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Brazil’s quasi-stagnation and the new developmentalism

Author

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  • Luiz Carlos Bresser-Pereira

Abstract

From the 1980s, Brazil quasi-stagnated while East-Asia continued to grow. Whatwent wrong? Classical developmentalists and post-Keynesians argue the cause was thedesertion of the national developmental project based on structural change or industrialization.New-developmental economics agrees but is more specific: two historical new facts reducedinvestments. In the 1980s, a fiscal crisis of the state defined by negative public savings, brokeup. This crisis, which was not resolved, led to the fall of public investments. As to privateinvestments, they also have fallen as a percentage of GDP (when we compare with the 1970).They have fallen due to an action and an omission. The action was the mistaken adoption ofgrowth with foreign indebtedness policy and the consequent excess of capital inflows. Theomission was the suspension of the neutralization of the Dutch disease. Both resulted in along-term overvaluation of the exchange rate and stopped industrialization. JEL Classification: O1; E2; F31; F34; F41.

Suggested Citation

  • Luiz Carlos Bresser-Pereira, 2022. "Brazil’s quasi-stagnation and the new developmentalism," Brazilian Journal of Political Economy, Center of Political Economy, vol. 42(2), pages 503-531.
    • Handle: RePEc:ekm:repojs:v:42:y:2022:i:2:p:503-531:id:2335
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    More about this item

    Keywords

    Public investment; private investment; exchange rate; foreign indebtedness; Dutch disease;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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