Por que o Brasil não precisa de política industrial

This article discusses the convenience of adopting industrial policy in Brazil. We argue that the success of East Asian countries, usually explained by industrial policy, is mainly result of horizontal policies. We also show that there are not theoretical or empirical foundations in most of the arguments used to justify industrial policy and that industrial policy must be motivated by market failures. We briefly discuss what market failures theoretically justify industrial policy, what the empirical relevance of these failures and what the most adequate instruments to be used in case of public intervention. From this perspective, we analyze the Brazilian industrial policy, such as described in Brasil (2003). Finally, we conclude that horizontal policies, besides to be less subject to the influence of self-interested groups, have more potential to foster Brazilian growth.

Inequality and economic growth in Latin

Latin America is the region that bears the highest rates of inequality in the world. Deininger and Squire (1996) showed that Latin American countries achieved only minor reductions in inequality between 1960 and 1990. On the other hand, East Asian countries, recurrently cited in recent literature on this issue, have significantly narrowed the gap in income inequality, while achieving sustained economic growth. These facts have triggered a renewed discussion on the relationship between income inequality and economic growth. According to the above literature, income inequality could have an adverse effect on countries’ growth rates. The main authors who spouse this line of thinking are Persson and Tebellini (1994), Alesina and Rodrik (1994), Perotti (1996), Bénabou (1996), and Deininger and Squire (1996, 1998). More recently, however, articles were published that questioned the evidence presented previously. Representatives of this new point of view, namely Li and Zou (1998), Barro (1999), Deininger and Olinto (2000) and Forbes (2000), believe that the relation between these variables can be positive, i.e., income inequality can indeed foster economic growth. Using this literature as a starting point, this article seeks to evaluate the relation between income inequality and economic growth in Latin America, based on a 13-country panel, from 1970 to 1995. After briefly reviewing the above articles, this study estimates the per capita GDP and growth rate equations, based on the neoclassical approach for economic growth. It also estimates the Kuznets curve for this sample of countries. Econometric results are in line with recent work conducted in this area – particularly Li and Zou (1998) and Forbes (2000) – and confirm the positive relation between inequality and growth, and also support Kuznets hypothesis.

Exchange rate: fix, float, or manage it?

The Exchange Rate is the Most Strategic of the Four Macroeconomic Prices. it Determines not Only Exports and Imports, But Also Real Wages, Consumption and the Savings Rate. Conventional Theory Holds That it is Impossible to Manage It, and That the Only Alternatives are to Fix or to Float It. the Experience of the East Asian Countries, That Use it Strategically, Demonstrates That This Claim is False.