Bahia, the democratization of power structures is the essential condition for which would be effective participation of civil society in the promotion of economic, social and environmental sustainable basis. That would be the condition for the Civil Society intervened directly in economic planning, social and environmental state of Bahia and contribute towards preventing the fruits of the development process had exclusively as its main beneficiaries the urban and rural oligarchies.

9. Threat of worsening structural problems of Bahia

The structural problems of Bahia are the following : 1) Excessive concentration of land ownership; 2) deficiency in energy infrastructure; 3) Deficiency in transportation infrastructure; 4) Deficiency in educational infrastructure; 5) Deficiency in health infrastructure; 6) Deficient in basic sanitation infrastructure; 7) Deficiency in water infrastructure; and, 8) Deficiency in infrastructure housing.

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Excessive concentration of land ownership in Bahia

The agrarian structure of Bahia has been changing in recent decades, and with increasing concentration of land (http://search.mywebsearch.com/mywebsearch/GGmain.jhtml?searchfor=concentra%C3%A7%C3%A3o+da+propriedade+rural+na+bahia&ts=1377725821233&p2=%5EHJ%5Exdm022%5EYY%5Ebr&n=77fc21bc&ss=sub&st=bar&ptb=03E7F0BE-4CE4-4975-BB45-11E251CEFD4F&tpr=sbt&si=pconverter). In recent years, there was an increase in the number of small farms and smallholdings to decrease its footprint. On the other hand, it was increased the area occupied by large landowners properties, remaining almost constant the participation of this group in the overall structure. There is intensification of land conflicts in rural areas, especially in the regions most dynamic and possessing abundant natural resources.

Land reform is urgent and necessary to the solution of the problem of land concentration in the State of Bahia, with the expropriation of unproductive areas and the granting by the federal and state levels of technical support and credit to small and medium producers. The land reform depends on the availability of public funds for investment in expropriated properties and supporting the activities of agricultural production to the beneficiaries of this action.

Deficient power infrastructure of Bahia

There is a high risk of blackouts due to the vulnerability of interconnected electric system in Brazil that requires the use of high- polluting power plants operating cost. Bahia has the greatest potential for solar and wind energy in Brazil and great potential for power generation based on agricultural waste and municipal solid waste that are not properly harnessed. The State of Bahia has a deficit in the production of ethanol and biodiesel despite the great potential for production.

The response to deficient power infrastructure Bahia would be harnessing the energy potential and increased production of ethanol and biodiesel to meet the demand of Bahia and export to other states. The improvement of the energy system of Bahia depends on the existence of public and private resources for investment in its infrastructure with the implementation of new production units located in strategic points of its territory, as well as the maintenance of existing structures.

Deficiency in the transport infrastructure of Bahia

The transport system of the State of Bahia is concentrated basically on the highways at the expense of railways, waterways and coastal shipping (Map 3). An array of predominantly road transport, such as Brazil and Bahia, makes no sense. The port system of Bahia cannot keep inefficient and costly. Maritime transport being the main mode of international trade, it is necessary to build a system of international port in Bahia. Most modern ports and rail infrastructure works are essential to Bahia.

Baia de Todos os Santos (The Bay of All Saints) is the second largest deepwater recess of the world, and the largest in South America, which gives excellent features for the creation of a large port complex in the State of Bahia. The grain produced in the West should be disposed by a new grain terminal in the Baia de Todos os Santos, enabling the return shipping of fertilizers produced in the Metropolitan Region of Salvador.

