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CHANGING CULTURES IN LATIN AMERICA
WELLINGTON, NEW ZEALANDSEPTEMBER 26, 2008
GOVERNING BRAZIL LESSONS AND CHALLENGES
•
JOÃO PAULO M. PEIXOTO•
PROFESSOR OF GOVERNMENT•
UNIVERSITY OF BRASILIA
BRAZIL IN THE WORLD
B R A Z I L
BRAZIL IN NUMBERS
an introduction
BRAZIL IN NUMBERS
• Population: 196.342 mil (+half of SA)• Size: 8.514.205 sq km (n/half of SA)• GDP (PPP): $1.836 trillion (+half of SA)• GDP (PPP): per capita $9,700• GDP Growth Rate: 5.4% (est.)• Exports: $160,6 billion (f.o.b.)• Imports: $120,6 billion (f.o.b.)• Budget: $244 billion
BRAZIL IN NUMBERS
• PUBLIC DEBT: 45.1% GDP• CURRENCY: BRL$1,8 to $1,00• INFLATION RATE: 3.6% (est.)• THREE MAIN EXPORT PARTNERS• U.S.: 14.4%• CHINA: 9.2%• ARGENTINA: 8.3%
BRAZIL IN NUMBERS
• Labor force: 99.47 million (2007 est.)
• Labor force - by occupation: agriculture: 20% industry: 14% services: 66% (2003 est.)
• Unemployment rate: 9.3% (2007 est.)
• Population below poverty line: 31% (2005)
BRAZIL IN NUMBERS
• IMPORT COMMODITIES
• MACHINERY, ELETRICAL AND TRANSPORT EQUIPMENTS, CHEMICAL PRODUCTS, OIL, AUTOMOTIVE PARTS AND ELETROCNICS
BRAZIL IN NUMBERS
• THREE MAIN IMPORT PARTNERS:• U.S.: 20%• CHINA: 8.9%• ARGENTINA:8.1%
• RESERVES OF EXCHANGE AND GOLD:
• $200 BILLIONS (2007)
BRAZIL IN NUMBERS
• EXPORT
• COMMODITIES, TRANSPORT EQUIPMENTS,IRON ORE, SOYBEANS,FOOTWEAR,COFFEE,AIRPLANES AND AUTOS
CULTURAL, ETHNIC, BACKGROUND
LANGUAGE PORTUGUESE
ETHNIC GROUPS
• WHITE: 53.7%• MULLATO (mixed white and black):
38.5%• BLACK: 6.2%• OTHERS (include Japanese, Arab,
Ameridian): 0.9%
• GOVERNMENT TYPE• FEDERAL REPUBLIC • PRESIDENTIAL
• ADMINISTRATIVE DIVISIONS• 26 STATES AND 1 FEDERAL DISTRICT
• CAPITAL BRASILIA
BRAZIL POLITICAL
LEGISLATIVE BRANCH• BICAMERAL NATIONAL CONGRESS
• FEDERAL SENATE• 81 Senators
• 3 members from each state and Federal District elected to serve eight-years term. One third and two thirds elected every for
years
LEGISLATIVE BRANCH
• CHAMBER OF DEPUTIES• 513 seats
• MEMBERS ELECTED TO SERVE FOUR YEARS
• 4 MAJOR POLITICAL PARTIES• PMDB,PT,PSDB,DEMOCRATS
JUDICIAL BRANCH
• SUPREME FEDERAL TRIBUNAL• 11 MINISTERS APPOINTED BY THE PRESIDENT OF THE
REPUBLIC
• HIGHER TRIBUNAL OF JUSTICE• REGIONAL, FEDERAL, TRIBUNALS
POLITICAL EVOLUTION
• 1500 DISCOVERED BY THE PORTUGUESE
• 1500 to 1822 PORTUGUESE COLONY
• 1822 INDEPENDENCE
• 1822 to 1889 EMPIRE (UNIQUE IN L.A.)
• 1889 REPUBLIC
• 1930 MODERN BRAZIL
MAIN PHASES OF THE BRAZILIAN STATE (since 1930)
The golden years: from the keynesianism of 30’s to the “quasi- liberalism” of the 90’s.
