Vol. 12 No. 4 (1992): Oct-Dec / 1992

Vol. 12 No. 4 (1992)

Oct-Dec / 1992
Published October 1, 1992


Homenagem a Fernando Fajnzylber
Luiz Carlos Bresser-Pereira
Brazilian Journal of Political Economy


Industrialization in Latin America: from the “black box” to the “empty mailbox”
Fernando Fajnzylber
Brazilian Journal of Political Economy

In this paper the author offers an alternative development strategy to the previous
import substitution inner oriented, state led one, but also to the “new orthodoxy of the 1980’s”-
the neoliberal approach. This alternative is based on the experience of European countries and
particularly of the Asian Tigers, that he calls GEICs (Growth with Equity Industrializing Countries).
These countries were able to develop combining high rates of growth with a reasonable
distribution of income. This “mail box” is void in Latin America. If we build a two entry matrix
having in the lines the growth rate (low or high) and in the colons the degree of equity (bad or
reasonable), and we plot the Latin American countries in this matrix, the box “high rate of
growth-reasonable degree of equity” will be void. If Latin America is able to fill this box, savings
will increase, technical progress will be accelerated, growth will be resumed.

JEL Classification: O25; L52.

Inflationary acceleration, financial instability and internal and external indebtedness
Alexandre Schwartsman
Brazilian Journal of Political Economy

IWe provide here a model that attempts to explain how the financial circuit in
Brazil became an outstanding locus of wealth valuation. It shows that its special character
is due to a peculiar institutional arrangement that allows the public sector – the main financial
agent – to operate with negative spread. Then, inflationary shocks can produce very
strong movements of private sector portfolio, between indexed and non-indexed bonds,
which can deepen the negative spread. This is the reason why the financial circuit is a source
of wealth valuation, since this negative spread is appropriated by the financial speculators.

JEL Classification: H63.

Development, distribution of income and foreign capital: a comment on ECLAC in the 1950s
Renato Perim Colistete
Brazilian Journal of Political Economy

This article discusses the ECLAC’s approach on the role of foreign capital in the
industrialisation of the Latin America during the fifties. The first section provides a synthesis
of Eclac’s vision on the structural changes in the main Latin American economies. The
second section shows how the international capital was understood by “cepalinos” thinkers
as an alternative way of financing development, in opposition to the radical schemes that
were proposed by the nationalists and the left. The concluding section summarizes the main
points of the paper.

JEL Classification: O40; B22.

State and development in the 90s: challenges of the institutional reform
Fernando Rezende
Brazilian Journal of Political Economy

Up to now the claim for deep institutional reforms in the Brazilian economy did
not lead to major changes. The consensus on broad issues, such as less government interference
and control, has proved not to be sufficient to give more impetus to these reforms over
the nineties. It is intended to summarize some basic questions, which might help to further
appraisal of the chances to solve the conflicts of interest in due times. The divergences, in
many cases, are more a matter of time and degree than of substance. For that matter, it is
pointed out that a previous agreement on some basic principles, alongside the propositions
advanced by Italian writer Ítalo Calvino for the next millennium, will be of great help.

JEL Classification: H11; O10.

A structuralist analysis of inflation and stabilization
Edward J. Amadeo, José Márcio Camargo
Brazilian Journal of Political Economy

This paper develops a model in which the distributive conflict between capital
and labor is the driving force which generates inflationary pressures in a market economy. In
the model the rate of inflation is a function of the capacity of firms to pass increases in costs
to prices and of the relative power of workers and employees associations in the process of
collective bargaining. One of the main results of this analytical framework is that the structure
of the capital/labor relations in a country, the process of collective bargaining and the
structure of unions organizations are important determinants of inflationary pressures. As a
result, institutional reforms which promote cooperation on capital/labor relations are of great
importance in stabilization policies, if the social costs of stabilization are to be minimized.

JEL Classification: E31; J52.

Private investment in Latin America
Eliana Cardoso
Brazilian Journal of Political Economy

This paper studies investment in Latin America and explores the relationship of investment with growth, exchange rates and the terms of trade. It addresses the theoretical issue of the relationship between the real exchange rate and the real price of capital with a model of a small open economy with four assets. It discusses the dynamics of both the real price of capital and the real exchange rate in response to different shocks, including a change in monetary policy, an increase in external interest rates and a deterioration of the terms of trade. In the model (with a nominal exchange rate rule fixed by the central bank) a deterioration of the terms of trade leads to an immediate decline of the real price of capital, followed by a depreciating real exchange rate while the real price of capital slowly recovers. The paper explores the determinants of investment in Latin America. The regressions use quadrennial panel data for the period 1970-1985 in Argentina, Brazil, Chile, Colombia, Mexico and Venezuela. Together, these six countries account for 86 percent of the total GDP of the region. The decline in private investment shares in Latin America during the 1980s seems to result from the deterioration in the terms of trade, from the decline in growth (resulting from adjustment programs designed to reduce current account deficits), from a reduction in complementary public investment, from increased macroeconomic instability, and from a large stock of foreign debt. The real exchange rate and the real rate of depreciation have no significant role in the determination of private investment.

