Envisioning Brazil: A Guide to Brazilian Studies in the United States

Chapter 9. The Brazilian Economic System through U.S. Lenses

CHAPTER 9 The Brazilian Economic System through u.S. Lenses WERNER BAER and ROBERTO GUIMARAES Since 1945 the number of U.S. economists who have concentrated on the study of Brazil has been relatively small, even in periods when development economics was a popular field and area studies were getting substantial financial support from U.S. foundations and government agencies (such as the U.S. Agency for International Development). Many economists who devoted their research to Brazilian economic problems were associated with universities that had active centers for Latin American studies and/or economics departments that supported development economics as a field of specialty. Most prominent among such universities were Berkeley , Columbia, Illinois, Stanford, Texas, Vanderbilt, and Yale (through its Economic Growth Center). The language barrier might be one explanation for the small number of U.S. economists who have concentrated their efforts on Brazil. One thus finds a much larger number of development studies devoted to countries whose official primary or secondary language is English. More important, however, is the bias against area studies among economists. The profession lays great weight on analytical techniques and specialization in fields (such as industrial organization, public finance, international trade, etc.). This has resulted in the perception by many economists that geographical area or country specialization would hinder professional advancement. This perception grew during the 1970S and 1980s. However, the rising interest in the 1990S in what has been called the "new institutionalism" in economics may in time lead to a more receptive climate toward those professionals specializing in a geographical area. Despite these circumstances, it is remarkable that a small group of 241 242 WERNER BAER AND ROBERTO GUIMARAES talented economists have devoted a large proportion of their professional activities to the study of the Brazilian economy. The attraction of Brazil's society and its institutions were stronger than professional ambitions, and in most cases the Brazilianist economists have had successful professional careers. The bulk of Brazilian studies by u.s. economists and economic historians has concentrated on themes that originated with Brazilian scholars and/or criticizing Brazilian interpretations of some of the major economic issues arising during Brazil's development in the twentieth century. We shall review the u.s. contributions to the study of the Brazilian economy by dividing the topic according to some major issues. This chapter is organized as follows: in section 1 we concentrate on the economic history of Brazil; this is followed by a review of u.s. scholars' contribution to such postwar issues as industrialization, the role of foreign capital, and protectionism. Next comes an analysis of the literature on macroeconomic achievements and failures, and in the fourth section we look at the contributions to the study of the country's different stabilization programs. Finally, we review some of the major issues that Brazil faced during the last decade of the twentieth century and at the beginning of the twenty-first century, such as globalization, regionalization, and privatization. 1. ECONOMIC HISTORY OF BRAZIL Two U.S. economists have delved into certain aspects of Brazilian economic history before the twentieth century. Leff published two volumes of selected essays on the economic history of Brazil (Leff 1982), and some of his main themes reappeared in an essay in 1997 (Leff1997). In his analysis of the Northeast, he blames the region's problems on the poor export performance of sugar and cotton, the products in which the region traditionally specialized, compared to the dynamism of coffee exports, whose production was located in the southeastern part of the country. Because the domestic resource costs of foreign exchange were lower in coffee than in sugar or cotton, Leff concludes that the Northeast suffered from an early example of the "Dutch Disease." He also raises interesting questions about why Brazil relied on foreign immigrants to supply labor to the booming southeastern coffee economy rather than on migrants from the poor Northeast, suggesting that this may have been because of the absence of capital market institutions to finance such migration and because of racial attitudes. The Brazilian Economic System through U.S. Lenses 243 Leff's thesis about the "Dutch Disease" was disputed by Denslow (1974), who found fault with the nature of the data used and the way Leff interpreted them. Denslow made an important contribution to the study of the origins of regional inequality in Brazil that was originally published in Brazil (Denslow 1978). In a careful empirical...