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Map 3 - Main transport Bahia

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B a rraF o rm o s a d oR io P re to

X iq u e -X iq u e

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O u ro lâ n d ia

L e n ç ó is

B ru m a d oC a e t itéG u a n a m b i

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S a n ta n a

C a r in h a n h a

M a lh a d a

B o m J e s u sd a L a p a

S a n ta M a r iad a V i tó r ia

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BA RRA GE M D E SO BRA DINH O

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C id a d e

46’ 44’ 42’ 40’ 38’

17’ 17’

13’ 13’

15’ 15’

11 ’ 11 ’

9 ’ 9 ’

46’ 44’ 42’ 40’ 38’

With the deterioration of the road network, expands, of course, the number of accidents as well as operating costs of that modal. According to World Bank data, poorly maintained as a highway to Bahia can increase the cost of trucking heavy as 46 %. Thus, not surprisingly, the shipping costs in Brazil reached, with poor road maintenance, levels much higher than international standards.

The challenge is to recover the railroads integrated with the expansion of other modes. This occurs mainly in Western Bahia that has only the railroads undersized for the large volume of cargo in the region . With the polarization in RMS, the road connections between regions are very weak or even nonexistent, making it difficult, by far, the domestic trade. That structural problem sum up the very precarious state of most roads.

First new option for load flow from West is the proposal of a multimodal transport system linking the highway BR 242 (the stretch Luís Eduardo Magalhães – Muquém - 300 km), the São Francisco waterway (Muquém-Juazeiro - 604 km) and railway of FCA from Juazeiro to Salvador (570 km). This alternative requires a relatively small investment because all routes already exist, needing only to be recovered / adapted and articulated.

The construction of the Railroad of East-West Integration (Fiol) will enable the connection between the western of Bahia, on the border with Tocantins, and Porto Sul

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in Ilheus (Map 4). The Porto Sul Project can handle more than 60 million tons of products such as iron ore, raw materials for the construction, cereals, fertilizers and other bulk. All this will be carried by the East - West Rail and exported by ship docked at the Porto Sul deploying Bamin, Paoeto Sul and Fiol make an economic revolution in the region, with more jobs, more trade, more services and more business opportunities.

Map 4 - Railroads in Bahia

A loss of R $ 2 billion is the approximate size of the damage that will be caused to the public coffers due to lack of planning and a multitude of faults committed in the execution of two megaproject of infrastructure in Bahia: The Railway East-West Integration (Fiol) and Porto Sul, the port complex set to be built in Ilhéus.

The implementation and management of the two infrastructure projects present significant deficiencies resulting from their planning not properly integrated and coordinated. Valec, responsible for the work of Fiol, acknowledged that no studies on possible impacts because of the mismatch in terms of completion.

The situation of the railroads in Bahia is far from reasonable. Not only the integration between regions still wanting, nor is it possible to live with a federal network state so precarious.

The greater allocation of resources for infrastructure Airway in the State of Bahia is explained by the size of the state, which prevent the existence of a single gateway. Undertaking a strategy of internalization of tourism in the State of Bahia, new airports

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have been deployed in major tourist cities of Bahia. Thanks to this strategy State of Bahia already has currently one second international airport in Porto Seguro, and besides Ilhéus Airport more six national -sized airports.

The improvement of the transport system in Bahia depends on the availability of public funds for investment in its infrastructure with the implementation of new modes located at strategic points of its territory, as well as the maintenance of existing and future structures.

Disabilities in educational infrastructure of Bahia

Bahia has 277,690 children and young people outside the education system. Places are insufficient to meet demand in higher education in Bahia and Brazil. With only a federal university, higher education in Bahia was maintained for a long period without expanding the number of vacancies or the teaching staff. The participation of universities in the State of Bahia offer undergraduate and registered in enrollment in public higher education is quite significant, given almost two thirds of the number of students enrolled in public higher education in the state.

The demand for higher education has been attended by many private institutions with low quality of education. It is the high dropout in higher education in Bahia and Brazil. Of the 10.3 million Bahia aged more than ten years, 8.1 million are literate in the State of Bahia. More than two million illiterates from the age of ten. No other state has so many illiterates.

