Abstract
From a historical perspective, Eli Diniz and Luiz Carlos Bresser-Pereira show how the established contract between the private sector and the government came to an end since the end of import substitution industrialization and as a consequence of the reforms of the 1990s based on the Washington Consensus. The authors point out that a new national development strategy cannot be identified. Due to a subtle process of de-industrialization and extremely low growth rates in the 1990s, the political participation of industrialists became weaker as did their political influence. Since Lula’s election as president, in 2002, Brazil is going through a transition from an economic system ruled by the market to a system with stronger State control. To foster a long-term economic growth process, a national development strategy should be formulated jointly by the government and the industrial sector (as occurred between 1930 and 1980). Such a strategy has to respond to the national reality and be founded on solid fiscal health, low interest rates and a competitive exchange rate, without neglecting the issue of social justice.
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The clearest evidence of this political vacuum was the defeat of three of the main leaders of the fight for the democratic transition (Ulysses Guimarães, Mario Covas and Luiz Inácio Lula da Silva) in the presidential election of 1989, while a young and previously unknown politician, Fernando Collor de Mello, was elected.
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The “Pacote de Abril” was a package of laws enacted under President Ernesto Geisel through which the forthcoming elections would be influenced in favor of the military to ensure them an automatic majority in Congress. To this end, among others, the package established that one-third of the senators were to be determined by the President and the sparsely populated States would receive more votes in the Chamber of Deputies (Editors’ note).
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The breakup of the alliance between the industrialists and the military, and their alignment with the democratic forces was originally analyzed in Bresser-Pereira (1978). The Democratic-Popular Pact of 1977 that led the Brazilian democratic transition was formed then.
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Although some features of the import substitution strategy have been conserved, since 1967 Brazil engaged in a successful manufactured goods strategy. In 1965, exports of manufactured goods represented 6 % of total exports, in 1985, 66 %.
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The URV was a pure accounting currency, whose value was set at approximately US$1. It represented an index in the context of the fight against inflation and was the forerunner of the country’s present day currency, the Real.
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The IEDI was founded by private enterprises in the late 1980s and is considered a response to the economic instability, low investment rates and rising unemployment. The Institute is a part of the Brazilian corporatism tradition and emphasizes on political participation of the private sector. Today the IEDI is an industry-oriented and globalization-friendly think-tank (Editors’ note).
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Jorge Gerdau Johannpeter is Chairman of the Gerdau Group, a conglomerate that is active mainly in the steel and construction industries. He is currently one of Brazil’s most influential businessmen (Editors’ note).
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Benjamin Steinbruch is also one of today’s most influential industrialists in Brazil. The Vicunha Group he co-founded, is the largest textile manufacturer in Latin America. In the process of their privatization, he led the consortia that bought the Companhia Siderúrgica Nacional (CSN) and the Companhia Vale do Rio Doce (Vale). He is currently the director of CSN’s, one of the largest steel companies in the world (Editors’ note).
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These were followed by the election of Evo Morales in Bolivia (2005), Rafael Correa in Ecuador (2007), Tabaré Vasquez in Uruguay, Daniel Ortega in Nicaragua and Fernando Lugo in Paraguay (all three in 2008), and finally Mauricio Funes in El Salvador (2009). It is also necessary to mention the debatable defeat of Andrés Obrador in Mexico (2007).
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The initiative to create the IEDI came from Paulo Cunha, Eugênio Staub, Claudio Bardella and Paulo Francini, who at the time were among the most prominent businessmen of Brazil.
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Horácio Lafer Piva, economist from São Paulo, with many family ties at the political level, was FIESP’s youngest President.
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Armando Monteiro Neto, industrialist, lawyer and politician from Pernambuco, is currently Senator for his home State and member of the PT since 2003 (previously with PSDB and PMDB).
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The quality of the Economic Department also took another leap, now under the leadership of Paulo Francini, a businessman, expert in macroeconomics, with ample experience in political corporate participation since the 1970s.
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A dossier on this debate can be found at www.bresserpereira.org.br
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Editors’ note: The “Dutch disease” refers to an economic phenomenon, according to which there is an appreciation of the currency through foreign trade surpluses in one sector (raw materials), which, in turn, acts in detriment of other sectors (industry). The supposedly positive aspects of foreign trade surpluses thereby reverse into the opposite direction.
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Diniz, E., Bresser-Pereira, L.C. (2016). Industrial Entrepreneurs, Democracy, and Political Power. In: de la Fontaine, D., Stehnken, T. (eds) The Political System of Brazil. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-40023-0_11
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