Bernardo furtado, Federal University of Minas Gerais ufmg economics School face regional Planning and Development Center cedeplar, Belo Horizonte, Brazil



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TEXTO PARA DISCUSSÃO N 258
LAND PRICE AND DEVELOPMENT,

A CRITICISM TO THE LOGIC OF URBANIZATION:

A CASE STUDY OF URBAN SPACE PRODUCTION IN

TIMOTEO, MG, BRAZIL
Bernardo Alves Furtado
Maio de 2005

Ficha catalográfica


332.1(815.1)

F992l

2005



Furtado, Bernardo Alves.

Land price and development, a criticism to the logic of urbanization: a case study of urban space production in Timoteo, MG, Brazil. / Bernardo Alves Furtado. - Belo Horizonte: UFMG/Cedeplar, 2005.


19p. (Texto para discussão ; 258)
1. Economia regional. 2. Urbanização – Aspectos sociais – Timóteo (MG). 3. Urbanização – Aspectos econômicos – Timóteo (MG). 4. Timóteo (MG) – Condições econômicas. I. Universidade Federal de Minas Gerais. Centro de Desenvolvimento e Planejamento Regional. II. Título. III. Série.

CDU



UNIVERSIDADE FEDERAL DE MINAS GERAIS

FACULDADE DE CIÊNCIAS ECONÔMICAS

CENTRO DE DESENVOLVIMENTO E PLANEJAMENTO REGIONAL

LAND PRICE AND DEVELOPMENT,

A CRITICISM TO THE LOGIC OF URBANIZATION:

A CASE STUDY OF URBAN SPACE PRODUCTION IN TIMOTEO, MG, BRAZIL


Bernardo Alves Furtado

Doutorando do Curso de Economia CEDEPLAR/UFMG

Professor do UnilesteMG/PucMinas


CEDEPLAR/FACE/UFMG

BELO HORIZONTE

2005

SUMÁRIO



1. The Central Argument 6

2. Cost of services 6

3. Stop the bulldozers, then! 7

4. Case Study: the analysis of the production of space and its perception within the context of a middle-sized city in Minas Gerais, Brazil 9

5. Methodology 9

6. Urban evolution 11

The 1930s 11

The 1940s 11

The 1970s 13

The 1980s 14

The 1990s 14

7. Landscape and Urban Morphology 14

8. Case Study Conclusions 15

9. Are there any alternatives? 15

10. Now what, Joseph? 17

11. Bibliographical References 18


ABSTRACT
This quick essay aims to demonstrate the fundamental importance of the cost of producing and managing urban space from a developing country perspective. It also indicates, based upon vast literature, that the price of urban investments ends up to have an expelling trend to citizens away from the benefits which they cannot afford. This fact suggests a vice cycle in which the more the City invests the more expensive it becomes to its citizens who, helplessly, move out into unserviced neighborhoods. Furthermore, it analyses the production of space in a middle-sized city in Brazil based on parcel approval documents from the 1930s to the 1990s. It also uses Kevin Lynch’s city landscape theoretical framework to help interpret the evolution of urban space in Timoteo. This paper ends with some suggestions to the problem posed.
Key words: urban cost, urban dynamics, land price, city landscape, urban space.
JEL Classification: R14; R20; R51

RESUMO
Este breve ensaio busca demonstrar a importância fundamental do custo da produção e gestão do espaço para a cidade e sugere-se, apoiado em farta literatura, que o ônus dos investimentos urbanos acabe por se transformar em fator de expulsão dos cidadãos para longe das benfeitorias, inviabilizando seu usufruto. Tal fato indica ciclo vicioso no qual quanto mais se investe na cidade, mais cara ela se torna para seus habitantes que, sem alternativa, buscam as periferias desprovidas de serviços. Ademais, analisa a produção do espaço em uma cidade média no Brasil, baseado em documentos de aprovação de parcelamento entre os anos de 1930 e 1990 e usa o conceitual teórico de paisagem urbana de Kevin Lynch no intuito de contribuir para a interpretação da evolução do espaço urbano em Timóteo. Conclui-se com sugestões para o problema posto.

1. The Central Argument

This essay proposes a reviewed discussion of long-believed concepts concerning urban areas within developing countries. Furthermore, it aims to intertwine knowledge and definitions from different fields of science, from urbanism and architecture to geography to economics, whereas all of them debate the city.

