Chapter 2: Neomonetarist dreams and realities: a review of the Brazilian experience
Alfredo Saad-Filho and Lecio Morais* This chapter reviews the performance and changing structure of the Brazilian economy during the 1990s. This was a remarkable decade, partly because of the economy’s dismal growth rates,1 and partly because of the changes in the system of accumulation.2 The most important change was the abandonment of import-substituting industrialization for a new system of accumulation, based on the microeconomic integration of Brazilian industry and ﬁnance into transnational capital. There were two main reasons for this change. First, in the late 1980s most analysts argued that Brazilian import-substituting industrialization faced three insuperable problems: the ﬁscal crisis of the state; the perceived ineﬃciency of the manufacturing, service and ﬁnancial sectors; and the continuing diﬃculty of creating a dynamic national system of innovation. As a result, economic growth rates tended to decline, and inﬂation to accelerate, until the accumulation process was largely blocked after the 1982 international debt crisis.3 Second, in the early 1990s a new consensus gradually emerged across the Brazilian elite. It was argued that the neomonetarist economic policies associated with the Washington Consensus and the predominance of ﬁnance over industrial interests provided the best, or even the only, prospect of long-term economic growth. This strategic shift was validated by strong pressure from the Washington institutions and foreign and Brazilian transnational capital, and by the seemingly outstanding economic performance of Argentina, Mexico, South Korea and other countries. This policy shift was contingent upon substantial inﬂows of foreign goods, services and ﬁnance....
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