Paralela Avenue, which connects the city of Lauro de Freitas to Salvador, is a gigantic job site that forms a straight line. Buildings, condos, malls, stores and universities are popping up along the 18 kilometers where just five years ago all you could see was dense brush. Every end of afternoon, hundreds of buses crammed with workers on the way back home join the passenger cars and jam the avenue's three lanes. Traffic is especially intense around the job site for the Le Parc condo, where 2200 workers toil six days a week. Le Parc - embellishing the capital of Bahia - is the largest residential development under construction in Brazil. Eighteen towers, each with at least 16 floors and 64 apartments, are being built at the same time on a 100,000 square meter lot. Every week, 4.5 million premolded blocks and the equivalent to seven Olympic-sized pools of concrete are used. Trucks from 40 different suppliers enter and exit through the venture's gates from Monday thru Saturday, 7am to 5pm. Le Parc was projected to be constructed over a five year period, but its timetable had to be moved up to meet demand. One thousand of its 1138 apartments were sold in less than one year at prices ranging from 421,000 to 1.1 million reais. "We had planned on starting the works with just five towers," says Antonio Andrade Jr., 43, president of Cyrela Andrade Mendonça, an association between Andrade Mendonça, a constructor from Bahia, and Cyrela, from Sao Paulo. But, like so many other business people, Andrade Jr. soon found out the local market was much bigger than it seemed. In 2008, his company's sales doubled, reaching 600 million reais. Andrade Mendonça was founded over 30 years ago and it has never experienced so much prosperity in its businesses. At this moment, its workers are simultaneously raising 52 buildings spread about Bahia, Pernambuco, Paraíba and Sergipe.

Paralela Avenue in Salvador is an example of what is happening today in that historically poorest and most backward region of the country. For four centuries, the Brazilian northeast had been home to a pre-industrial economy, based on a nearly feudal structure, nonexistent technology and the lack of large business ventures. There was no market. And, as an obvious and cruel consequence, there was no opportunity. The northeast is home to 28% of the Brazilian population and it is responsible for only 14% of its GDP. But the buildings raised by 2200 people on Paralela are solid proof of the region's transformation into a real market, in which part of the 54 million inhabitants become consumers. It is a sign that is actually one among others that include the emergence of a new and thriving agricultural center between Bahia, Piauí, Tocantins and Maranhao, the installation of large industries like Nestlé and Sadia, and infrastructure works that are among the largest in the country, the result of public and private investments.

	Little by little, the economy of the 21st Century is taking over what remains of the economy of the 16th Century. Therefore, development of the northeast did not occur in phases. It is taking place in one huge leap. During this year of the global crisis, the northeast was responsible for the largest share of the small growth seen in the Brazilian economy. The Tendencias consulting firm estimates the northeast's GDP growth at 1.5%, whereas the rest of Brazil should shrink 0.1% (see chart on page 22). If the domestic market protected the country from the effects of the international crisis, this is even more so in the northeast, the region with the least international exposure, and whose base is comprised of a legion of emerging consumers. "This part of Brazil is discovering its own path for growth, with local entrepreneurism, technological development, services, tourism and civil construction," says economist Maílson da Nóbrega, a partner at Tendencias.
- The new migrants Queirós, president of the Pague Menos pharmacy chain, in Fortaleza: with revenues of 2 billion reais, he is now moving into other regions of the country
- Beyond the basic food basket Saunders, owner of Eletroshopping, in Recife: sales of household appliances in up to 24 payments in cities with fewer than 70,000 inhabitants

We must go back a little in time to understand the current statistics. No region of the country received as many benefits from the current government's income transfer programs as the northeast. Today, nearly half of the 12 million families aided by the Bolsa Família (Family Assistance) throughout the country live in the region. The program is responsible for 2.6% of the northeast's family income - an average threefold greater than the rest of Brazil, but still a small amount of money in face of the whole. There are other initiatives, such as the rural pension, which today benefits 3.8 million people in the area - half of the entire benefit paid in the country - and the 94% increase in the minimum wage, which since 2003 has helped raise the population's average income. But, it is necessary to underscore that the northeastern economy, although once driven by income distribution incentives, is prospering today thanks to the forces of traditional capitalism. The region began to receive large investments over recent years, especially in the infrastructure sector (see chart on page 23). Gigantic works are underway, like the ports of Suape, in Pernambuco, and Pecém, in Ceará, or the duplication of BR-101, which connects the coasts of Pernambuco and Rio Grande do Norte. Altogether, 52 billion reais shall be injected in the local economy over the next five years, according to a study by the EXAME Infrastructure Yearbook 2008.  "It is a very large investment for a historically needy region," says Francisco Cunha, partner at TGI, with its headquarters in Recife. This combination accelerated the northeast's economic push - the increase in income generates more consumption, which generates more production, which generates more investment. A study by economist Marcelo Neri, of the Fundaçao Getulio Vargas, reveals that income from work in this part of the country has been growing 7.27% per year since 2003, compared to the Brazilian average of 5.13%. From September 2008 to September of this year, the northeast saw the largest growth in formal job vacancies in the country. "These are emblematic numbers to do away with those theories that the region only grows thanks to income transfer programs," says Neri.

