Vol. 22 No. 4 (2002): Oct-Dec / 2002

Vol. 22 No. 4 (2002)

Oct-Dec / 2002
Published October 1, 2002


Argentina: a decade of the convertibility program
Roberto Frenkel
Brazilian Journal of Political Economy

This article is an assessment of the Convertibility period in Argentina, which covered the nineties. It is presented in two sections. In the first section macroeconomic performance is described and evaluated, together with the effects on employment, unemployment and income distribution. An important contraction in full employment and significant increments in unemployment and involuntary underemployment are stressed. As from the mid-nineties, income distribution shows a strong worsening trend and the poverty and indigence indicators tend to rise. The increment in unemployment stands as the main explanatory factor of the worsening of social conditions. In the second section different aspects of the Convertibility Regime are discussed: the appreciated exchange rate, the dollarization of the financial system, the accentuated dependency on capital flows, the external sustainability and the regime durability.

JEL Classification: E31; E65.

The postsocialist transformation in central and Eastern Europe
Béla Greskovits
Brazilian Journal of Political Economy

What is attempted in the East is catching up with the West from a recent position of worse-than-Latin-American economic backwardness. Until now, populations that were sentenced to political patience by the logic of poor democracies have reluctantly backed this enormous effort. Central and Eastern Europe’s post-socialist path is characterized by an increasingly discredited ideology of a return to Europe and a non- European combination of substitute institutions of development: radical opening towards the world economy, damaged institutions of labor representation, eroded state capacity, and often strong private and foreign dominance in the financial and other strategic sectors. There is a chance for a few countries to succeed. Yet various development traps may be more likely in the end than a “Great Spurt” in the Gerschenkronian sense.

JEL Classification: N14, P23.

Chile, entre el neoliberalismo y el crecimiento com equidad: una sitesis
Ricardo Ffrench-Davis
Brazilian Journal of Political Economy

During Pinochet’s dictatorship deep reforms were implemented in Chile. Certainly, many of them constituted permanent achievements for development strategies in democracy. However, economic growth between 1973 and 1989 was mediocre (averaging only 2.9% annually) and income distribution deteriorated notably. This was related to the fact that the reforms suffered from various flaws that had severe repercussions on the growth of potential GDP and on social welfare. In the 1990s, the governments of the Concertación launched several reforms to the reforms with the goal of injecting “pragmatism”. It focused on decreasing macroeconomic vulnerability when faced with an increasingly volatile external environment and on completing underdeveloped domestic markets. The result of the set of reforms to the reforms was that, during the entire decade, there was an unprecedented vigorous expansion of productive capacity (which averaged 7% per year), along with a significant reduction in poverty (from 45% to 21% of population). A recessive gap in 1999-2001, however, highlighted failures, increasing contradictions and the lack of greater reforms to the reforms.

JEL Classification: E32; E61; E62; O11; O24.

Sectorial specialisation in east Asia and Latin America compared
Marcela Miozzo
Brazilian Journal of Political Economy

East Asian countries have been successful at specialising in machinery and capital goods. Latin American countries, on the other hand, have retreated from these sectors, reinforcing their specialisation in resource-intensive goods. Institutional arrangements in place in both regions explain these divergences. In particular, the differences in the strategy and structure of leading firms, the nature of industrial promotion by the government, the development and support of small and medium-sized firms and the operation of foreign-owned firms may explain the respective success and failure in sectoral specialisation in machinery. Failure to develop these sectors may hinder the process of economic development.

JEL Classification: O53, O54, L6.

An institutional vision for public debt in Brazil
Marcel Guedes Leite, Paulo Roberto Arvate
Brazilian Journal of Political Economy

The purpose of this article is found a theoretical apology to the debt public allocation on agents’ finance wealth given the successive defaults enforced by public sector to debt public demanding. 

JEL Classification: H6.

Banks, Domestic debt intermediation and confidence crises: the recent brazilian experience
Afonso S. Bevilaqua, Márcio G. P. Garcia
Brazilian Journal of Political Economy

This paper examines the recent evolution of the Brazilian public domestic debt and interprets it in light of the confidence crisis literature. The analysis of the recent developments in the Brazilian public domestic debt market shows that the likelihood of a default must not be assessed only using simple summary aggregate measures of public domestic debt size and maturity, but must also consider other structural aspects. Our analysis emphasizes the two main pillars of the Brazilian public domestic debt market: home-bias and the role of the banking sector in intermediating the debt. Evidence from yields of a “perfectly” indexed bond shows that the rollover premium was very small when the devaluation occurred, and is still fairly small by October, 1999, indicating that the rollover of the public domestic debt is not, so far, a serious problem. Positive prospects for the public domestic debt market will depend, however, on the Brazilian government maintaining the current fiscal austerity program.

JEL Classification: F32; F34; G21.

Economics and philosophy: tension and solution in Adam Smith’s work
Angela Ganem
Brazilian Journal of Political Economy

The purpose of this paper is to show that Adam Smith’s work is indeed unified as can be seen from the fundamental concepts pervading both The Theory of Moral Sentiments and The Wealth of Nations. This approach opposes the canonical reading of Adam Smith’s work, in the sense that it links together four key concepts nested parities in a successive chain of three intersecting groups leading, ultimately, to the unified understanding of his contribution, apparently disperse into several independent pieces. The four concepts organized into three groups are: experience and imagination, imagination and morality and morality and self-interest. The conclusion is that, according to Adam Smith, The Wealth must be read in the light of the TMS; the invisible hand feeds back on the actual morality, economy and moral come together without any conflict under the justification of the social order provided by the market.

JEL Classification: B1.

Economics and Autopoiesis
Luiz Augusta Estrella Faria
Brazilian Journal of Political Economy

The self-regulated nature of capitalist economic systems cannot be understood through the concept of equilibrium, as neoclassical economics does. A new way to create a systemic theory of the economy has been opened by the concept of autopoiesis. Starting from Marx’s proposition of the founding character of social relations for economic systems and combining it with the autopoietic theory it is possible to propose a systemic theory of economics. In the first section it is made a characterization of autopoietic systems and argued that developed capitalist economic systems belong to this kind. In the second section, economic dynamics is presented as adequate to the nature of autopoietic systems.

JEL Classification: B41; B51; P16.

The specificities of the health sector innovation system
Eduardo da Motta e Albuquerque, José Eduardo Cassiolato
Brazilian Journal of Political Economy

This paper discusses the biomedical innovation system. This sectoral system is an intersection between the innovation system and the welfare institutions. The innovative dynamics in the health sector has various distinctive characteristics, specially the importance of the universities and academic research for the biomedical innovations. The specificity of health care as an economic activity explains the role of institutions in this sector. Institutions and regulation shape the direction of technological progress, influencing the economic, industrial and social performance of the whole health sector. 

JEL Classification: I10, O30, H75.


A heterodox rereading of Bresser-Nakano
Alcino Ferreira Câmara Neto, Matias Vernengo
Brazilian Journal of Political Economy

Bresser-Pereira and Nakano argue, in their article on stable growth, that the fiscal adjustment has already been effectively carried out in Brazil. For them, what needs to be done, contrary to the orthodox demands for more fiscal adjustment, is an active commercial and industrial policy to stimulate exports, to complement the lower interest rate and a more devalued exchange rate. It is suggested here that capital controls would be necessary to maintain relative exchange rate stability, following Keynes’ heterodox ideas. 

JEL Classification: F38; E52; E62.