Vol. 24 No. 2 (2004): Apr-Jun / 2004


Vol. 24 No. 2 (2004)

Apr-Jun / 2004
Published April 1, 2004

Article


Recent controversies on capital controls
Fernando J. Cardim de Carvalho, João Sicsú
Brazilian Journal of Political Economy
https://doi.org/10.1590/0101-31572004-1620

The efficacy of capital controls has been the object of renewed interest, especially in the aftermath of the Asian crisis of 1997. In particular, the IMF, that had decided to push for capital account convertibility in 1997, went through a change of mind of sorts, substituting the concern with the right sequencing of liberalizing reforms for the attempt to obtain immediate liberalization in developing countries. In the paper, it is shown that the theoretical debate around capital controls is in fact the same debate concerning financial regulation in general, opposing the Efficient Market Hypothesis to imperfect market hypotheses. It is also shown that the most recent empirical studies on the effects of capital account liberalization (and thus on the effects of keeping capital controls in force) do not have shown significant positive results in terms of most macroeconomic target variables, such as employment, growth, price stability, etc. These lack of definite results seem to suggest that liberalization efforts are mostly premature, moved by ideologically-founded pro-free market views rather than by empirical evidence.

JEL Classification: F38; F32; F40.


Foreign savings and macroeconomic performance: an analysis from a dynamic nonlinear model of capital accumulation and external indebtedness
José Luís Oreiro
Brazilian Journal of Political Economy
https://doi.org/10.1590/0101-31572004-1621

The objective of this article is to present a non-linear dynamic model of capital accumulation and external debt in order to evaluate the recently thesis defended by Bresser and Nakano that an excessive external debt in emerging countries – which is the result of large current account deficits – can produce not only an increase in external fragility of these economies, but also an economic stagnation, i.e. a permanent reduction in the growth rates of potential output. For this purpose, we will develop a dynamic model in which (i) an increase in the ratio external debt/GDP will produce a less than proportional increase in the rate of investment, since a fraction of the external finance will be used for the acquisition of non-reproducible assets like stocks and land; (ii) the country risk-premium is endogenous, being proportional to external debt as a fraction of GDP. In this theoretical framework, we will be able to show the existence of two long-run equilibrium: an equilibrium with a low external debt and a high degree of capacity utilization, and another equilibrium with a high external debt and a low degree of capacity utilization. Moreover, we also show that – for a certain set of parameters values – the equilibrium with high external debt is stable and in the neighborhood of this position the degree of capacity utilization and the ratio of external debt to GDP will both show a time path characterized by damped fluctuations.

JEL Classification: O11; E11; O41.


Deuda externa, crescimento y sostenabilidad
Roberto Frenkel
Brazilian Journal of Political Economy
https://doi.org/10.1590/0101-31572004-1622

The paper presents a model intended to define and discuss the sustainability of external debts in “emergent markets.” The first sustainability condition is the existence of a maximum in the debt-output ratio. With some simple behavior hypotheses it is shown that sustainability depends on the initial debt-exports ratio, the rate of growth of exports and the country-risk premium. An endogenous country-risk premium gives room for multiple equilibrium. The model allows the discussion of vulnerability vis-à-vis financial shocks and the propensity of the economy to jump to unsustainable paths. The first sustainability condition is not a stringent one. Two additional sustainability conditions are added: a positive rate of growth and a minimum in the domestic absorption-output ratio. The discussion of multiple equilibrium, vulnerability and the potential instability of sustainability is then extended.

JEL Classification: F34; F32.


The myth of convertibility
Luiz Gonzaga Belluzzo, Ricardo Carneiro
Brazilian Journal of Political Economy
https://doi.org/10.1590/0101-31572004-1624

A critique to the proposal of making the real convertible. The convertibility does not eliminate the hierarchy of currencies in the global space and risk premium paid by the non-convertible currencies.

JEL Classification: E50.


