An account of new developmentalism and its structuralist macroeconomics

This is a personal account of the definition of "new developmentalism" - a national development strategy alternative to the Washington consensus -, and of a "structuralist development macroeconomics": the sum of models that justifies theoretically that strategy. It is personal account of a collective work involving Keynesian, institutionalist and structuralist economists in Brazil that are forming a new school of thought in Brazil: a Keynesian-structuralist school. It is Keynesian because it emphasizes the demand side or the investment opportunities' side of economic growth. It is institutionalist because institutions obviously matter in achieving growth and stability. It is structuralist because it defines economic development as a structural change from low to high value added per capita industries and because it is based on two structural tendencies that limit investment opportunities: the tendency of wages to grow below productivity and the tendency to the cyclical overvaluation of the exchange rate.

Structuralist macroeconomics and the new developmentalism

This paper first presents some basic ideas and models of a structuralist development macroeconomics that complements and actualizes the ideas of the structuralist development economics that was dominant between the 1940s and the 1960s. A system of three models focusing on the exchange rate (the tendency to the cyclical overvaluation of the exchange rate, a critique of growth with foreign savings, and new a model of the Dutch disease) shows that it is not just volatile but chronically overvalued, and for that reason it is not just a macroeconomic problem; as a long term disequilibrium, it is in the core of development economics. Second, it summarizes "new developmentalism" - a sum of growth policies based on these models and on the experience of fast-growing Asian countries.

The new developmentalism and conventional orthodoxy

O Fracasso das Políticas e Reformas Propostas por Washington e Nova York, Aqui Denominadas Ortodoxia Convencional , em Promover a Estabilização e o Crescimento Econômico na América Latina Abriu Espaço para o Surgimento de uma Estratégia Nacional de Crescimento, a Qual Chamamos Novo-Desenvolvimentismo . Capitalismo, Desenvolvimento Econômico, Nação e Estado-Nação são Conceitos Históricos Interdependentes. o Desenvolvimento do Capitalismo Depende de uma Estratégia Nacional que Precisa de uma Nação Capaz de Formulá-La. o Antigo Desenvolvimentismo Promoveu o Crescimento na América Latina Desde os Anos 1930, Mas nos Anos 1980 Ficou Ultrapassado. Diferentemente, o Novo Desenvolvimentismo é Orientado para as Exportações e Rejeita o Protecionismo. Ambicionando um Mercado e um Estado Fortes, Apóia uma Disciplina Fiscal que Vise uma Poupança Pública Positiva. é Nacionalista, Porque Visa o Interesse Nacional e Rejeita as Pressões Vindas do Norte, Mas é um Nacionalismo Liberal, Social e Republicano. Diverge Fortemente da Ortodoxia Convencional, Porque Rejeita a Estratégia de Crescimento com Poupança Externa e a Abertura da Conta Capital, Afirma que a Taxa de Cambio Pode e Deve ser Administrada, e que é Necessária uma Estratégia Especial para Combater Taxa de Juro Alta e a Moeda Apreciada que Mantêm a Economia Brasileira Instável e Semi-Estagnada.

From old to new developmentalism in Latin America

O fracasso do consenso de Washington e das políticas macroeconômicas, baseadas em altas taxas de juros e taxas de câmbio não-competitivas para promover o crescimento da economia, levou os países da América Latina a formularem estratégias nacionais de desenvolvimento. O novo desenvolvimentismo é uma estratégia alternativa não apenas à ortodoxia convencional, mas também ao antigo nacional-desenvolvimentismo latino-americano. Enquanto o antigo nacional desenvolvimentismo era baseado na tendência à deterioração dos termos de troca e, adotando uma abordagem microeconômica, propunha planejamento econômico e industrialização, o novo nacional-desenvolvimentismo pressupõe que a industrialização foi alcançada, apesar de em diferentes estágios em cada país, e argumenta que, para assegurar rápidas taxas de crescimento e o catch up, a tendência que deve ser neutralizada é a da sobrevalorização da taxa de câmbio. Contrariamente à economia convencional, um estado capaz continua sendo o instrumento chave para assegurar o desenvolvimento econômico, a política industrial continua sendo necessária; mas o que distingue a nova abordagem é principalmente o crescimento com poupança interna, ao invés de com poupança externa. Uma política macroeconômica baseada em taxas de juros moderadas e uma taxa de câmbio competitiva, e não altas taxas de juros e moeda sobreapreciada conforme recomenda a ortodoxia convencional.

