Brazil at Crossroads: A Critical Assessment of Developmentalist Policies

Brazil with its policies of combining growth with income redistribution gained high attention especially since the Global Financial Crisis. These policies often have been labeled as developmentalist. Now, with a deep economic crisis, the question arises how far developmentalist policies were responsible for this downturn. To address this question, we first deliver a more precise definition of different variants of developmentalism. Second, based on stylized facts of the Brazilian economy in the period of three successive leftist governments between 2003 and 2016, we classify relevant macroeconomic, social, and industrial policies. Thus, we can see that different types of developmentalist policies came to application to a certain degree, with the dominance of redistributional policies fostering domestic consumption. However, there were also orthodox policy elements to be found especially within macroeconomic policies and to a highly varying degree over time. Most remarkably, we found the later part of the period under analysis characterized by permanent changes in the policy mix, and a final and frustrated orthodox attempt to revert the crisis. We thus conclude that not only has developmentalism per se been a fallacy, but rather its lack of conceptual clarity at the theoretical level, and incoherent policy coordination at the policy level in the case of Brazil.