Sobering up and Going Global: Brazil's Progress from Populism and Protectionism

VER the course of the last two decades, Brazil has made an impressive progression in terms of its economic policy and performance.By the early 1980s, the "Brazilian Miracle" was decisively over, and the "country of tomorrow" was reeling from a cluster of severe economic problems, including rising inflation, deepening balance of payments problems, sluggish growth, and crippling external debt.In 1985, the combination of economic problems contributed to the end of the military regime that had overseen the "miracle years."The miracle was premised on strong state-leadership and import-substitution-industrialization (ISI), but by the end of the dictatorship, it was clear that this basic formula had to change.Unfortunately, the new democracy also struggled initially to develop a coherent approach to solving the country's deepening economic problems.The election of Fernando Collor in 1990 did finally usher in a new direction as Collor embraced neoliberal economic reforms, especially privatization and trade liberalization.Nevertheless, the transition was anything but smooth or consensual, and the resulting political turbulence did little to resolve the economic crisis.In fact, Brazil's political and policy performance was so erratic that the Economist magazine observed that the county's problems were the result of it being "drunk, not sick."'As of 2008, the situation has changed dramatically.Brazilian economic and social policy is widely praised for its stability, innovativeness, and adherence to prudent macroeconomic principles.And though Brazil's economic performance continues to lag behind the region's leaders, it is dramatically improved relative to its own past performance, with the trend pointing towards continued improvement.It is important to note that this dramatic change occurred under the government of Workers' Party President, Luiz Inacio Lula da Silva.The one-time socialist labor leader has eschewed populist or more radical leftist policies and instead has championed a reformist, moderate-left strategy premised on macroeconomic stability.Thus, Brazilian democracy has "sobered up"