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Brazil's quasi-stagnation and East-Asia growth: A new-developmental explanation

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  • Bresser-Pereira, Luiz Carlos

Abstract

From the 1980s, Brazil quasi-stagnated while East-Asia continued to grow. What went wrong? Classical developmentalists and post-Keynesians argue the cause was the desertion of the national developmental project based on structural change or industrialization. New-developmental economics agrees but is more specific: two historical new facts reduced investments. In the 1980s, a fiscal crisis of the state defined by negative public savings, broke up. This crisis, which was not resolved, led to the fall of public investments. As to private investments, 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 of growth with foreign indebtedness policy and the consequent excess of capital inflows. The omission was the suspension of the neutralization of the Dutch disease. Both resulted in a long-term overvaluation of the exchange rate and stopped industrialization.

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  • Bresser-Pereira, Luiz Carlos, 2021. "Brazil's quasi-stagnation and East-Asia growth: A new-developmental explanation," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 500-508.
    • Handle: RePEc:eee:streco:v:58:y:2021:i:c:p:500-508
    DOI: 10.1016/j.strueco.2021.06.014
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    References listed on IDEAS

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    1. Barry Eichengreen & Donghyun Park & Kwanho Shin, 2012. "When Fast-Growing Economies Slow Down: International Evidence and Implications for China," Asian Economic Papers, MIT Press, vol. 11(1), pages 42-87, Winter/Sp.
    2. Felipe, Jesus, 2012. "Tracking the Middle-Income Trap: What is It, Who is in It, and Why? Part 2," ADB Economics Working Paper Series 307, Asian Development Bank.
    3. Luiz Carlos Bresser-Pereira, 2018. "Growth and distribution: a revised classical model," Brazilian Journal of Political Economy, Center of Political Economy, vol. 38(1), pages 3-27.
    4. Jesus Felipe & Arnelyn Abdon & Utsav Kumar, 2012. "Tracking the Middle-income Trap: What Is It, Who Is in It, and Why?," Economics Working Paper Archive wp_715, Levy Economics Institute.
    5. Luiz Carlos Bresser-Pereira, 2020. "New Developmentalism: development macroeconomics for middle-income countries," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 44(3), pages 629-646.
    6. Felipe, Jesus, 2012. "Tracking the Middle-Income Trap: What is It, Who is in It, and Why? Part 1," ADB Economics Working Paper Series 306, Asian Development Bank.
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    1. Cunha, André Moreira & Lélis, Marcos Tadeu Caputi & Haines, Andrés Ernesto Ferrari & Franke, Luciane, 2023. "Exports of manufactured goods and structural change: Brazil in the face of Chinese competition," Structural Change and Economic Dynamics, Elsevier, vol. 64(C), pages 1-12.

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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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