SACHA PFEIFFER, HOST:
It seems like just about every country these days is obsessed with manufacturing. In wealthy countries, it's supposed to create better jobs. For developing countries, it's supposed to be a path up the economic ladder. Jeff Guo from our Planet Money podcast followed that thought to a manufacturing powerhouse in a very unlikely place.
JEFF GUO, BYLINE: You know the legend of El Dorado, the hidden city of gold in South America? Well, recently, Planet Money producer Luis Gallo and I went to visit a kind of modern-day El Dorado in the middle of the Amazon rainforest. To catch a glimpse of it, we walked along a dark jungle path up to an observation tower. At the top, we could see the rainforest stretching all the way to the horizon in nearly every direction. Except...
LUIS GALLO, BYLINE: I hear it. I hear buses.
GUO: Yeah.
...Just to the south...
GALLO: Through those trees.
GUO: ...There was this bright line running through the jungle.
GALLO: So on one side, we have the vast Amazon forest.
GUO: And then on the other side, it's a bustling metropolis.
We were looking at the city of Manaus in Brazil. Manaus is a manufacturing juggernaut, filled with giant factories from the likes of LG and Samsung and BMW and Honda. Nearly every TV that is sold in Brazil, every microwave, every motorcycle is built right here in the middle of the jungle, thousands of miles from where most Brazilians live, where, for several months of the year, the highways are practically impassable. All this is the result of a decadeslong experiment to kick start economic development. This area is called the Manaus Free Zone. We met with the government official in charge of the project, Bosco Saraiva.
BOSCO SARAIVA: (Speaking Portuguese).
GUO: Saraiva told us, since the 1970s, this experiment has brought hundreds of thousands of manufacturing jobs to one of the poorest regions of Brazil. So in that sense at least, Manaus looks like a huge economic success. But all these factories, they're here for basically one reason - the tax breaks. Every year, the Brazilian government spends about $6 billion subsidizing factories here in the free zone. Without those subsidies?
SARAIVA: (Speaking Portuguese).
GUO: Saraiva says all this manufacturing wouldn't be economically viable. It's pretty expensive to make things in the middle of the rainforest. And everybody knows this. Denis Minev is the CEO of Bemol, which is the largest department store chain in northern Brazil. He says, yeah, suppliers can get the same stuff made in China for way, way less.
DENIS MINEV: It, of course, depends on the product, but I would say, generally, we're talking about half.
GUO: No. Half?
MINEV: Half. Yeah.
GUO: Is that typical?
MINEV: Well, that's normal, yeah.
GUO: Minev used to serve as the secretary of economic development for this region. He told us the dream has always been that, one day, these factories might not need so many subsidies, that they'd figure out a way to be economically competitive. Right now, the U.S. government has similar hopes. It's paying countries billions of dollars to build new microchip factories in America. But one lesson from Manaus is that getting the factories to come, that's the relatively simple part. Figuring out how those factories might one day stand on their own without subsidies, that can take years, even decades of messy experimentation.
Jeff Guo, NPR News.
PFEIFFER: For Jeff's full story on how countries boost manufacturing, check out Planet Money wherever you listen to podcasts. Transcript provided by NPR, Copyright NPR.
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