Vol. 41 No. 3 (2021): Jul-Sep / 2021

Vol. 41 No. 3 (2021)

Jul-Sep / 2021
Published July 20, 2021


National policy space: reframing the political economy of globalization and its implications for national sovereignty and democracy
Thomas Palley
Brazilian Journal of Political Economy

This paper critiques the trilemma framing of the political economy of globalization, and offers an alternative framing based on the construction of national policy space. The paper makes three main contributions. First, building on Stein (2016), it deconstructs the categories used by Rodrik (2011) and introduces distinctions between the “degree”, “type”, and “dimensions” of globalization; “effective” versus “formal” national sovereignty; “content” versus “process” of democracy; and “national” versus “global” democracy. The deconstruction shows countries face choices involving a series of margins, not a trilemma. Second, that suggests reframing the problematic in terms of national policy space, which is the “funnel” through which globalization impacts democracy and national sovereignty. Third, the paper shows a country can be impacted by globalization even if it does nothing because other countries’ actions change its possibility set. The reframing shows globalization is an intrinsically political project. To the extent it is now driving a nationalistic anti-democratic turn in politics, responsibility lies with political elites.

JEL Classification: F0; F02; F50.

Business cycles fluctuations and commodities prices: evidence for Brazil
André Moreira Cunha, Marcos Tadeu Caputi Lélis, Priscila Linck
Brazilian Journal of Political Economy

This paper aims at evaluating macroeconomic impacts of commodities prices’ shocks on the Brazilian economy during the 2000s. The econometric methodologies employed allowed to identify three regimes of high and three of low behavior in those prices, all of them presenting the expected effects of stimulating the level of activities, at times when external price shocks are favorable; and the reverse, when price shocks were negative. The decomposition exercises made it possible to isolate the effects of commodities shocks from the other potential determinants of the level of activities. Thus, it was possible to verify that in the most recent upward cycle, starting in 2016, the recovery in commodities prices has not been able to compensate for the other domestic (or external) factors that, for the moment, block a more robust economic recovery.

JEL Classification: O11; F44; E32; F63.

PEC 32 of Administrative Reform: A critical analysis
José Luis Oreiro, Helder Lara Ferreira-Filho
Brazilian Journal of Political Economy

This article aims to make a critical analysis of the proposal for administrative reform presented by PEC 32/2020. As we will argue, the proposal does not solve any of the distortions that are willing to eliminate, weakens the power of intervention of the Brazilian State over the economic system, decreases the autonomy of public servants and discourages the hiring of qualified and motivated civil servants, having as probable consequence the reduction of the supply and quality of public services. Thus, the result of administrative reform is the weakening of the State of Social Welfare in Brazil. 

JEL Classification: H1; H11; H12.

Reason, scientism, and methodology: Hayek’s adherence to complexity through the development of his methodological criticism in the Abuse of Reason Project
Keanu Telles da Costa, Eduardo Angeli
Brazilian Journal of Political Economy

This article presents a narrative on the emergence of the concept of complexity in Friedrich A. Hayek’s work. We show that complexity emerges from Hayek’s methodological concerns and, specifically, from his texts that compose the first two parts of the Abuse of Reason Project. Namely, a) ‘Individualism: True and False’, from 1946; b) ‘Scientism and the Study of Society’, published between 1942 and 1944; and c) ‘The Counter Revolution of Science’, from 1941. In this paper, we aim to expose that the concept of complexity emerges gradually and organically and is integrated with the Hayekian research program from the 1940s. 

JEL Classification: B25; B31; B41.

Legalization of drugs and strategic behaviour
Vinícius Phillipe de AlbuquerqueMello, Francisco S. Ramos
Brazilian Journal of Political Economy

The growing number of users, about 250 million, in 2016, and the sheer number of health problems, that cause 190,000 deaths per year, are just some of the data that has rekindled the debate and discussion into the efficiency of the prohibitionist drug policies concerning drug consumption throughout the world. As a result, there has been the establishment of a special branch of literature focused on the investigation into this theme. In this regard, the present article conducts an economic analysis of scenarios where there is no decriminalization of drugs and other areas where legalization has been partial (marijuana) or complete, based on Game Theory. Thus, different from other studies, this paper establishes conditions of compatibility of incentives so that the economy could become formal, after decriminalization, to avoid contraband under a legal guise. This paper also manages to show which situation (Nash equilibrium) provides the greatest well-being for society. 

JEL Classification: C70; D6; H26.

Credit constraints and structure: a theoretical model of extractivism and slow-growth dynamics
Leopoldo Gómez-Ramírez, Nestor Garza
Brazilian Journal of Political Economy

We develop a theoretical model that explains the relationship between credit constraints and economic growth in the context of a three-sector economy, including an “extractive” sector. The model belongs in the structuralist tradition and it is inspired by the Colombian economy. In contrast to neoclassic development economics models, we prove that: 1) relaxing the credit crunch would foster formal sector growth but it may nevertheless not imply formal employment growth; and 2) the economy can converge to a pattern where the extractive sector increases while the formal one shrinks.

JEL Classification: O11; O41; E24; E26.

The future of capitalism for Branko Milanovic
David Beltrão Simons Tavares de Albuquerque
Brazilian Journal of Political Economy

The article analyses the latest book by Branko Milanovic, Capitalism, Alone: the future of the System That Rules the World, which was published in 2019, according to recent publications. First, it is presented the book’s overview. Second, its relations to other similar publications. Third, the book’s detailed analysis and fi nally, some of its argumentative problems regarding the Brazilian social and economic reality. 

JEL Classification: P16; F50; P48.

The unfounded enthusiasm towards private participation in infrastructure
Emilio Chernavsky
Brazilian Journal of Political Economy

Despite the widespread enthusiasm for private participation in the provision of infrastructure, international assessments of its results are rare and inconclusive. Audit offices are generally skeptical of their superiority, multilateral institutions have been cautious, and the population is critical in many countries. I show these frustrating results are associated with the extraordinary profits and slow progress of productivity derived from reduced competition and ineffective regulation common in the sector, and point out reasons that explain this situation. I argue that enthusiasm is theoretically and empirically unfounded, and that on the ideological acceptance of two crucial, highly questionable hypotheses. 

JEL Classification: L32; H54.

The political economy of the Workers’ Assitance Fund: an analysis of its recent performance (2005-2018)
Sandro Pereira Silva
Brazilian Journal of Political Economy

This study analyzed the political and economic factors that conditioned the recent evolution of the public employment system in Brazil, focusing on the operational mechanisms of the Workers’ Assistance Fund (FAT). Based on the accounting information of the annual periods, it was found that such financing arrangement has shown signs of fragility, with a reduction in the capacity to cover all of its current expenses. However, the imbalances are largely explained by economic policy decisions that have caused significant leaks in recent years, especially budget disengagement and tax relief.

JEL Classification: E22; E62; E65; H53; I38; J38; J68.

Political economy of Brazilian startups: a new order in a turbulent scenario
Anita Kon
Brazilian Journal of Political Economy

The article investigates the conditions that enable the creation and evolution of Brazilian startups in the context of uncertainties and instability of the country’s economy since 2010. The paper examines the premises of Complexity Theory and Chaos Theory applied to Economics. The study outlines the conditions for the emergence and evolution of these disruptive business models in the 1990s world scenario of crises and uncertainties. The last section deals with the evolution of these companies in Brazil until 2019, seeking to explain these services’ dynamic behavior, in the country’s conjuncture of instability and disorder.

JEL Classification: O; O14.