The central hypothesis of this paper is that high income inequality in Latin
America contributes to intense political pressures for macroeconomic policies to raise the
incomes of lower income groups, which in turn contributes to bad policy choices and weak
economic performance. The paper looks in detail at one common type of policy failure: the
populist policy cycle. This particular type of Latin American policymaking, characterized by
overly expansionary macroeconomic policies which lead to high inflation and severe balance
of payments crises, has been repeated so often, and with such common characteristics, that it
plainly reveals the linkages from social conflict to poor economic performance.

JEL Classification: P16; O21; O11; D72; E31.

The debt crisis caused a major setback in Brazil’s economic development in
the 1980s. Stabilization policies based on contracting aggregate demand have produced an
overall stagnant economic performance that alternates periods of recession with periods
of growth cum rampant inflation. The attempts of adjustment have implied a near exhaustion
of the public sector finances and have added distortions in the pattern of financing the
economy. While the “transfer problem” can be potentially settled on the real side, on the
fiscal side obstacles are real and may indeed lead to stagnation in the 1990s. This paper suggests
a concerted action to promote growth; one that involves a stimulus to the production
of tradeables through an investments policy and a new approach to commercial and the
exchange rate policies, and a refunding of the domestic and the external debts of the public
sector to help solve the financial disarray of the Government.

JEL Classification: H63; H62; O40.

The Latin American economies have faced very different scenarios regarding
their access to external financial resources. Scarcity of funds during the 1950s, a substantial
increase in the supply of financial flows by private international banks during the 1970s,
and again a stage of restrictive conditions since 1982. The work looks at the external causes
that made possible these different situations linking them to the particular conditions taking
place in the developed countries. For example, the stagnation of industrial growth that took
place in these countries during the 1970s and the external deficit showed by the US economy
can help to explain the expansion in the supply of funds available to Third World countries
during that decade. On the other hand, the changes showed by the US economy since the
end 1970s can also help to explain the deep changes in the supply of funds available to Latin
America. Some references to the future are also attempted.

JEL Classification: F34; H63.

The article discusses the relationship between savings and economic growth, to
integrate the main contributions of the models based on the hypothesis of full employment
and those which assume the existence of idle capacity. The text develops a hybrid model to
show that the effectiveness of the policies depends on the real situation of each economy.
Thus, useful recommendations in a given context may be completely miscarrying in another
one. Having this theoretical framework as guidelines, it is presented three paradigmatic
cases and analysed the effects over investment expected in each different situation, as result
of official policies.

JEL Classification: O41; E21.

The pure theory of international trade is essentially a chapter of economics. It
does not take into account the role of the state. Yet this role is crucial in contemporary capitalism.
In the first section of this paper the basic trends of international trade are examined.
In the second section some theoretical aspects of the evolution of the theory of international
trade are discussed. The third section brings an analysis of the role of state in international
trade and technological development. The paper concludes underlining the need of “reintroducing
the state” into economics.

JEL Classification: F13; F10; O19.

This paper starts denying the optimist belief that growth alone will be able
to solve the employment problems of Brazil. Anyway, in the 80s growth was reduced in
Brazil due to the external pressure. But Brazil disposes of a huge internal market. In order
to resume growth what is necessary is a development strategy that preserves the natural resources
of the country. This strategy should avoid the opposite mistakes of “ecologism” and
“economism”.The essential task is to build a “development reserve” in order to avoid the loss
of resources, that may be originated from the sub or the super-utilization of resources. An
inventory of measures in this direction is presented in the final part of the paper.

JEL Classification: J22; J21; J64.

The paper criticizes the so-called dollarization of Brazilian economy. The argument
is based on Marx’s discussion of the functions of money. The instrument elected to act
as money needs to act as means of payment, i.e., must be used to pay for the commodities
been transactioned. The dollar cannot yet perform this function because it does not exist in
a volume sufficient to pay for the commodities been transactioned.

JEL Classification: B51; E51; E31.

This paper presents an analysis of the present public-sector financial crisis in
Brazil and the possible pathways to fiscal adjustment. It points out some important issues
involved in the design and implementation of the fiscal adjustment in the country which deserve
further research effort. The paper contains five sections. The first covers the origins of
the financial crisis that has been faced by the public sector. The role of the fiscal adjustment
in both macroeconomic stabilization and growth resumption is analyzed in the second section.
The third looks into the political economy of the fiscal adjustment, raising some issues
which helps to understand the difficulties which have been hampering an adjustment of the
magnitude that is required. In the fourth section distinct pathways to the fiscal adjustment
are explored, with emphasis on alternatives to the simple increase in the tax burden. The last
section presents some final comments.

JEL Classification: H63; H20.