JEL Classification: E22; F31.

Monetary and fiscal reform to combat inflation in post-World War II Japan (1945-1951)
Silvio Yoshiro Mizuguchi Miyazaki
Brazilian Journal of Political Economy

This paper analyses the Japanese inflationary process occurred in the period
after the World War II, between 1945-1950, its causes and the policies of stabilization, monetary
and fiscal reforms. Initially, it analyses the factories that increased the price level. The
measures adopted to revert this process were divided into two subperiods: phase 1 (between
1946-1948) and phase 2 (between 1949-1951). Those economic policies and reforms resulted
in an economic stabilization.

JEL Classification: E31; N15.


The coordination of economic policies in the Common Market of the South – Mercosur
Olavo Cesar Rocha da Silva
Brazilian Journal of Political Economy

Coordination of economic policies among the countries participating in the
Common Market of the South (Mercosur) – Argentina, Brazil, Paraguay and Uruguay is
discussed, emphasizing exchange policies and the relationship to reginal monetary integration.
After dealing with terminology, coordination of exchange policies is examined more
specifically, taking into account that monetary integration implies some level of rigidity in
exchange rates among regional countries and of convertibility or regional moneys. Finally,
suggestion is made of possible steps to progress in coordination among Mercosur countries.

JEL Classification: F15; F55

The currency board: an independent issuing institution
André Lara Resende
Brazilian Journal of Political Economy

A successful stabilization program is a harmonic set of structural reforms. Fiscal
equilibrium is not a sufficient condition. It is necessary to reestablish monetary credibility.
Three alternatives to establish a monetary reference based on a foreign currency are
examined. A new currency issued by an independent institution fully backed by an internationally
accepted reserve currency is the alternative proposed. It is argued that the institution
responsible for the issuance of the new currency should be based on the experience of
Currency Boards. Overvaluation of the currency due to residual inertial inflation is a frequent
problem. The gradual introduction of the new convertible currency is proposed as an
attempt to reduce the degree of reference to past inflation in price formation. The risks
associated with a period of parallel circulation of two currencies are examined. Finally,
some of the arguments against such kind of monetary reforms are briefly analyzed.

JEL Classification: E52; E58; E42; E31.

Graphical interpretation of adjustment program costs
Jairo Abud
Brazilian Journal of Political Economy

This work is based on a Bresser-Pereira’s paper, in which he proposes to represent
the liquid costs of an economic adjustment applied upon a country. For that study he
used a graphic tool. Generally speaking, we may say that there are two situations: the first
one occurs when the country ‘s government decides to apply the adjustments and reforms
as soon as distortions appear. The second one happens when the government, in spite of the
evidences, muddling through reforms, waits for a society consensus. To illustrate this two
different cases, Mexico and Argentina were chosen. Although the graphic tried to show the
transitional costs of adjustment, it is possible to deduce other interesting things – basis of
this work.

JEL Classification: E31.

The modernization and deconcentrating of land in Mato Grosso agriculture: 1970/85
Maria Aparecida Anselmo Tarsitano
Brazilian Journal of Political Economy

Aiming the study of the evolution of the characteristics of the agricultural production
in Mato Grosso and Mato Grosso do Sul, a dynamic analysis was made by using
the main components method, with 26 variables, related to land tenure and use, technology,
capital, employment and labor relations. Data obtained from agricultural census of 1970,
1975, 1980 and 1985, for 13 microregions of both States. All microregions presented modernization
besides a reduction on land concentration and familiar labor force participation.

JEL Classification: Q15; Q12.


Rumo ao modelo de competição vitorioso nos países desenvolvidos
Brazilian Journal of Political Economy

Documento, a partir de quarto capítulo, aprovado pelo IEDI - Instituto de Estudos para o Desenvolvimento Industrial, São Paulo, junho de 1992. Esse instituto reúne as principais empresas industriais nacionais, de forma que este documento é representativo da sua visão dos problemas nacionais