Although the Bolsa Família still carries weight, a large part of the local economy's strength is due to the billions or reais invested in infrastructure.

The direct effect of this change in scenario is unprecedented social mobility. In 2003, half of all northeastern families lived on less than 768 reais per month and were part of the so-called class E, a portion of the population outside the consumer market. Over the past five years, this has fallen to 31% of the population. That means that nearly 10 million northeasterners have entered classes C and D. This is a huge contingent of people who bought their first stove or first TV. Today, northeasterners are the biggest consumers of products like rice and Uno Milles, Fiat's cheapest car, in the country. There is demand for almost everything - and that is precisely what is at the root of the emergence of a new generation of local entrepreneurs. Such is the case of Richard Saunders, of Pernambuco, and owner of the Eletroshopping retail chain. His company doubled in size over the past two years selling household appliances with financing for up to 24 months to a population that often doesn't even have a bank account. Today Saunders, 37, son of an Englishman and a woman from Pernambuco, runs a chain with 105 points-of-sale spread about six states in the northeast, and projected earnings of 700 million reais this year. By 2014, he projects to open another 150 stores - even with the arrival of national competitors to the region like Casas Bahia, sector leader. In March of this year, 52 years after it was founded, Casas Bahia inaugurated its first stores in the state that lent the chain its name. It plans on reaching 50 units by mid 2010.

Since 2003, nearly 10 million northeasterners entered classes C and D - unprecedented social mobility in the region.

After establishing itself in the major northeastern cities, Eletroshopping now begins a second phase - growth in cities with fewer than 70,000 inhabitants. The arrival of these household appliance stores in the rural areas is normally motive for a party. At the inauguration of Eletroshopping in Arcoverde, a city with 68,000 inhabitants, 250 kilometers from Recife, people gathered in the central square to watch the doors open to the sound of a musical band. "We have a great opportunity in these places where people have gained purchasing power, but had yet to have access to credit," says Saunders, who sold the family's Saveiro and Chevette to fill the shelves of his first store, inaugurated 19 years ago in Recife.

With this speed of growth activity in the northeast economy, typical figures from more developed markets also begin to appear. In Pernambuco, it is already possible to find a generation of serial entrepreneurs - restless business owners, normally young, who create one company after another, and often sell them to investors like private equity or venture capital funds. One of the representatives of this group of new northeastern capitalists is Fernando Carrilho, 28, from Recife. Graduated in civil engineering at the Federal University of Pernambuco, Carrilho is the son and grandson of civil construction entrepreneurs, but he opted to not work for the family's construction firm and to open his own business. He was able to get 15 million reais from banks and other investors, and in 2006, he inaugurated his first company, Cimentos Brasil. Less than two years later, he sold the company to the Camargo Correa Group for 200 million reais - an extraordinary gain of 185 million reais over the initial investment. In July, Carrilho began his second venture, this time in partnership with his friend from college Luiz Priori, founder of the Zipco metallic structure manufacturer. Zipco was founded three years ago and specialized in building warehouses for large companies. Carrilho invested 12 million reais for half the company, whose revenues this year will reach 20 million reais. "We are still small, but our clients already include Vale, AmBev and CPFL," he says.

- Export model Sadia's new factory in inland Pernambuco: built to be an export center	The biggest indication of renewal in the northeast's business environment is certainly the capacity to attract investors. "The region's appeal changed from a sort of compassion to accelerated growth," says Tania Bacelar, partner at the consulting firm Ceplan, of Pernambuco, and former Secretary of Regional Development Policy at the Ministry of National Integration. This expansion has also been catching the attention of international funds. According to GVcep, a branch of FGV that analyzes the venture capital and private equity markets, 11 northeastern companies had shares in private equity funds in 2004. Now there are 19. One is the SER Educacional group, with headquarters in Recife, which last year received 100 million reais from the American fund Cartesian Capital Group (Cartesian only has one other investment in Brazil, in the Daycoval bank).
- Growth cycle Port of Suape, in Pernambuco: more investments, more infrastructure, more jobs and more market

SER is comprised of three colleges - Maurício de Nassau, Fabac and Joaquim Nabuco - and was founded in 2003 by Janguie Diniz, of Paraíba. At 45, Diniz has an improbable origin for a business owner in education. The son of illiterate parents who fled the drought in Paraíba in the 1970s, he lived in Mato Grosso and Rondônia before settling in Pernambuco. He was able to graduate in law and, years later, when trying for a vacancy in a civil servant exam for prosecutor, he realized there were no preparatory courses. "It became very clear to me that this was a business opportunity," he says. So, in 1996, Diniz opened a preparatory school that would eventually become SER a few years later. Today, the group has eight campuses spread over Pernambuco, Paraíba, Alagoas and Bahia and 140 million reais in revenues. Diniz uses his own plane, a King Air C-90 turboprop that cost around 1 million dollars, to go from one campus to the other. With the investment by the Americans at Cartesian, now the objective is to increase the number of students from 30,000 to 100,000 and have 30 units in the north and northeast over the next five years.