It is common sense that a nation cannot be built without education of quality. Brazil and Bahia in particular need to universalize education at all levels, from primary education to University. One of the great challenges of Brazilian education, at present, is the expansion of higher education with the use of Distance Learning (ODL). Instead of multiplying structures of universities and colleges throughout Brazil with high costs, should, instead, multiply the number of distance education courses through distance learning technology. It is in this sense that the ODL can make an important contribution, increasing the potential for access to the University of Brazilians, especially in states and municipalities with greater difficulty in mobility for students as Bahia.

The Internet has accelerated the accumulation of knowledge and production, making the capacity of practitioners to be enlarged and more demanded. The development of the Internet leads us to think of a revolution of the universities in the future, once the physical classroom education classes can be supplemented, even replaced by distance classes. With the help of video conferencing, discussion forums (chat), electronic mail and other technological applications, universities are able to digitize. Thus, are reduced physical limitations (such as geographical distance) for access to university education. In Brazil, possessed of an education system exceeded, it is imperative restructuring at all levels, from elementary to University.

Improving the situation of education in Bahia depends on the availability of public funds for investment in its infrastructure with the implementation of new educational facilities at all levels located at strategic points of its territory, as well as the maintenance of existing and future structures.

Deficient health infrastructure of Bahia

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The failure of the public health system is checked throughout the state of Bahia. Men, women and children huddled in the corridors of hospitals in long lines waiting for service, as there are few doctors working in a cramped space to house patients with dignity, and the lack of medicines.

Public hospitals are in a state of calamity, with few attending physicians, beds and patients waiting in crowded hallways. Many are seen sitting on the floor. Others do not survive the waiting time and die. Bahia has less than 50% of hospital beds than indicated by the World Health Organization. There are enough clinics that have serious problems of structure and funding. There are no doctors, nurses and health professionals to meet the real health needs of the population.

The improvement of the health situation in Bahia depends on the availability of resources for investment in public health infrastructure with the deployment of new hospitals and health centers located at strategic points of its territory, as well as the maintenance of existing and future structures.

Disability in basic sanitation infrastructure of Bahia

Sanitation is the grouping of measures for water supply, sanitation, urban drainage of rainwater, actions relating to solid waste and control of disease-transmitting vectors.The water supply in urban areas is 53.59 % and rural 3.82 % of total households. Only 23.75% of households have sewage systems. 59.63 % of urban households, 2.03 % of rural households and 61.67 % of total households have garbage collected directly. 63.61 % of the municipalities have sewer service.

Of the 3.1 million private households of the State of Bahia, no less than 762,000 have no bathroom or toilet, which represents about three million of inhabitants of the State of Bahia doing their physical needs in the open in full XXI Century. Even in relative terms, Bahia has one of the worst rates of households without sanitary installation, ranking 23th in Brazil.

Garbage collection in Bahia only reaches 1.9 million households, or 40 % of the houses throw debris haphazardly. The IBGE reports that the State of Bahia has 13 million inhabitants with a population of five million Bahia without garbage collection.IBGE data show that more than one million households in the State of Bahia do not have water supply network overall, ie , water is acquired in well, spring or directly into rivers and lakes. Result: more than four million of inhabitants of the State of Bahia drinking untreated water .

Improved sanitation system Bahia depends on the availability of public funds for investment in its infrastructure as well as maintenance of existing and future structures.

Deficiency in water infrastructure Bahia

Bahia presents major deficiency in water supply in all regions, especially in semiarid characterized by water scarcity. The problems afflicting the population, especially that of the semi-arid, with regard to access to water quantity and quality, affecting their health and restrict the opportunities for improvements socioeconomic communities.

On the severity of the drought that affects mainly the semiarid region, a leading authority on water resources of Bahia, the Engineer Manoel Bomfim, now deceased, wrote the article A seca no Estado da Bahia (The drought in the state of Bahia) in which

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questions the fact that the government of Bahia not have adopted no preventive measures to mitigate its effects when it was common knowledge that the drought that settled in the backlands of Bahia was provided by long-time studies at the Institute of Space Activities (IAE) of São José dos Campos .

