Abstract
This chapter analyses the demise of the Brazilian developmental state. It argues that Dilma Rousseff’s deposition in Brazil in 2016 is a result of the financial sector dropping out of the coalition, that had promoted such a U-turn in Brazilian politics, and then proceeding to consolidate a project for economic austerity. It claims the focus on the role played by coalitions in sustaining—or downplaying—developmental strategies is pivotal to explain the political downturns and institutional changes, a feature often marginalized in VoC mainstream literature. First, it elucidates the process of structural change that led the financialization logic to filter into the Brazilian economy, with decisive consequences on the influence of the banking and finance sector on the country’s politics. Then, it analyses Worker’s Party governments agenda to fight inequality based on full employment and the expansion of internal productive capacities, in which the State fulfilled the role of key coordinator. Rousseff, in particular, challenged the interests of financial capital in order to promote this developmental agenda. By doing so, and failing to ensure that her electoral base understood the efforts to promote structural change, the president lost popular support and lost ground to sectors linked to big capital, with media and the legislative and judicial branches support, to build the narrative that the government was incompetent, technically irresponsible and populist.
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Notes
- 1.
The 4th International conference on The Role of State in Varieties of Capitalism (SVOC) entitled “Uneven Development, Inequalities and the State” was organized by the Institute of World Economics of the Centre for Economic and Regional Studies (IWE CERS—belonging back then to the Hungarian Academy of Sciences) and the Center for European Neighborhood Studies (CENS) Central European University on 29–30 November 2018 in Budapest.
- 2.
Meaning “anti-PT”; political stance contrary to the Partido dos Trabalhadores, or PT, the Brazilian Workers’ Party; Translator’s note.
- 3.
It should be noted that the Executive Branch in Brazil is in fact located in a palace, the Palácio do Planalto.
- 4.
According to Epstein (2005: 3), “financialization means the increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies”.
- 5.
Following the analytical framework proposed by Hall and Soskice (2001), many other attempts to build a typology were made, in order to encompass either core countries whose economic institutions is not in accordance to the LME/CME duality, or peripheral economies, whose model of development is not considered efficient.
- 6.
On the wake of the Brazilian exchange rate crisis in 1999, at some point Brazil’s Central Bank fixed the Selic rate in 40%.
- 7.
In the beginning of Lula’s first term, in 2003, the Selic rate was 25%. When Lula was about to leave office, the Selic rate had fallen considerably, but it was still operating on high levels, at 10.75%.
- 8.
The so-called New Macroeconomics Matrix is a set of economic policies put forward during Rousseff’s first term (2010–2014) involving fiscal expansion, exchange rate devaluation and tax exemption. The term was coined by Mário Holland, the head Economic Policy Secretariat (Carvalho 2018).
- 9.
For an account of June 2013 protests, see: Bringel (2016).
- 10.
‘Paying for the duck’ is a Brazilian idiomatic expression that means ‘unduly paying for something’ Translator’s note.
- 11.
See: Power (2010).
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Index: Lula (Luiz Inácio Lula da Silva); Dilma Rousseff; Brazil; developmental state; democracy; coalitions; financialization; banks.
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Ribeiro, A.O., da Silva, R.R.M. (2021). The Demise of Brazilian Developmental State: Political Constraints and the Role of Finance. In: Gerőcs, T., Ricz, J. (eds) The Post-Crisis Developmental State . International Political Economy Series. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-71987-6_14
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