Brazil’s liberal neo-developmentalism: New paradigm or edited orthodoxy?
Cornel Ban Department of International Relations, Boston University, MA USA
Is Brazil’s economic policy regime a mere tinkering of the Washington Consensus? The evidence suggests that Brazilian governments institutionalized a hybrid policy regime that layers economically liberal priorities originating in the Washington Consensus and more interventionist ones associated with neo-developmentalist thinking. To capture this hybridity, the study calls this regime ‘liberal neo-developmentalism’. While defending the goal of macroeconomic stability and sidelining full employment, Brazilian governments also reduced reliance on foreign savings and employed a largely off-the-books stimulus package during the crisis. Brazil experienced important privatization, liberalization and deregulation reforms, but at the same time the state consolidated its role as owner and investor in industry and banking while using an open economy industrial policy and a cautious approachto the free movement of capital. Finally, while conditional cash transfers fit theWashington Consensus, Brazil’s steady increases inhe minimum wage, industrial policies targeted at high employment sectors and the use of state-owned firms to expand welfare and employment programs better fit a neo-developmentalist policy regime. In sum, while the main goals of the Washington Consensus were not replaced with neo-developmentalist ones, Brazil’s policy regime saw an extensive transformation of policy orthodoxy that reflects Brazil’s status as an emerging power.
BRICs; Washington Consensus; neo-developmentalism; Brazil; macroeconomic stability; liberalism; Lula; Rousseff; Keynesian.
The BRICS Development Bank: A New Tool for South-South Cooperation?
Jan Schablitzki BPC Policy Brief-V.5N.1
The Sixth BRICS Summit, held in July 2014 in Fortaleza, Brazil, resulted in agreements to establish a New Development Bank (NDB) as well as a Contingent Reserve Arrangement (CRA). This Policy Brief discusses the impact of the NDB on the existing architecture of de-velopment finance, focusing on the bank’s potential contribution to the BRICS’ South-South cooperation. The first section outlines the BRICS countries’ rational for establishing the NDB. In the following section potential development paradigms that are likely to be adopted by the NDB are addressed. Since no decision has been taken on the bank’s future governance, this section will be based on the experiences from the BRICS’ national development banks. Once the NDB’s governance is agreed upon, it will impact whether and to what extent the new bank will cooperate with the existing international system of development finance. A third section discusses the NDB’s potential appeal for the Global South. The Global South shares with the BRICS a disappointment with the existing system, and connects specific hopes and expecta-tions with the foundation of the NDB. Examining the Banks effect on South-South cooperation, the section includes prospects on the Bank’s capital potential and by that its potential contribution to the prevalent demand for infrastructure financing in developing coun-tries. A final section summarises the points made and aims to put the present perceptions of the NDB in rather cautious perspectives.
FDI from BRICs to LICs: Emerging Growth Driver?
Montfort Mlachila and Misa Takebe IMF Working Paper
Despite the rapid increase in FDI flows to LICs, there have been relatively few studies that have specifically examined these flows. This paper attempts to partially fill the void by throwing light on one particularly dynamic aspect of global FDI—flows from Brazil, Russia, India and China (BRICs). The paper finds that official data sources undoubtedly underestimate the volume and scope of FDI flows as many small and medium-sized enterprises (SMEs) do not always register their investment. As a result, while it is difficult to estimate accurately the growth impact of BRIC FDI, there is case study evidence that it is increasingly significant. Second, while initial investment, mostly by state-owned companies, has often been destined for natural resource industries, over time, investment has been spreading to agriculture, manufacturing, and service industries (e.g., telecommunications). Third, FDI from BRICs flows into many non resource-rich countries in LICs and plays a significant role in growth in those countries.