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The Economies of Argentina and Brazil

The Economies of Argentina and Brazil

A Comparative Perspective

Edited by Werner Baer and David Fleischer

This book compares the successes and failures of the development and growth processes of Argentina and Brazil. It provides important insights into the different performances of these economies through a series of comparative essays written by Argentinian and Brazilian economists.

Chapter 14: Two Decades of Privatization in Brazil

Armando Castelar Pinheiro

Subjects: development studies, development economics, economics and finance, development economics


Armando Castelar Pinheiro 14.1 INTRODUCTION For political scientists, the many privatization programs around the world in the late twentieth century can be grouped into three categories: systemic, tactical and pragmatic.1 Initiatives in the first group have deep, ample objectives, being intended to reshape economic and political institutions, as was the case in Chile, the United Kingdom and New Zealand. Tactical cases are those in which privatization is aimed at the short-term objectives of political actors, such as political parties and interest groups. Pragmatic privatization, in turn, tends to suffer less influence from ideology or politics, being only one of a number of alternatives the bureaucracy deems adequate to further social objectives. It is not straightforward to say in which category Brazilian privatization fits best. Sprawling over two decades, with total revenues of close to US$83 billion and almost 170 state-owned enterprises transferred to the private sector, it is undeniable that privatization has substantially changed the country’s economic and political landscapes. In 1996–98, in particular, when ports, railways, roads, telecommunications and electricity were transferred to private hands, the state substantially reduced its weight in the economy, allowing for the establishment of new national and foreign players, with deep implications for the way product, labor and political markets operate. Yet, as we argued elsewhere (Pinheiro and Giambiagi, 1999), privatization in Brazil was above all a pragmatic response to short-term macroeconomic problems, arising mainly from the state of disarray of the country’s fiscal accounts. It did not, in this sense, differ...

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