Vol. 26 No. 3 (2006): Jul-Sep / 2006

Vol. 26 No. 3 (2006)

Jul-Sep / 2006
Published July 1, 2006


Authoritarian governments and exchange rate policy in Latin American countries
Cláudio Ribeiro Lucinda, Paulo Roberto Arvate
Brazilian Journal of Political Economy

 Our aim on this paper is to identify the exchange rate policies used by Authoritarian governments in Latin America during the seventies and eighties. The literature shows that the focus of the exchange rate policy was on inflation control, which was not consistent with the evidence. We show on this paper that these governments aimed at a undervalued currency because of the behavior of the external balance of the countries.

JEL Classification: N16, F41, H19.

Cooperation, social capital and economic performance
Marcos Fernandes Gonçalves da Silva
Brazilian Journal of Political Economy

The objective of this paper is to define social capital as social infrastructure and to try to include this variable in an economic growth model. Considering social capital in such a way could have an impact on the productivity of production factors. Firstly, I will discuss how institutional variables can affect growth. Secondly, after analyzing several definitions of social capital, I will point out the benefits and problems of each one and will define social capital as social infrastructure, aiming to introduce this variable into an economic growth model. Finally, I will try to open the way for subsequent empirical studies, both in the area of measuring the stock of social infrastructure as well as those comparing economies, with the idea of showing the impact of social infrastructure on economic growth.

JEL Classification: A13, O10, Z13.

Directions of Brazilian financial liberalization
João Sicsú
Brazilian Journal of Political Economy

 This paper describes the most recent change in the rules of domestic exchange market and emphasizes/explores their consequences to Brazilian macroeconomic.

JEL Classification: F32; F36; F41.

China as a double pole in the world economy and the recentralization of the Asian economy
Carlos Aguiar de Medeiros
Brazilian Journal of Political Economy

The extraordinary growth of Chinese trade that occurred in the last years changed China’s role on world and regional economy. As a major producer of industrial consumer goods to OCDE countries, China has negatively affected many Asian competitors but as an expansive market China became the main source of growth to Asian countries. This new dimension was achieved after the Asian crisis of 1997 by an economic expansion led by public investment. After considering the Chinese balance of payment position and its industrial strategy this paper investigates this double dimension of China on trade and its influence on Asian countries.

JEL Classification: E60; F14; F23; F31; L50.

China: long-run economic growth
Flávio Vilela Vieira
Brazilian Journal of Political Economy

 The paper aims to understand on theoretical and empirical grounds the main determinants of China´s long run growth. The econometric analysis suggests the exchange rate as the most important variable in explaining China´s economic growth and in a different model specification using growth rates of exports instead of trade openness, the exchange rate remains as the main variable but export performance has almost the same relevance. Exchange rate policy seems to be a direct road to explain economic growth in China and there is no clear sign that China will increase exchange rate flexibility in the same pattern and pace suggested by most trade partners, which cannot be criticized based on China´s own interest in sustaining its export performance and economic growth.

JEL Classification: O40; O53; C22.

Origin and development of Chinese township and village enterprises (TVEs)
Gilmar Masiero
Brazilian Journal of Political Economy

 Township and Village Enterprises (TVEs) performed an important role during China’s rapid economic development. Based on a review of the recent literature on these “engines of growth,” this study characterizes TVEs and their contribution to China’s development trajectory. It draws attention to institutions that are key to explaining TVEs, including responsibility contracts and organizational structure. It concludes that the paradigmatic experiences of TVEs have played an important role in terms of employment and export generation which contributed to China’s sustained levels of economic growth and development.

JEL Classification: O18, P32, P21.

Credibility, rules and power in the European Union institutions a transactional analysis of the "stability and growth pact"
Abel Caballero, Gonzalo Caballero, Abel Losada
Brazilian Journal of Political Economy

The credibility of the rules and the elements of power constitute fundamental keys in the analysis of the political institutions. This paper opens the “black box” of the European Union institutions and analyses the problem of credibility in the commitment of the Stability and Growth Pact (SGP). This Pact (SGP) constituted a formal rule that tried to enforce budgetary discipline on the European States. Compliance with this contract could be ensured by the existence of “third party enforcement” or by the coincidence of the ex-ante and ex-post interests of the States (reputational capital). The fact is that states such as France or Germany failed to comply with the ruling and managed to avoid the application of sanctions. This article studies the transactions and the hierarchy of power that exists in the European institutions, and analyses the institutional framework included in the new European Constitution.

JEL Classification: B520; H300; H600.

Manufacturing real wages in Mexico The Role of Macroeconomic Factors
Antonia López Villa Vicencio, Julio López Gallardo
Brazilian Journal of Political Economy

In this paper we analyse the recent evolution and determinants of real wages in Mexico’s manufacturing sector, using theories based on the assumption of imperfect competition both in the product and in the labour markets, especially wage-bargain theory, insider-outsider and mark-up models. We show evidence that the Mexican labour market does not behave as a traditional competitive market. The proposed explanation for this fact is that some workers benefit from advantages when compared with others, so that they can get a greater share of the proceedings of the productive process. Also, we find that changes in the degree of competition in the market for output influence the behaviour of real wages.

JEL Classification: E24, C51, J31.