The region never received so much private money. Investments jumped from 2 billion in 2003 to 13.3 billion last year

The growth in the northeastern market did not go unnoticed by the large companies installed in the south and southeast. At Banco do Nordeste alone, loans grew sixfold, jumping from 2 billion in 2003 to 13.3 billion reais in 2008. They are for projects of various different sizes and for purposes as diverse as soy bean crushing to the production of medications. One of the largest recent investments was made by Sadia in Vitória de Santo Antao, 50 kilometers from Recife. In March, the company inaugurated its first factory in the region, the result of a 300 million real investment. "We used to take up to ten days to meet a local order, with products that at times traveled up to 3000 kilometers," says Julio Cavasin, project and investment manager. Sadia also plans on making Vitória de Santo Antao an export center for its products. For such, it has paid special attention to international quality norms. Sadia's factory in Vitória de Santo Antao is the first in the country's meat sector to neutralize carbon emissions.

Students in the northeast have only now reached the average number of years of education the rest of the country had in 1999 - less than six years of formal education

The benefits resulting from large works, both private and for infrastructure are immediate. In 2005, BR-232 was duplicated from Recife to Caruaru, the largest city in Pernambuco's rough inland area. The 150 kilometer journey that used to take up to 3 hours now takes 90 minutes. Caruaru has enjoyed unprecedented growth ever since. In May, the city, known for its huge Sao Joao party, received the first McDonald's outside the capital. On the day it was inaugurated, hundreds of people lined up in front of the counter in a scene that recalled the opening of the chain's first unit in Moscow after the Iron Curtain fell. McDonald's employees became celebrities in the city. Some continue to wear their name tag when they go out at night to dance forró in the city (they say the golden arches on their chest function like "magnets" to attract the local girls). Different from what happens in the large cities, McDonald's biggest challenge in Caruaru is not to compete with other fast food chains, because they don't even exist there, but rather to break the local tradition of eating beef jerky and goat stew for lunch. The biggest hope lies in the new generations of consumers. Teachers take entire classes to the restaurant during lunch break. "For these kids, eating at McDonald's is a matter of pride," says Mario Jorge Carvalheira, who owns the franchise.

In a reverse direction, more and more northeastern companies are finding the strength to go beyond their own borders, in a migratory move that differs from everything we've seen for decades in the country. Rather than a mass of migrants in search of work, we begin to see a throng of northeastern entrepreneurs attracted by the possibility of national growth. One of the pioneers of this movement is the Pague Menos pharmacy chain, with headquarters in Fortaleza. Founded in 1981 by Deusmar Queirós, 62, last year the company became the largest in the country in its sector. It aims to finish 2009 with 340 stores and revenues of 2 billion reais. Meanwhile, the largest concentration is in its own region, where it has 220 stores. But now the objective is to conquer the rest of the country. For that, Queirós has already plotted 132 cities with more than 100,000 inhabitants that could receive new pharmacies. There is an innovative strategy behind this growth. Pague Menos was the first Brazilian chain to offer products like ice cream and soft drinks and to accept payment of water, power and phone bills - a service that is much sought after in inland areas of the northeast where the banks' presence is still timid. Queirós' model will be tested over the next few months. Anvisa, the agency that regulates the medication sector, determined that in February, pharmacies must sell only medications.

The northeast is experiencing a moment of prosperity thanks to its own merits as the most emerging region of a country that is catching the world's attention today. Its current development occurs beyond - and despite - political convenience, private interests and state development agencies that buried money in ghost dams. The region's power of attraction lies in its potential market, and in that portion that becomes real. But of course, this growth has obstacles that will rear their heads later on if not removed. Despite what is happening, the northeast is a poor region, with low education and skilled labor indexes. FGV data reveal that northeastern students have only now reached the average number of years of education the rest of the country had in 1999 - less than six years of formal education. This gap tends to be critical in an economy that is becoming more modern and dependent on greater skills. The differences between states are considerable. For example, Alagoas and Maranhao are far from the pace of growth of neighbors like Pernambuco and Ceará. "We have the obligation to grow more because the difference is still brutal when compared to the south and southeast," says Joao Carlos Paes Mendonça, of Sergipe, president of the JCPM group and founder of the Bom Preço supermarket chain, today in the hands of Walmart. The place where more than 54 million Brazilians live seems to finally have the chance to transform its enormous weaknesses into opportunities.