Making use of an economic perspective of urban areas, this paper shall present the issue of part of the cost of reproduction of the work force as being in fact part of an urban cost. That means that the price of land comprises not only its inherent cost, but also the price of urban services embedded in a certain area around the lot. These available infrastructures are usually planned, implemented and maintained by local authorities (in Brazil, the municipality) and are, therefore, shared by all citizens independently of one’s access to the service. This process attaches an extra cost to the land that most of the times is inaccessible to those who originally helped finance the investment1.

It is not a novelty to say that the price of land is established exactly by the calculation of what it provides2. In a developing country, however, where distribution of services is scarcely homogeneous, what happens is that most investments are made by the City and hence paid for by taxpayers. Access to them, on the other hand, is limited, being the price of land the natural barrier. Moreover, this paper suggests that the more the city invests, the more expensive the land becomes. Thus making it impossible for an ordinary citizen to become even an ephemeral user of the system.

The case of the city of Timoteo serves the purpose of illustration of the theme discussed throughout the paper. It is a typical middle-sized city in the outback of Minas Gerais state in Brazil that experienced an accelerated process of occupation after the 1940s under the influence of a huge steel plant built in its territory. As a result, five broad distinct areas are conformed each one serving to a reason at different times.


2. Cost of services

A number of authors (CALDEIRA3, MENDONÇA4, COSTA5) have depicted clearly the influence of the price of land in the location of inhabitants in the city. According to Singer, the rules of the real estate market reserve the areas that are well serviced to those privileged that have a high-income and are therefore capable of paying the highest price for the right to live. The citizens with lower income are relegated to areas that are poorly serviced and, consequently, the only ones affordable to them (1982 p. 27).

This means that what expels the poor away from urban convenience is the lack of sufficient income to afford the price of an urbanized lot. As Bolaffi puts it, the poor do not have the financial resources to buy the land (1979, p. 41). Azevedo adds to that view as he discusses the Brazilian Housing Department (COHAB) experience throughout the 1970s. He advocates that the primary cause of non-payment of most of the houses provided was exactly the inability of the buyers to amount the necessary income (1982, p. 93).

The seriousness of this discussion is that in the end one might realize that the cities do not have only a problem of lack of houses or lack of land exactly, but most importantly, a problem of income. Hence the importance to debate the price of city living in a broader sense than housing alone. That means broadening the discussion further than land use regulations, zoning or control of real estate speculation and considering all costs that are over the citizen. Costs which might be directly imposed, such as taxes and the price of the lot itself, or, indirectly, such as transport, availability of education and health services within reach.

One other important factor to add is the theme of overwork that is made by the laborer in order to reduce his cost of reproduction. Building his own house at his supposedly leisure time, for example, exempts his employer from paying adequately so that one would be able to afford the purchase of a suitable home. Those artifices, however, are limited for there are other costs, such as transport, for instance, that cannot be personally arranged by the worker as they are institutionalized. Society markets them as goods, so that the user is expected to acquire them. When this happens there are no remedies, but a cost that is inevitably monetary (OLIVEIRA, 2003, p. 84).

According to Coraggio, “contemporary urban questions have an economic base” (1994, p.234). That assumption has led into an analysis in which it is proposed that any intervention in the city – be it the augmenting of sanitation or the building of a new city park – has a cost to be assumed by a specific budgetary source. The financing might come from federal or state institutions – which would then constitute money transfer from other regions to the city – or it might have been thought as a payment to be made by the users of the new implemented service. “New structural adjustment processes are imposing to public economy (…) policies of recuperating expenses made through charging of the services at real market prices (…) transforming bureaucratic structures into business-like facilities” (op. cit., 1994, p. 237)6.

What is important to highlight within this paper’s framework is that whoever makes the investments, invariably, the aggregated value of the new services will be added to the cost of living in the serviced location. A cost that Brazilian workers cannot afford.


3. Stop the bulldozers, then!

An extreme and radical suggestion would then be that it is better not to do any improvements in the city at all. That is because it is clear that any investments made result in increase of the price of the land, and therefore the impossibility of low-incomers to comply with it. Moving further into this speculative scenario, one might add that social movements should be extinct. This is because these movements have [in Brazil] forced municipal governments into offering amnesty to illegal entrepreneurs which resulted in the inclusion of a number of lots in the legal market. The result of this process was the reduction of cheap pieces of land, previously, illegal (CALDEIRA, 1997, p.3)7. Holston adds that, “ironically”, the instruments of modernist planning, with little adaptation, become perfect instruments to produce inequality, not to erase differences (1993, p. 128).

