Multiple exchange rates and industrialization in Brazil, 1953-1961: macroeconomic miracle or mirage?

This dissertation revisits Brazil's experience with multiple exchange rates (MERs) between 1953 and 1961. Exchange controls such as MERs were common across the world during the early days of the Bretton Woods arrangement, despite the resistance from the International Monetary Fund (IMF), which assumed they caused instability and balance of payments crises. Latin America’s use of exchange controls was widespread, with different exchange rates also adopted as instruments to stimulate import substitution industrialization (ISI). Brazil’s MER system was, however, a unique experiment, with all the country’s imports included in a regime of auctions of foreign exchange, resulting in a controlled depreciation process with different sectoral exchange rates. The experience had two phases, the first of which diverged from other cases in the region in lasting much longer, maintaining stable macroeconomic conditions, and avoiding IMF interventions. The second phase resulted in a decline of the system's macroeconomic effectiveness and its eventual collapse in 1961. This research investigates the peak and decline of Brazil’s MER systems by analyzing a new quantitative dataset that is further complemented by qualitative sources. The main thesis is that Brazil’s MER regime was a ‘successful’ experience during its first phase, with a singular design that supported the stabilization of macroeconomic conditions. Officials were ‘guiding the invisible hand’ of the market to help balance macroeconomic variables. The dissertation also shows that the MER system was not a protectionist instrument to stimulate import substitution in advanced sectors and did not generate distortions to sectoral industrial growth. It was, however, transformed during its second phase into a mechanism to subsidize private sector imports and increase the government’s direct participation in the industrial effort, which was an industrial deepening process with costly macroeconomic consequences

Pluralism in economics : from epistemology to hermeneutics

The objective of this paper is to bring elements from the philosophical movement ofhermeneutics and pragmatism to the discussion on methodology in economics, with aspecific concern on the theory of truth. Our aim is to present the concept of thehermeneutic space, developed by the philosopher Richard Rorty, as a rational justificationfor pluralism in economics. We consider the hermeneutic space an interesting conceptwhich should allow us to overcome the void left by the incapacity of epistemologicaltheories to explain the evolution of sciences. It defends the idea that our culture, values andways of interpreting things are what build the sciences, not any closed epistemologicalmethod. In this sense, pluralism is nothing more than letting the hermeneutic space work,without epistemological barriers, and understanding that this is desirable for the futuredevelopment of economics as a science. This approach differs from all othermethodological justifications for pluralism because it does not rely on any epistemologicalmethod, but assumes that the hermeneutic space can entirely fulfill the gap created by them

Education and development projects in Brazil (1932-2004): political economy perspective

This paper discusses the long-run history of education policies in Brazil. It is suggested that the main reason for the educational backwardness was the existence of strong political interests over education. It is also defended that these interests can be empirically observed in the allocation of public resources between the different levels of education, with political choices favouring specific groups in society. It was not a matter of lack of investment in education, but of inadequate allocation of resources. This pattern of political-based policies created a strong negative path dependence of misallocation of resources in education in Brazil, particularly with significant underinvestment in secondary education

The Athenian Economy in Light of the Welfare State: Karl Polanyi's Work in Perspective

Karl Polanyi considered that the relationship between the markets and their societies was a central feature of any social order. He studied what he called "ancient societies," to compare them with his own times, in an effort to understand that subject. This paper aims to show, following Polanyi's work on Classical Greece, that it is possible to make a clear analogy between the Athenian state and economy with the modern Welfare State. First, we present Polanyi's study of the early Athenian economy, focusing on the coexistence of a kind of state economic planning and a market. Second, we show how this relates to Polanyi's emphasis in the comparison of different societies and times. Third, we characterize the contemporary Welfare State to make an analogy between these two forms of economic organization. We conclude by underlining the relevance of this analogy in understanding the societies of today.Karl Polanyi, embeddedness, classical Greek economy, welfare state,