Abstract
<p>The aim of this paper is twofold. At first, we briefly review the current debate in Brazil between the new-developmentalists and the social-developmentalists. Both groups assume that the investment is the main component of aggregate demand to explain growth. However, the key variable to determine demand for investment is different for each group. For the new-developmentalists, the key variable is the real exchange rate. For the second group, public investment and domestic mass consumption are the most relevant variables. Given this debate, our next step is to test econometric models that capture the determinants of investment in Brazil in the 2000s. We start with the investment function presented by Bhaduri and Marglin (1990) and add other variables according to the developmentalist debate. We found robust results that confirm the validity of Bhaduri and Marglin´s hypothesis as well as the ones proposed by the new-developmentalists and the social-developmentalists.</p>
Highlights
The recovery of the Brazilian economy in the mid-2000s, following the good performance of the current accounts during 2003-2007 as well as the rapid positive response after the international financial crisis in 2009 gave boost to the academic interest on the debate on developmentalism in Brazil.1 The recent domestic economic crisis has been reinforcing this interest as conventional economic policies are inept to deliver a sustainable way out to the current crisis
If we consider that the measure of the degree of capacity utilization embodies some anticipation about the behavior of aggregate demand, we can say that this result suggests that the expectation of an increase in aggregate demand is the most important variable to explain a firms decision to invest in capital expansion
In this paper, inspired by the developmentalist debate in Brazil, we run different versions of the investment function originally presented by Bhaduri and Marglin (1990), adding key variables to capture the arguments presented by the new-developmentalist and the social-developmentalists
Summary
The recovery of the Brazilian economy in the mid-2000s, following the good performance of the current accounts during 2003-2007 as well as the rapid positive response after the international financial crisis in 2009 gave boost to the academic interest on the debate on developmentalism in Brazil. The recent domestic economic crisis has been reinforcing this interest as conventional economic policies are inept to deliver a sustainable way out to the current crisis. The recovery of the Brazilian economy in the mid-2000s, following the good performance of the current accounts during 2003-2007 as well as the rapid positive response after the international financial crisis in 2009 gave boost to the academic interest on the debate on developmentalism in Brazil.. Biancarelli (2012) points out that the debate unfolds on two levels. The debate is focused on alternative economic policies to the neoliberal project of development.. Following the intensification of the debate, Mollo and Amado (2015), for example, subdivided the new developmentalist positions into three groups: the new developmentalists (see for example Bresser-Pereira, 2006), the post-Keynesian developmentalists (see for example Sicsú et al, 2005) and the social developmentalists (see for example Bielschowsky, 2014).
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