The paper discusses the normative principles on which Brazilian policies towards
foreign direct investment should be bared. It starts from considerations about global
trends regarding world industrialization and trade – especially as connected with new technological
developments – and seeks to identify some crucial elements in the relationship
between Brazil and the world economy to be shoped by multinational corporations. Next
the paper deals with issues related to market access and technological transfer emphasizing
the importance of foreign firms for the future of Brazilian industrialization and export
performance.

JEL Classification: F21; L52.

This paper argues that the establishment of a safeguards code is one of the basic
issues to be faced by the present GATT round of negotiations. Section II discusses the role
of safeguards measures as instruments of protection, shows the problems that arise from the
lack of a code on such matter, and indicates the feasible options for regulation. Section III
analyses the operation of the antidumping and subsidies codes during the eighties, with emphasis
on the impacts of the actions taken by other countries against Brazilian exports, and
reveals the interplay of these codes with other instruments of protection used by developed
countries. Section IV summarizes the main points of the article.

JEL Classification: F13.

This article firstly analyses the antikeynesian features of “IS-LM” model as developed
by Hicks, as well as the extensions of this model in the version of Pigou and Modigliani.
In a second stage, it analyses the internal inconsistencies of the model, as pointed out
by Hicks himself, when it fits together a flow relation which is expressed in the IS curve with
a stock or balance sheet relation, as expressed by the LM curve.

JEL Classification: B21; E12.

This essay is about the present crisis of the institutions, structures, and policies
that made possible the remarkable growth of the capitalist world economy for more than
three decades following World War II. It deals with the weakening of the dollar, instability of
the international financial system, extreme indebtedness of countries, firms and governments,
and deterioration of institutions like the IMF and GATT. We maintain that the present predicament
also involves a crisis of the general mechanisms of capitalist regulation, i.e. the
law of value and its pseudo-substitutes, such as state intervention and oligopolistic administration.
In sum, we argue that the crisis that capitalism faces at the present time is general
– economic, political, and institutional – and that it results from the same mechanisms which
stimulated rapid growth in previous decades. In this sense, the present imbroglio is a kind of
“auto-immune” response, or in other words, it is due to blockage of the sanitizing action of
Schumpeter’s “creative destruction”.

JEL Classification: P10; D46.

It is widely known that in Brazil, agricultural! growth and modernization are
taking place together with a substantial “liberation” of the rural workforce. According to
evaluations based on the neoclassical doctrine, this is due to a severe distortion of relative
factor prices. Artificially cheap equipment and “expensive” labor have favored a large scale
substitution of the former for the latter. Thus, workers are being driven out of the farms at
a faster rate than that allowed by the creation of jobs in the rest of the economy. To correct
this situation, it would be necessary to eliminate the factor price distortions. The paper
argues that these evaluations are mistaken. They ignore the real nature of the process that
led to the adoption of mechanical technologies and to a growing “liberation” of manpower
from rural areas; the phenomenon is considerably more complex than what is implied in the
substitution of equipment for labor along an isoquant exhibiting substitutability. It argues,
furthermore, that the substitution of machinery for labor would not be reversed by the mere
adoption of a policy eliminating the “distortion” in factor prices.

JEL Classification: R23; Q12; J43.

From the viewpoint of developing countries the so-called conventional debt
strategy is clearly unsatisfactory, mainly because it underestimates the dimension of the crisis
and the domestic costs of the adjustment imposed on debtor countries. New private
loans, which are anyway more and more difficult to obtain, wouldn’t be a solution, in the
sense that they would increase a debt that is already extremely high. Some mechanisms to
reduce the stock of external debt have been introduced in recent rescheduling agreements
with creditor banks, such as debt-equity swaps, buybacks, and the exchange of part of the
debt for long-term bonds. However, for many countries, these market instruments will not
provide a sufficiently large reduction of the burden of financial foreign transfers. Therefore, it is necessary to arrive at an encompassing and lasting solution to the external debt problem,
through the design of an adequate institutional and legal environment that could provide
more support and additional guarantees to the implementation of debt reduction schemes.

JEL Classification: F34; F63.

This paper analyses the impacts of ongoing technological innovations (particularly,
in microelectronics) on the future of the world economy. The author argues that
service-intensive activities will become increasingly important, and the world economy will
reach “network characteristics “, with a much higher degree of interdependence than ever.
The technical feasibility of worldwide integration, however, will not necessarily translate
itself into economic integration given the resistance of nationalist and protectionist forces.
And the disarray of the international financial system will tend to foster these forces. Against
this background, the options for Brazil vis-à-vis the worldwide integration process are also
discussed.

JEL Classification: F02; L80.

This paper presents a synthesis of Hyman Minsky’s basic thought about capitalist
instability identifying it with the Keynes’ The General Theory. It stands out especially
– focusing the Minsky’s book John Maynard Keynes (1975) – the importance of financial
relations on the capitalist accumulation process like this author conceives them.

JEL Classification: B22; E12.

This piece tries inconsistencies in the mainstream view that in 1987 there was
a significant improvement in workers’ wages. Using data from PNAD and considering the
real variation of the minimum wage we show that depending on the deflator, inequality and
poverty could be either higher or lower in 1987 than in 1985.

JEL Classification: J31; I32.

Statement by President José Sarney