Vargas Era
Military Regime
Collor and the Washington Consensus
FHC Era
Lula’s Administration
PresidentialPresidentialLimited Parliamentary
Government System
Dictatorship
Provisory Government 1889 to 1891 and
Constitutional 1891 to 1930 Provisory Government 1930 to
1934 andConstitutional 1934 to 1937 Dictatorship 1937 to 1945
Pre-constitutional 1822 to 1824
andConstitutional1824 to 1889
Type of Constitution
DictatorshipLimited DemocracyLimited Democracy
Political Regime
Unitary in practice, Federal
in theoryFederalUnitaryState
Structure
RepublicRepublicMonarchyGovernment Strucure
From 1937 to 1945From 1889 to 1937From 1822 to
1889Brazilian
State
EVOLUTION OF THE BRAZILIAN STATE (from 1822 to 1945)
Syn
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EVOLUTION OF THE BRAZILIAN STATE (from 1946 to 2008)
PresidentialPresidential
Presidential1946 to 1961
Parliamentary1961 to 1963Presidentialsince 1963
Government System
ConstitutionalConstitutionalConstitutionalType of Constitution
DemocracyAuthoritarianLiberal DemocracyPolitical Regime
FederalFederalFederalState Structure
RepublicRepublicRepublicGovernment Strucure
From 1985 until today
From 1964 to 1985
From 1946 to 1964Brazilian State
Syn
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Syn
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POLITICAL AND ECONOMIC FEATURES OF CONTEMPORARY BRAZIL: 1930 – 1985
Period Administration Features1930 - 1945 Getúlio Vargas Industrialization, Public Sector
Modernization, State Intervention in the Economy.
1946 - 1950 Gaspar Dutra Economic Liberalization, Redemocratization, Currency Crises
1950 - 1954 Getúlio Vargas Nationalism, Populism, Statism
1955 - 1960 Juscelino Kubitschek Development with Inflation, “Plano de Metas” , New Capital
1960 - 1964 Jânio Quadros João Goulart
Right and Left Wing Populism, “Structural Reforms”, Parliamentary System, Planning
1964 - 1985 Castelo Branco, Costa e Silva, Emílio Médici, Ernesto Geisel,João Batista Figueiredo
Nationalism, Structural Reforms, Economic and Administrative Modernization, Ideology of National Security and Development, External Debt
PeriodPeriod AdministrationAdministration FeaturesFeatures1985 - 1989 José Sarney New Republic, Constitution
of 1988, Economic Nationalism, High Inflation, “Plano Cruzado”
1990 - 1992 Fernando Collor Economic Reforms, Neoliberalism, Public Sector Reform, Impeachment, Privatizations
1992 - 1994 Itamar Franco “Plano Real”, Statism
1995 - 2002 Fernando Henrique Cardoso “Plano Real”, Economic Stabilization, Structural Reforms, State Modernization, Privatization, Re-election
2003 - 2007 Luiz Inácio Lula da Silva Economic Stability, Populism, Statism and Democratic Left
POLITICAL AND ECONOMICAL FEATURES OF CONTEMPORARY BRAZIL : 1985 - 2007
Syn
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SEVEN CONSTITUTIONS OF BRAZIL
Length Observations Lasted for
1824 to 1891 Empire, the one that lasted more
67 years
1891 to 1934 First Republican Constitution 43 years
1934 to 1937 The one that lasted less 3 years
1937 to 1945 “New State” 8 years
1946 to 1967 Liberal 21 years
1967 to 1988 The Constitution of the Military Regime
21 years
1988 onConstitution of the “New Republic”, emphasis at Economic Nationalism, “Pro - State” and Progressive on Social issuesS
ynth
esis
elab
orat
edby
the
auth
or
THE VARGAS ERA1930 – 1954Institution Building
Reforms
Public Sector Modernization, DASP, Careers,Merit System, Scientific Administration – Weber
Objectives
Administrative
Labor First Legislation – Labor Code and Courts
Trade Unions Pluralism and Autonomy
Fiscal/Tax Flexibility
Political Electoral Code and Court
Industrialization Economic Nationalism (CSN – BNDES –PETROBRAS)
JOÃO GOULART ADMINISTRATION‘REFORMAS DE BASE’
(1961 – 1964)
REFORMS OBJECTIVES
Agrarian Reform Redistribution of land, creating numerousclasses of small owners.
Urban Reform Planning and regulations for city development.
BankingReform Creation of a financial system dedicated to attendnational needs.
Electoral Reform Allow the iliterate to vote (about half the adultpopulation) as well as the military.
Foreign CapitalReform
Regulation and control of foreign investment andprofit/capital flow.
Educational andUniversity Reform
Teaching and research alligned with nationalinterests and social needs.
Tax Reform Emphasis on collecting direct taxes, such as theprogressive income tax.
Agrarian Reform Land Statute, rural settling andcolonization.
Education Reform Structural and educational reforms in the three levels of the system.