According to figures released by the press, more than 500,000 cattle have died in the Semi Bahia because of drought, and dairy products, the fall was around 70 %. According to Manoel Bomfim, the government of Bahia was lenient to develop a specific program and determined to build a water infrastructure in Bahia. Given this situation, it is urgent not only increase the supply of water, but also its distribution in all regions of the State of Bahia.

There is an urgent need for structural works and priority with the goal of bringing the benefits to society resulting from the expansion of supply of good quality water for human consumption and watering animals, and increased supply of irrigated areas for food production, generation employment and income and improving the quality of life of people in the countryside in Bahia. To increase the water supply, the State of Bahia government should promote the integration of watershed through the implementation of the Project Integration São Francisco River with river basins located in Bahia (Map 5).

Map 5 - Bahia - basins and major rivers

 

4 2 40 3 8

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Bacia do Recôncavo N orte

Bacia do Recôncavo Su l

Rio de C on tas

Rio Inham bupe

Bacia do Les te

Rio P ardo

Rio S ão Francisco

Rio Vaza-Barris

Rio Itapicu ru

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ALA G O AS

To address the impacts of the structural crisis in Bahia, it is essential to:

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• Implement a planning system of the State of Bahia characterized by systemic and strategic approach covering their regions and municipalities and prepared in coordination with the federal and municipal governments with the participation of civil society.

• Deploy a network structure (Network Status) to ensure, through the Department of Planning with the support of the State Secretariats sectoral integration in the actions of all public organizations (federal, state and municipal) in implementing the plan strategic of development .

• Deploy UEDRs - Units Strategic of Regional Development to operate in the network in each region covered by the axes of development which would be connected to the Department of Planning and would articulate the actions of all organs federal, state and municipal governments with civil society organizations.

• Strengthen civil society organized to be able to obtain concessions from the government and the ruling classes and establishing balances between the interests of capital and society as a whole to promote social development and the environment.

• Promote the development of indigenous energy resources (solar, wind, ethanol, biodiesel, waste, etc.) to meet demand, reducing the vulnerability of the energy supply and promoting development.

• Promote the development of the transport sector with the increase of railways, waterways and coastal shipping and port system of Bahia.

• Overcoming the major shortcomings in education, health and sanitation of Bahia, strengthening the role of the state in the provision of services.

• Develop actions to divert water from the Rio Tocantins to the Rio São Francisco and promote the construction of dams and the integration of water resources of the São Francisco River with other rivers of Bahia located in the semiarid region.

• Eliminate the existing housing deficit in the State of Bahia Bahia.

10. Threat of crisis management in the public sector of the State of Bahia

The State of Bahia is faced with three types of crisis in the field of public sector management: 1 ) Crisis of planning; 2) Crisis of development strategy; and 3) fiscal crisis of public finances .

Crisis of planning

Planning State of Bahia is not characterized by systemic and strategic approach. To get the optimization of the State of Bahia from the point of view of regional development, it´s necessary to have a regional development plan systemic and strategic. Unfortunately, the government of Bahia does not have a regional development plan covering the entire state of Bahia.

The government plans are mere letters of intent and not drivers instruments of his action. Bahia's government is characterized by punctual action such as project - Fiol Porto Sul, the bridge Itaparica - Salvador, among others. A systemic and strategic plan of development should include their regions and municipalities, and be prepared in

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coordination with the federal and municipal governments with the participation of civil society .

Crisis development strategy

The government of the State of Bahia has no effective strategy of development that promotes :

• The strengthening and integration of its of its economic poles of growth and development Salvador, Camaçari, Feira de Santana, Vitória da Conquista, Itapetinga, Lençóis, Jequié, Ilhéus, Itabuna, Porto Seguro, Eunápolis, Teixeira de Freitas, Juazeiro, Irecê, Guanambi, Bom Jesus da Lapa, Barreiras, among others) to be connected to each other by roads ( highways, railways and waterways).

