The importance of leadership in Brazil’s economic development

I was reading this paper from Rogerio L. F. Werneck, Prof at Catholic University, Rio De Janerio.

He illustrates the experience of Brazil setting up a modernmacroeconomic system. The special thing about the paper is that it is not a typical paper that has graphs, tables etc to show how Brazil economy improved (or deteriorated) in the selected time.

The paper is more in the political econ0my space. It discusses how political parties and leaders in Brazil went about making economic policies in Brazil. One crucial lesson I could draw from the paper is how critical it is to get one minister at the top who could drive economic reforms. The concerned Minister has to be given full powers to achieve the desired outcome.

In Brazil’s case it was Henrique Cardoso, who became Finance Minister in 1993. He was quite influential and got a team of economists to serve and lay the economic path for Brazil. Just before him, economists were not willing to serve under Brazil Government. He was seen as a reformer and changed the perception. This in turn laid the path for Brazil’s much improved economic performance.  Read the whole thing for more clarity.

All this reading made me realise that we had near similar situation in India around 1990-91.  Though, India ‘s problem was not hyperinflation but balance of payments difficulties. (Both Brazil and India had common problems of high fiscal deficit as well).

India also got a great Finance Minister in Manmohan Singh (Interestingly both Manmohan Singh and Cardoso later became Prime Minister and President as well). Now, there are a lot of stories that go around regarding this phase of Indian economy. Some say he was backed fully by the then Prime Minister PV Narsimha Rao and was given a free hand to run economic reforms. As a result, the much opposed liberalisation policies could go through. Some even say that Narsimha Rao had a full majority in Parliament which made the task much easier, otherwise it would have taken much longer. Some suggest that politicians understood that India had little choice but to pass those economic reforms.

I have read (and prepared) quite a few reports looking at graphs and charts to see India’s performance after reforms. However, what I would like to read is something like the above cited Werneck paper on India. It is stuff like this which tells you much more about growth lessons – it tells you what were the bottlenecks, how certain policies though understood could not be passed, the importance of getting right people (this is always assumed to be given in most growth advisory papers ) etc etc.  Despite numerous research and suggestions, the economies have had to discover the path on their own (as suggested by Rodrik et al in this paper and by Growth Commission lately).

I am sure there must be papers like the Brazil one on India. Those who are aware please let me know.

One Response to “The importance of leadership in Brazil’s economic development”

  1. Wanted a dream team of Indian economy managers.. « Mostly Economics Says:

    […] Interesting stuff. The article takes me to Brazil paper cited earlier. The paper highlighted the importance of dream team that ushered reforms in Brazil. I asked for a […]

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