Brazil in transition : beliefs, leadership, and institutional change


Brazil in transition : beliefs, leadership, and institutional change

Lee J. Alston, Marcus Andre Melo, Bernardo Mueller, and Carlos Pereira

(The Princeton economic history of the Western world)

Princeton University Press, c2016

  • : hardcover

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Includes bibliographical references (p. [227]-241) and index



Brazil is the world's sixth-largest economy, and for the first three-quarters of the twentieth century was one of the fastest-growing countries in the world. While the country underwent two decades of unrelenting decline from 1975 to 1994, the economy has rebounded dramatically. How did this nation become an emerging power? Brazil in Transition looks at the factors behind why this particular country has successfully progressed up the economic development ladder. The authors examine the roles of beliefs, leadership, and institutions in the elusive, critical transition to sustainable development. Analyzing the last fifty years of Brazil's history, the authors explain how the nation's beliefs, centered on social inclusion yet bound by orthodox economic policies, led to institutions that altered economic, political, and social outcomes. Brazil's growth and inflation became less variable, the rule of law strengthened, politics became more open and competitive, and poverty and inequality declined. While these changes have led to a remarkable economic transformation, there have also been economic distortions and inefficiencies that the authors argue are part of the development process. Brazil in Transition demonstrates how a dynamic nation seized windows of opportunity to become a more equal, prosperous, and rules-based society.


List of Illustrations xi List of Tables xiii Preface xv Abbreviations xvii Part I. An Overview of Brazil in Transition: Beliefs, Leadership, and Institutional Change 1 Chapter 1. Introduction 3 Economic Development and Critical Transitions 3 Brazil: This Time for Real? 7 A Sketch of the Conceptual Framework 14 Analytical Narratives and Economic Development 16 Road Map for the Book 19 Chapter 2. A Conceptual Dynamic for Understanding Development 24 Beliefs, Leadership, Dominant Network, and Windows of Opportunity 24 Difference in Difference in Changing Beliefs 28 Overview of Dominant Network, Beliefs, and Institutions in Brazil from 1964 to 2014 33 1964-1984 33 1985-1993 36 1994-2014 38 Summary 39 Part II. Introduction to the Case Study of Brazil, 1964-2014 41 Identifying Beliefs 45 Appendix: A Primer on the Brazilian Political System 50 Chapter 3. From Disorder to Growth and Back: The Military Regime (1964-1984) 54 From Chaos to a Short Period of Order 54 From Order to Unsustainable Growth 59 The Miracle Fades 64 Back to Disorder 67 The Decline of Developmentalism 70 Chapter 4. Transition to Democracy and the Belief in Social Inclusion (1985-1993) 71 A New Belief Emerges 71 The Transition to Democracy 72 Codifying Beliefs: The Constitution of 1988 76 The Constitution-Making Process 78 The Constitution's Delegation of Powers to the President 87 Back to Uncertainty and Chaos 90 Failures of the Brazilian Economic Plans before the Real 91 The Collor Government: Great Hope, Huge Disappointment 93 Chapter 5. Cardoso Seizes a Window of Opportunity (1993-2002) 97 The Real Plan 99 Early Institutional Deepening: Constitutional Amendments 103 Coalition Management under Cardoso 107 Asserting Fiscal Control over States 108 Staying the Course against the Early Opposition to the Real Plan 110 Sustaining Stability in the Face of External Shocks 116 Cardoso's Second Term: Combining Macro Orthodoxy with Social Inclusion 117 The Reassertion of Presidential Fiscal Authority 119 Conclusions 120 Chapter 6. Deepening Beliefs and Institutional Change (2002-2014) 122 The Uncertain Transition 122 Continuity in Change 126 Deepening the Social Contract 128 Checks and Balances vs. Strong Presidential Powers 138 The New Economic Matrix and Dilma's Policy Switch 150 Beliefs? Really? ... Really! 154 The Messy Process of Dissipative Inclusion 161 Conclusion 165 Part III. A General Inductive Framework for Understandin Critical Transitions 169 Chapter 7. A Conceptual Framework for Understanding Critical Transitions 171 Understanding Critical Transitions 172 How Does Our Framework Fit in the Literature? 173 The Building Blocks of Our Conceptual Framework 176 Windows of Opportunity 176 Dominant Network 177 Beliefs 180 Leadership 186 Institutions 189 Economic and Political Outcomes 190 Dynamics 191 Argentina: An Illustrative Use of the Framework 199 The Camelot Years: 1912-1930 200 Electoral Fraud and the Rise of Peron: 1930-1946 201 Instability Is the Rule: Oscillations between Populism and Military Rule: 1946-Present 204 Concluding Remarks 207 Chapter 8. Conclusion 209 Better and Worse at the Same Time 210 Assessing the Framework 214 Brazil and the Critical Transition 216 Afterword 221 References 227 Index 243

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