Abstract

The case of port modernization reform in Brazil encapsules the problems Brazilian reformers face. Although reform legislation was passed in 1993 (Law 8.630/93), many obstacles remain for full implementation of its provision. This article focuses on how business attitudes and actions deferred reform, and demonstrates how business is unable to contribute to reform implementation because of institutional obstacles and collective action problems. It then suggests a mechanism to overcoming these difficulties; specifically, it examines the evolution of corporatism and the value of constructing democratic close-knit policy communities meeting the needs of each sector. The empirical work is complemented with an unusual combination of three theoretical approaches to explain the political economy of institutional modernization: institutional economics as developed by Douglass North, the logic of collective action as elaborated by Mancur Olson, and policy network analysis as developed by Marsh and Rhodes, Jordan and Richardson.

JEL Classification: P11; R10.