Tax/Fiscal Reform Modernizing the tax/fiscal systems, creation ofnew taxes, and redistribution of theincome tax.
Administrative Reform Public Sector modernization, deburocratization, administrativereorganization.
Economic Reform Economic stabilization, business liberalization, financial system reform.
Judiciary Reform Modernization of the Judiciary system.
Political Reform Two party system and indirect elections.
MILITARY REGIME (1964 – 1985)
REFORMS OBJECTIVES
Conservative Modernization
Economic modernization, privatization and business liberalization
Simplification and consolidation of indirect taxes, modernize and simplification of the collection and the auditing by the Revenue Service (RF), tax/fiscal system reform.
Review of the stability of public servants, careers structure, rationalize the public expenditures and salaries, de-regulation and administrative reorganization.
Review of Higher Education and regulation of the university’s autonomy.
End State tutelage, flex the labor laws.
Review of the ITR, encourage rural settling.
Pension reform, revenue system.
REFORMS IN THE COLLOR ADMINISTRATION (1990-1992)
REFORMS OBJECTIVES
Tax/Fiscal Reform
Public SectorReform
Higher EducationReform
Union and LabourReform
Agrarian Reform
Social SecurityReform
Economic Reforms
Globalization and Neoliberalism
FHC ADMINISTRATION(1995 – 2002)
Economic Reform End of State monopolies, economic stability, fiscal adjustment, privatization, publicservice concessions.
State Reform Regulatory agencies, administrative reformand reorganization, fiscal responsability law (New Zealand).
Agrarian Reform Rural settling.
Tax/Fiscal Reform Review of the tax system.
Social security Reform Review of the public sector’s pensionsystem.
Political Reform Electoral system, reelection, party system.
Judiciary Reform Modernization of the Judiciary.
REFORMS OBJECTIVES
Quase-Liberalism
FHC ADMINISTRATION LEGACY 1995 - 2002
• Structural Reforms• International Presence• Presidential Diplomacy• Economic Stability
LULA ADMINISTRATION CHALLENGES 2003 - 2008
- Govern Efficiently at the Federal Level
- Control the PT and its Ideology
- Maintain Economic Stability- Implement the Social Agenda- Promote Sustainable Development- Carry on the Reform Agenda
Lula Administration
An Administration of Programmes
NOT
An Administration of Reforms
ACTION OBJECTIVESocial Security Reform
Reduce social security deficit
Fiscal and Tax Reform
Reduce the costs on production and wages. Simplify the system by creating a IVA Tax charged from the final consumer, instead of the great amount of taxes that exists today.
Labor ReformFlexibility on the labor relations and reduction of labor costs for the companies.
Bureaucratic Simplification
Improve business environment and citizenship
Poltical Reform
Strengthen the parties trough party loyalty, public financing of the campaigns, discussions over the improvement of politicians’ links to their constituencies (districts) and party list system.
Unfinished Reforms
State
Mar
ket
State versus Market
1990 - 2008
TENDENCY FOR
MARKET SERVICES FOR THE RICH(MIDDLE CLASS)
PUBLIC SERVICES FOR THE POOR(LOWER CLASSES)
Some obstacles for Growth
Public Services Infrastructure
•Unefficient public services as health, education, public safety and justice.
•Precariousness of infrastructure in transportation, energy, ports and sanitation.
THE BACKWARDNESS EQUATION The reasons for small growth in Brazil - % of the GNP
The government raises taxes...
1995 28,2
1997 29
1999 31
2001 33,5
2003 34
2005 37
...spends more to sustain the administrative apparatus...
1995 14,8
1997 15,4
1999 16,1
2001 17,3
2003 16,9
2005 18,8
...and invests less and less. 1995 0,6
1997 0,6
1999 0,4
2001 1,2
2003 0,4
2005 0,5
Source: Ministério do Planejamento e Fazenda, IBGE, Banco Central. Elaboração Raul Velloso
Perceptions of Obstacles to Growth—Brazil
Source: World Bank, Investment Climate Survey, 2003
Source: World Bank, Investment Climate Survey
Labor Regulations as an Obstacle for Growth
Source: Doing Business 2004
International Comparison of Days Needed to Start a Business
Topics for the Future
Strengthen citizenship
Improve the quality of essential public services (education; health and public safety)Reduce bureaucracyImplement necessary reformsMore Society, less State
What must be done is common sense
The failure remains at the implementation level
B R A Z I L
THANK YOU
AKU MIHI NUI KI A KOE
JPMP@UNB.BR
BRAZIL: HISTORICAL DATES
154918081815182218241889
193019461964198519902002
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