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The costs of neomonetarism: The Brazilian economy in the 1990s

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The costs of neomonetarism: The Brazilian economy in the 1990s

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... Neoliberal economic policies are hegemonic in Brazil as well as the world today (Saad-Filho and Johnston, 2005; Saad-Filho and Morais, 2004). This section reviews the theoretical foundations of these policies, and the transition from economic policies geared toward the promotion of ISI to neoliberal policies in Brazil. ...
... Ver Saad Filho e Maldonado Filho (1998) e Saad Filho eMorais (2000Morais ( , 2002. Do ponto de vista neoclássico, a liberalização da conta de capitais permite o uso da taxa de juros doméstica para regular a entrada do volume desejado de divisas. ...
... Neoliberal economic policies are hegemonic in Brazil as well as the world today (Saad-Filho and Johnston, 2005; Saad-Filho and Morais, 2004). This section reviews the theoretical foundations of these policies, and the transition from economic policies geared toward the promotion of ISI to neoliberal policies in Brazil. ...
Article
This paper offers a political economy analysis of the two systems of accumulation in the postwar Brazilian economy: import-substituting industrialisation (ISI) and new liberalism, and the industrial policies associated with them. The transition between these two systems of accumulation from the early 1980s to the mid-1990s is reviewed in the light of the country's key macroeconomic indicators and the political developments which have determined the choice and implementation of economic policy in each period. It is argued that, despite their signifi-cant achievements, both ISI and new liberalism were implemented unevenly and inconsistent-ly, and that their shortcomings can be analysed at two levels: internal micro-and macro-eco-nomic limitations preventing these development strategies from achieving their stated aims, and external limitations imposed by social conflicts during each period of time. The paper con-cludes, first, that industrial policies are closely associated with specific state structures, economic constraints, and political configurations which can be analysed only concretely (there can be no general theory of industrial policy, and there is no 'optimum path' of accumulation under late development). Second, each system of accumulation is limited by a distinctive set of historically specific economic and political constraints, which set limits to its potential development. Third, and precisely for these reasons, industrial policy is irreducibly political and context-specific.
... Quarto, altas taxas de juro estimulam a acumulação de dívida externa e criam espaço para a arbitragem através da tomada de empréstimos externos para aplicações financeiras domésticas, especialmente em títulos públicos (ver seção 5). Vamos agora avaliar a implementação dessas políticas no Brasil após o Plano Real (ver SaadFilho & Morais 2000). A seção 2 indicou que a abertura da conta de capitais atraiu grandes fluxos financeiros unilaterais para o Brasil, levando à rápida acumulação de reservas internacionais. ...
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This paper reviews the performance of the Brazilian economy during the 1990s, in the light of the neomonetarist policy shift implemented unevenly but incrementally across this decade. The paper shows that this policy shift was associated with, and contributed to, a change in the structure of manufacturing industry, the financial deterioration of the public sector, the tightening of the balance of payments constraint, and increasing external economic dependence. These structural changes were largely responsible for the currency crisis of 1999. Subsequent policy measures have largely failed to address these weaknesses of the Brazilian economy. Este artigo analisa a trajetória e as mudanças estruturais ocorridas na econo-mia brasileira durante os anos noventa. Essa foi uma década notável devido, em parte, às taxas de crescimento excepcionalmente baixas no período 1 e, em parte, às mudanças no modo de acumulação da economia brasileira 2 . A principal mudança foi o abandono da industrialização pela substituição de importações (ISI) por um novo modo de acumulação baseado na microintegração da base produtiva e do capital financeiro em circuitos transnacionais. Essa mudança foi justificada de duas * Somos gratos pelos comentários de projeto de pesquisa foi apoiado pela Nuffield Foundation (SGS/LB/203).
... This concept is explained by Fine and Rustomjee 1996. The Brazilian case is discussed by Saad-Filho 1998, Saad-Filho, Coelho and Morais 1999, Saad-Filho and Mollo 2002and Saad-Filho and Morais 2000 The term 'new liberalism' highlights the contrast between the new system of accumulation and the oligarchic 'old liberalism' of the early twentieth century, characterised by the hegemony of the coffee sector, foreign ownership of key industries, formal democracy, economic exclusion though oligarchic rule and state repression, and the lack of support for manufacturing industry. 5 See, for example, Baer 1995, Furtado 1972, Hewitt 1992and Tavares 1975 See Studart 1995. ...
