ABSTRACT
This chapter describes that understanding the causes of environmental degradation in the Amazon requires an evaluation not only of economic conditions within the region, but also of the links between the regional and national economies. Predatory occupation such as that in the Amazon Basin is neither new nor peculiar to that region. Rather, it is the result of extension into the area of the familiar pattern of agricultural expansion at the extensive margin that has characterized the growth of Brazilian agriculture since the sixteenth century. The dependence on national markets for determination of factor and output prices combines with existing technology and resource availability to produce the cycle of destruction seen in the area. The chapter discusses important aspects of regional and national factor markets. This is followed by an analysis of the interrelationship between these and the pattern of development in the region. Finally, policy implications and recommendations are presented.