Azevedo also recommends caution when investing in urban areas. Once again, discussing the public housing experience in Brazil, he says that the COHAB project was conceived to diminish social inequalities, but it ended up to increase them further. (1982, p. 129).

This line of argument can be extended away from urban only problems as suggests Oliveira when he says that the central competitiveness of Brazil resides specifically on the fact that labor force can be bought cheaply. Furthermore, it can be made cheaper by reducing costs of the reproduction of labor8. Stating so, he opposes the Economic Commission for the Latin America and The Caribbean’s (CEPAL) respected traditional view which claims that there are two faces of Brazil: a modern one and a backward one. Oliveira insists that what there is is a single Brazil, not dual, but complementary parts that are essential to capitalist accumulation. “It is through non-capitalist agriculture, informal urban services and unpaid, favor-like, labor that workers make their cost of living small, allowing for minimum wage to be kept at very low standards and investments to be extra rewarded (…); informality and misery are indispensable conditions for capitalism boom in Brazil”9, says he. Further, in his book called Ornitorrinco, he complements that the reserve army in the cities, busy with informal activities, is part of the lowering of the cost of reproduction of labor which reduces the monetary cost of their own reproduction (2003, p. 130). Giving some examples10, the author emphasizes what he calls the “perversity of the logic” in which the non-availability of services is essential. “The real process shows a symbiosis, a union of contraries, in which the modern Brazil feeds and develops on the backward one” (op. cit, p. 32). He then discusses the city environment again highlighting the relevance to evaluate the impacts of any intervention in the urban space. Otherwise, there is a risk that the remedies intended as corrective actions become a nightmare and enhance the very trends which they were supposed to eliminate in the first place (op. Cit., p. 60).

Besides Oliveira, Kowarick (1974), agrees to this argument in which there are not two separate structures: one modern and another one traditional, old or marginal. What there is is one single framework that simultaneously supports and strengthens this supposedly not capitalist social division of labor that far from being a burden in the accumulation process is an essential component. Singer, a notorious Brazilian social scientist, agrees to this view when he states that extra income from labor productivity, in itself honorable11 and positive, is perverse. The reason why is that they make the capital move outwards into areas where the cost of labor is cheaper and where there are no social benefits which in the end aggravates the losses of jobs in countries were labor rights exist and are followed thoroughly (1998, p. 118).

Furthermore, Coraggio evaluates the possibilities for local management of resources. While international capital moves freely around the globe, searching for the best combination of technology, resources, access to markets, quality and cost of the labor force, local agents, who are definitely not so mobile, will have to compete with imported goods which are produced using more modern12 technology and substantially lower costs of labor force (1994, p. 229). This, in turn, forces them deeper into diminishing the comparatively easiest factor to apply this downward trend: cost of reproduction of labor.

The various quoted authors may lead one to confirm the thesis according to which any raises in the cost of life of the worker would withhold the development of the country. From this point of view, “stop the bulldozers” might become a possible suggestion. “The Ornitorrinco is this: there is no possibility to remain as a developing country and take advantage of the gaps that came along with the Second Industrial Revolution. It is definitely not possible to evolve towards the digital-molecular accumulation: the internal accumulation basis are insufficient and are below the necessary level to enable a rupture of this magnitude…” (OLIVEIRA, 2003, p. 150).


4. Case Study: the analysis of the production of space and its perception within the context of a middle-sized city in Minas Gerais, Brazil

The analysis of the perception of urban dynamics in the municipality of Timóteo, Minas Gerais, is based on the study of its production of urban space throughout the twentieth century. In this paper, production of space is understood in the sense proposed by Lefebvre (1974) and accepted by most Brazilian urbanists. It is henceforth defined as the process of incorporating rural areas into urban legal developments13 (FURTADO, 1997). Putting it simply, it is the process of transforming rural areas into urban ones.

It is also important to define the appropriation of urban space as the actual occupation of neighborhoods and the implementation of the infrastructure needed, which do not happen, pari passu, with the production of space. On the contrary, typical Brazilian city landscape reflects an “in construction” space, always unfinished, in need, which, because it has unequal and disperse spatial occupation, demands high costs of maintenance and production which the municipality cannot hope to bear.




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