... This overvaluation was deliberately pursued by the Brazilian authorities, in order to boost the impact of the liberalisation of imports. 22 Currency overvaluation and import liberalisation, along with fiscal reforms and de-indexation, were the functioning core of the real plan. ...
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Abstract This article outlines a political economy analysis of Brazilian high inflation and stabilization. The paper explains the distributive and monetary aspects of inflation and the gradual fragmentation of the Brazilian currency. It also reviews the most important aspects of the Real stabilization plan, the de-indexation of the economy, and its rapid “liberalization” and “internationalization.” The paper shows that, in spite of the successful reduction of inflation, the Real plan was highly vulnerable to shifts in international liquidity; partly for these reasons, it led to de-industrialization and high unemployment. In addition to this, the Real plan contributed to an increase in income inequality and the development of sharp social conflicts in Brazil. These weaknesses were the main factors responsible for the currency crisis in January 1999. © 2002 URPE. All rights reserved
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This chapter offers a political economy analysis of the two systems of accumulation in the post-war Brazilian economy, import-substituting industrialisation (ISI) and new liberalism, and the industrial policies associated with them1.The shift across systems of accumulation has been associated with significant changes in the role, structure, and policies of the Brazilianstate. Section 1 examines the case of ISI, departing from a review of conventional assessments of this system of accumulation and offering an alternative interpretation of its economic and political structures. This section also considers the limitations of ISI and the reasons for its crisis in the eighties.
Chapter
Controlling the public sector deficit is critically important for the formulation and implementation of macroeconomic policy in Brazil. At one level, the deficit2 has become a key variable for the assessment of the stance and effectiveness of economic policy by international organizations, foreign lenders and investors and domestic agents. At another level, it is often claimed that lower deficits are essential for intertemporal macroeconomic stability in the country. In this context, the public sector borrowing requirement (PSBR) has become increasingly relevant.
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This article explains the context of Lula's election for the Brazilian presidency, and the scope for progressive economic and social change in the country. We argue that although the ruling coalition is on the political left, the new administration is not, and it will face grave difficulties to achieve traditional left objectives, including universal citizenship and greater equality of income and wealth.
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Full-text available
This article outlines a political economy analysis of Brazilian high inflation and stabilization. The paper explains the distributive and monetary aspects of inflation and the gradual fragmentation of the Brazilian currency. It also reviews the most important aspects of the Real stabilization plan, the de-indexation of the economy, and its rapid “liberalization” and “internationalization.” The paper shows that, in spite of the successful reduction of inflation, the Real plan was highly vulnerable to shifts in international liquidity; partly for these reasons, it led to de-industrialization and high unemployment. In addition to this, the Real plan contributed to an increase in income inequality and the development of sharp social conflicts in Brazil. These weaknesses were the main factors responsible for the currency crisis in January 1999.
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THIS PAPER PROVIDES AN INTERPRETATION of the Brazilian Real (stabilisation) plan, and its recent collapse. The plan was designed to maximise Brazil's ability to profit from the exceptional liquidity of the international credit markets, when low interest rates in the industrialised economies (especially the US) facilitated surges in capital flows to a select group of countries, the so-called ‘emerging markets.’ The general backdrop of the Brazilian plan, as well as similar policy initiatives in other emerging markets, was the neo-liberal fundamentalist prescription that countries should ‘liberalise, privatise, cut government spending and show to the world your commitment to liberal principles.’ Allegedly, this would be enough to inspire investor confidence, and allow the country to benefit from the exuberant power of capital inflows. The events that followed the adoption of that prescription in Brazil tell a very different story.
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Marxian analyses of inflation tend to fall under three broad categories, those that emphasise primarily the role distributive conflicts, monopoly power, or state intervention on the dynamics of credit money. This article reviews these interpretations, and indicates how they can be integrated. The proposed approach, based on the ‘extra money’ view, departs from the circuit of capital and the endogeneity of credit money in order to explain inflation in inconvertible paper money systems.