Searching for a New Formula: Brazilian Political Economy in Reform

Brazil was among the last Latin American countries to adopt reforms of the so-called Washington Consensus. In the early and mid-1990s, it carried out changes in foreign trade policy and macroeconomic policy, and it privatized many state-owned industries. While many have pointed out that the reforms could have gone much further, there is a sense that Brazil has changed a great deal in the last decade and a half. A country that used to be known for its ability to "deal" with hyperinflation has found itself with low and very "normal" inflation rates. It has also elected—with no political trauma—a president who in the past caused fear among Brazil's propertied classes. That president—Luis Inácio Lula da Silva—has been quite moderate, and Brazil's general economic policy has not changed in recent years. In many ways, Brazil is now more stable—both politically and economically—than it has ever been.

Despite this relative stability, there is little agreement in the scholarly and policy-making communities about the overall consequences of recent changes, or the next directions that Brazil should take. That said, one can conclude that most analysts are still waiting for Brazil to pull off a new economic miracle, one that will help to solve the many problems that the country has faced. At the same time, many (not all, for sure) recognize that a great deal of progress was made during the government of Fernando Henrique Cardoso, even though much remains to be done.

In this essay, I discuss much of the recent literature on Brazilian political economy from several different angles by addressing eight books. The books can be broken down into three broad categories: books that assess the reforms of the Cardoso government, those that focus on the economic policy options facing Brazil, and finally, those that consider the place of Brazil in the world. Since many of the works considered here are edited volumes, it is difficult to conclude that there is any consensus about Brazilian political economy. However, a number of broad themes do emerge. In particular, there is a widespread sense that whatever one thinks of the changes that came along with reforms, the agenda of new reforms is a long one. In addition, there is also a widespread sense that Brazil has "matured" politically and economically since the mid-1990s. Interestingly, however, the kinds of debates that Brazilians continue to have about economic policy are reminiscent of past debates. There is still a strong current of developmentalism in many of the analyses offered here. It is not that anyone advocates going back to the bad old days of high inflation, but there are plenty who advocate much more activist state intervention in the economy.

The overall assessments...