For a partially convertible currency: A critique to Arida and Bacha
José Luís Oreiro, Luiz Fernando de Paula, Guilherme Jonas C. da Silva
Brazilian Journal of Political Economy
https://doi.org/10.1590/0101-31572004-1623

The objective of this article is to present a non-linear dynamic model of capital accumulation and external debt in order to evaluate the recently thesis defended by Bresser and Nakano that an excessive external debt in emerging countries – which is the result of large current account deficits – can produce not only an increase in external fragility of these economies, but also an economic stagnation, i.e. a permanent reduction in the growth rates of potential output. For this purpose, we will develop a dynamic model in which (i) an increase in the ratio external debt/GDP will produce a less than proportional increase in the rate of investment, since a fraction of the external finance will be used for the acquisition of non-reproducible assets like stocks and land; (ii) the country risk-premium is endogenous, being proportional to external debt as a fraction of GDP. In this theoretical framework, we will be able to show the existence of two long-run equilibrium: an equilibrium with a low external debt and a high degree of capacity utilization, and another equilibrium with a high external debt and a low degree of capacity utilization. Moreover, we also show that – for a certain set of parameters values – the equilibrium with high external debt is stable and in the neighborhood of this position the degree of capacity utilization and the ratio of external debt to GDP will both show a time path characterized by damped fluctuations.

JEL Classification: E11; E43.


Economic development and the resumption of the classical approach to surplus
Franklin Serrano, Carlos Medeiros
Brazilian Journal of Political Economy
https://doi.org/10.1590/0101-31572004-1625

In this article we show how an analytical framework based on the classical surplus approach can be used to the understanding of some central matters of the economic development of the nations and of the Brazilian economy in the last decades, in particular. We start discussing the shortcomings of the traditional approach to development economics and the inability of the neoclassical approach to explain some of the more important stylized facts of the development process. We show how the scheme proposed can explain these facts and, in this perspective, what are the internal and external constraints to economic development. Finally, we illustrate our argument with a brief summary of our research on the recent development of the Brazilian economy.

JEL Classification: O11.


Gap between Public and Private Wages and Wages Determination in the Public Sector
Nelson Marconi
Brazilian Journal of Political Economy
https://doi.org/10.1590/0101-31572004-1626

This study verifies, first of all, the existence of segmentation between the public and private labour markets in Brazil by means of the analysis of the behaviour of employment and wages in those markets during the 1990’s, showing that the controlled wage gap between the workers of both sectors have increased in a manner favourable to civil servants in this period. Later on, the study analyses the factors that specifically influence the wage setting in the public sector, which would account for the existence of such gap, by means of a theoretical discussion followed by the application of econometric tests.

JEL Classification: J31; J45.


Productive accumulation and the contemporary capitalism
José Ricardo Tauile, Luiz Augusto Estrella Faria
Brazilian Journal of Political Economy
https://doi.org/10.1590/0101-31572004-1627

Virtuality, immateriality and the development of even more abstract forms of wealth are characteristics of contemporary capitalism. Nevertheless, the course of accumulation needs productive labor. The transformations hidden under these appearance forms are viewed in the light of Marx’s thought in three different ways. 1. The new forms of productive labor that challenge the distinction of productive and unproductive. 2. The transformation of productive capital through concentration, centralization and changing forms of competition. 3. The relationship of productive capital and finance capital, and the new role of money capital.

JEL Classification: F63; N10; P16.


Analyzing the economic impact of sustainable development programs in the Brazilian Amazon
Drew Nelson
Brazilian Journal of Political Economy
https://doi.org/10.1590/0101-31572004-1628

Over the last forty years, the Brazilian Amazon has been the object of many development and industrialization programs. The vast majority of those programs have been “mega-projects” implemented by the Brazilian federal government. Recently, several states have implemented their own style of economic development programs in the Amazon. These smaller scale “local” sustainable development programs offer policy makers an alternative to the “mega-projects.” This paper seeks to identify the strengths and weaknesses of each economic development model. Additionally, this paper provides an economic impact analysis of one “local” sustainable development project, Projeto Castanha-do-Brasil.

JEL Classification: Q01.