Structuralist macroeconomics and new developmentalism

This paper, first, presents some basic ideas and models of a structuralist development macroeconomics that complements and actualizes the thought of structuralist development economics that was dominant between the 1940s and the 1960s including in the World Bank. The new approach focus on the relation between the exchange rate and economic growth, and develops three interrelated models: the tendency to the overvaluation of the exchange, the critique of growth with foreign savings, and a model of the Dutch disease based on the existence of two exchange rate equilibriums: the “current” and the “industrial” equilibrium. Second, it summarizes “new developmentalism” – a sum of growth policies based on these models and on the experience of fast growing Asian countries

The new developmentalism as a weberian ideal type

New developmentalism may be seen as a specific set of policies (a national development strategy), or as a broader the theory behind (structuralist development economics) and the corresponding developmental state. Seen in the later sense, as Weberian ideal type, this paper compares new developmentalism with old developmentalism and with liberal orthodoxy. This paper was written in honor of Roberto Frenkel, in 70 years Festrischt.

After the demise of neoliberalism but not of conservatism, a third developmentalism?

Neoliberalism and developmentalism are the two alternative forms of economic and political organization of capitalism. Since the 2008 global financial crisis we see the demise of neoliberalism in rich countries, as state intervention and regulation increased, opening room for a third historical developmentalism (the first was mercantilism, the second, Fordism). Not only because of major market failures, not only because the market is definitely unable to assure financial stability and full employment, an active macroeconomic policy is being required. Modern economies are divided into a competitive and a non-competitive sector; for the coordination of the competitive sector the market is irreplaceable and regulation as well as strategic industrial policy will be pragmatically adopted following the subsidiarity principle, whereas for the non-competitive sector, state coordination and some state ownership are usually more efficient. Besides, the fact that capitalist economies are increasingly diversified and complex is an argument against the two extremes – against statism as well as neoliberalism – in so far that they require market coordination combined with increased regulation. But the third developmentalism probably will not be progressive as was the second, because the social-democratic political parties are disoriented. They won the battle for the welfare state, which neoliberalism was unable to dismantle, but the competition of low wage developing countries and immigration continue to offer arguments to conservative political parties that defend the reduction of the cost of labor contracts or the or precarization of labor.

Reflecting on new developmentalism and classical developmentalism

This paper, first, distinguishes new developmentalism, a new theoretical system that is being created, from really existing developmentalism – a form of organizing capitalism. Second, it distinguishes new developmentalism from its antecedents, Development Economics or classical developmentalism and Keynesian Macroeconomics. Third, it discusses the false opposition that some economists have adopted between new developmentalism and social-developmentalism, which the author understands as a form of really existing developmentalism; as theory, it is just a version of classical developmentalism with a bias toward immediate consumption. Finally, it makes a summary of new developmentalism – of its main political economy, economic theory and economic policy claims

Por que novo-desenvolvimentismo?

This paper develops some general guidelines that should take part of a new view of development to Brazil, in opposition to the neoliberal project. This alternative, that is called "new developmentalism", should include sustained economic growth with social equity.

A Argentina depois da conversibilidade: um caso de novo-desenvolvimentismo?

This paper analyses the economic recovery in post-Convertibility Argentina. We try to identify if there are evidences to support the suggestion that Argentina could be an example of the so-called "new developmentalism".