In Starting Over: Brazil Since 1985, Albert Fishlow examines the forces behind Brazil’s impressive progress in the years since the end of the military dictatorship. Fishlow, one of the foremost economic scholars on Latin America, investigates the effects of political and economic globalization that imbue every aspect of Brazil’s democratic rebirth. The book focuses on the country’s move toward political cohesion in domestic and foreign realms as well as the government’s prioritization of fiscal stability and growth. Brazil’s modernization is closely tied to this newfound stability, which helped bring about the recent shift in international perceptions and attitudes toward investment in the country. Fifteen years ago Brazil was defined in international markets by its recent history of unstable hyperinflation; today the country flourishes in the global market “more vigorously than anyone imagined,” dominating speculations among top economists in the United States and European Union.[i] Though overcoming hyperinflation inspired such first world flocking to Brazil’s sandy shoreline, the process of opening Brazil to greater international trade was much longer and more involved. Fishlow outlines and analyzes the full history to encourage understanding of the challenges both overcome and yet to come.
Globalization in Brazil began in the late 1980s with tariff reform, but because of lobbying from national companies, even modest change came slowly. Domestic sectors strongly resisted tariff reductions and liberalization; talks on reform only began after significant pressure from then-President Fernando Collor and the continuing devaluation of Brazil’s currency, the Real, which offset losses domestic firms might have otherwise experienced.[ii] By the time the Real began appreciating a few years later, trade surged enough to support both domestic and international markets.[iii] The effects of the Real’s recovery should not be downplayed; Fishlow shows that it is clear in a quantitative analysis of import activity from 1993 to 1994 that a sudden boom in imports in late 1994 coincides with the demand increase resulting from the Real’s stabilization.[iv] Once Brazilians and international investors perceived inflation as under control, the tariff reforms policymakers had worked so long to put into motion finally began to take effect. By 2004, exports had become a leading sector of the economy. Under President Luiz Inácio Lula da Silva—popularly known as Lula—the country became even more multinational, playing international politics on the global field, engaging China, and increasing diplomatic ties with developed states outside of Latin America. By 2006, Brazil’s investments abroad exceeded entering investments; domestic business, too, continued to grow, frequently profiting from expanding foreign trade and new business policies.[v]
The true test of Brazil’s globalization and liberation success was the 2008 global recession. While developed countries struggled to keep afloat, Brazil watched from the apogee of its enormous international reserves; after decades of scrambling for financial solidity, Brazil was suddenly helping others tread water. While the country did experience an expected slump in demand resulting from the downturn, Brazil weathered the crisis better than most and emerged remarkably unscathed.[vi] As Fishlow quips, “[good] economic policy makes a big difference,” and Brazil’s years of prioritizing fiscal constancy certainly paid off in the late 2000s.[vii]
Unfortunately, Brazil still struggles with such social trials including staggeringly poor education, extreme income inequality, and poor pension plans, which the government works vainly to combat.[viii] Both Lula and his successor, President Dilma Rousseff, have introduced social policies in hopes of improving the national standard of living.[ix] Their main obstacle is proper funding. As Fishlow notes, “[demands] for government services are not lacking; that is why overall fiscal deficits continue” despite Brazil’s economic success.[x] Despite commendable efforts to attain loans from the World Bank and the implementation of well-functioning programs such as the Bolsa Família, which provides financial assistance to families so that their children can receive vaccinations and attend school, poor education and healthcare still haunt the country; such deficiencies are particularly worrisome as they contribute to income inequality and slow growth.[xi]
Fishlow highlights the festering social issues in Brazil as a cautionary tale. Impressive though they are, transitions from dictatorship to democracy, hyperinflation to stable fiscal success, and a closed economy to international recognition as a rising giant mean little to the impoverished citizens crouching in the favelas. Brazil has become a particularly popular developing democracy to the United States and EU, and not just economically. The country has participated in the India-Brazil-South Africa Dialogue Forum and multi-lateral talks at high-level conferences on the importance of agriculture, global warming, and tariff structures, and has made strides in international peacekeeping. In addition, though not yet accepted into the Security Council—a burning goal for the country—was proudly selected to host both the 2014 World Cup as well as the 2016 Olympics.[xii] In the face of this popularity, Fishlow reminds Brazil to keep up the hard work. He notes that prolonged economic innovation and efforts to maintain international appreciation—for example, through improved standards of living, healthcare, and education for the population—are central to sustaining the country’s current achievements. It would be unwise to expect unabated growth in the absence of further attention to development, and Brazil would do well to remember its accomplishments came only after discipline and great labor. Fishlow believes Brazil is on the right path, but his analysis offers guidance for further success that anyone interested in the region’s development should consider.
Lee Catherine Booker is a second-year dual-degree candidate of SIPA and the Fundação Getulio Vargas School of Business Administration in São Paulo, Brasil.