• The strengthening of the development axes of Bahia: 1) São Francisco; 2) Chapada; 3) Extremo Sul; 4) Mata Atlântica; 5) Metropolitano; 6) Grande Recôncavo; 7) Planalto; e 8) Nordeste.

• The use of endogenous development potential of each municipality and each region with the use of factors of production (capital, human resources, knowledge resources, research and development, information and institutions, among others).

The government of the State of Bahia is inefficient and ineffective as an organization for the reasons described below:

• The state government should operate like the Bahia State Network to ensure, through the Department of Planning with the support of the State Secretariats sectoral integration in the actions of all public organizations (federal, state and municipal) in the execution the strategic development plan.

• To operate the network in each region covered by the development priorities should be established UEDRs - Units Strategic of Regional Development that should be reporting to the Department of Planning that would articulate the the actions of all the organs of federal, state and municipal organizations of civil society.

Fiscal crisis of public finances

From 2008 to 2012, current revenues of the State of Bahia grew 51.42 % and current expenditure 60.62 %. The operating expenses in 2013 increased much more than the average growth of government expenditure. In the year that the government Wagner took over the number of commissioned positions totaled 8,101 and now reach 13,000 burdening expenses of the state government. Bahia ranks second in the percentage of commissioned positions of State of Bahia government. On the outbreak of the 2008 crisis and the prospect was falling in state revenue, there should be a government action to reduce spending costs and be an effective control of cash flow. This was not done. The fiscal crisis is the product of managerial incompetence of the government of the State of Bahia.

The leader of the parliamentary bloc PMDB / DEM in the Legislative Assembly, Mr Luciano Simões, issued on 10.09.2013, a list of engineering firms that are in a pre -bankruptcy not to receive payments for services provided to government of the State of Bahia since 2011. According to the parliamentarian, the Urban Development Company of the State of Bahia (Conder) is approximately US$ 85 million. The company that tops

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the list is the Metrus Engineering, responsible for reforming the Avenida Pinto de Aguiar (Avenue Pinto de Aguiar) and the construction of Imbuí viaducts. Then appears the UFC Projects and Inspection, to whom should Conder more than $ 15 million. Still appear in the list LJS, responsible for the work of the Feira de São Joaquim (Fair of San Joaquin), the builder Elite, CSC, who takes care of the works of the Pelourinho, the ConstruQuali, responsible for market Paripe; BSM, which also looks after the maintenance of fair São Joaquim Itatiaia, among others .

To address the impacts of fiscal and financial crisis in Bahia, it is essential actions described below:

• Implement an effective system of planning and control of public finances.

• Dramatically reduce the cost of funding of public administration in Bahia eliminating unnecessary departments and agencies and commissioned positions to a minimum.

• Renegotiate the payment of debt service to dispose of public resources for investment in transport, education, health and housing of Bahia infrastructure.

• Work together with the political parties in order to: 1) prepare technical and administrative staff to exercise their competence to the management of the public sector in both the executive and legislative ; and, 2) choosing to compete for office people that meet the best conditions for the exercise ethically and competently.

• Raise awareness among voters to choose candidates who are most able to defend their political ideals, ideological and competently perform their charges in public administration both in the legislature and in the executive.

• Raise awareness among elected officials who hold office in the executive and legislative powers in order to choose competent assistants, adopt techniques systemic planning and strategic exercise financial control of public finances need and use public resources responsibly.

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i Lecture at the HBIG-Geographic and Historical Institute of Bahia 24.09.2013, Salvador, Bahia.ii Alcoforado, Fernando, engineer and doctor of Territorial Planning and Regional Development from the University of Barcelona, a university professor and consultant in strategic planning, business planning, regional planning and planning of energy systems, is the author of Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova (Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado. Universidade de Barcelona, http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of the Economic and Social Development-The Case of the State of Bahia (VDM Verlag Dr. Muller Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe Planetária (P&A Gráfica e Editora, Salvador, 2010), Amazônia Sustentável- Para o progresso do Brasil e combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011) and Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012), among others.