브라질 경제: 정부의 실패인가? 시장의 실패인가?

Abstract

This paper discusses the Brazilian economic policies during the last 20 years

from the standpoint of what economic reasoning supported that kind of policies.

And we investigate whether these policy-decisions are based on the belief

in market mechanism or, on the contrary, on the idea that government can do

better than market. If the underlying logic of policy making was the latter, we

may conclude that the current Brazilian economic crisis is the outcome of government

failure.

The basic lines of economic policies in the 70s are: 1) promotion of deficit

financed growth and 2) acceleration of government led import substitution.

Motivated by the oil shock, the implementation of these policies were possible

only through increasing borrowings of recycled petro-dollars. Inflation and consequent

economic instability caused by the fiscal deficits and credit expansion

became a burden to persistant growth, while gains from these were insignificant.

The 1980s were marked by recurrent crises of debt and inflation. And economic

policies of the 80s focused on these two issues. Bacause of the requirement

to meet the debt services, external economic policy turned to making of

trade surpluses. And domestic economic policy was nothing but stabilization

program to control the increasing inflationary pressure. Policies of the 80s, as

those of the 70s, were inspired not by price mechanism of market, but were

attempts to solve the problems by govermnent regulation and market control.

We conclude that the current Brazilian economic crisis is government made.

This government failure originated from the misjudgement of reality and the

belief on wrong economic theory which promises prosperity without cost.