Public Law and Economics: Economic Regulation and Competition Policies
1st June – 30th June 2017
Food and Justice: Ideas for a new global food agenda?
5th November – 15th December 2016
Capital Accumulation, Production and Employment: Can We Bend the Arc of Global Capital Toward Justice?
15th May – 15th July 2016
The European Crisis
1st October – 1st December 2015
Ideas Towards a New International Financial Architecture?
15th May – 20th July 2015
Greece and Austerity Policies: Where Next for its Economy and Society?
20th October – 21st December 2014
Is a more inclusive and sustainable development possible in Brazil?
5th May – 31st August 2014
Historically, changes in the orientation and the scope of the Brazilian government interventions have been associated with deep economic and social transformations. In the 1960s and 1970s, the economic outcomes were decisively affected by militarism that turned out to reinforce economic growth with social exclusion. It also led to increasing productive internationalization where key agents have been the transnational corporations from many developed countries. However, the so-called Brazilian model of development led to further concentration of income, wealth, and land ownership. As Celso Furtado pointed out, it was a false modernization as it benefited only a minority reinforcing the structural heterogeneity and inequality. After the 1970s, questions have been raised about the pattern of Brazilian industrialization that led to failed expectations. Those millions of Brazilians that had hoped for a fair and sustainable economy and society were disappointed by stagnant incomes and higher inflation.
Since the 1990s, Brazil has been subject to a new dependency where financial capital tends to dominate social and economic dynamics in a historical setting where the redefinition of the elites is part of the overall financialization process. Consequently, as of the early 2000s, Brazil has been considered as a promising emerging economy by global institutions and investors. From 2000 to 2008, the expansion of the BRICS – Brazil, Russia, India, China and South Africa—benefited from the combined commodity and credit cycle. During this period, Brazil experienced high rates of economic growth and was able to promote the inclusion of large portions of the population in the financial, labor and goods markets. As a result, the economy has experienced near full employment during the two years prior to the financial crisis. Income inequality dropped and inflation was kept under control. Interest rates trended downward. However, external imbalances grew and the manufacturing share of output declined while exports have been mainly driven by commodities. In this setting, the newly discovered underwater oil reserves are a major opportunity and challenge: whereas they can provide funds for investing in education and health services, they also raise the prospect of a possible Dutch disease.
Following the global crisis, Brazil has been seriously affected by the decline of commodity prices. In the last decade, Brazil did not improve key structural features of its economy leading to a sustainable business environment. The lack of long-term investments in infrastructure, for example, is part of the scenario that dampens the expectations around the sustainability of economic growth and social inclusion. As of 2012, only 1.5% of Brazil’s GDP goes on infrastructure investment from all sources, both public and private. To catch up, Brazil would have to triple its annual infrastructure spending for the next 20 years (The Economist, 28th September 2013)
In the aftermath of the global crisis, government intervention have supported aggregate demand and supported social inclusion. However, there are signs that the speed of the consumption and investment growth has been diminishing in a scenario characterized by inflation pressures, lower expectations of bank profitability and a diminishing rate of job creation, among other issues. Considering the global economic integration, Inflationary pressures have put on pressure on domestic interest rates which attract “hot money” from international “carry-trade” operators and finance. Indeed, this attraction turns out to be considered necessary by the Brazilian government in order to address the trade deficit but renders the economy vulnerable to sudden changes in investor sentiment.
In this context, the long term sustainability of development, growth and social cohesion is called into question.