The rise and fall (?) of a new developmental state in Brazil

Abstract

We investigate the most recent experiment of the state-led development approach in Brazil, and reveal some of its merits and shortcomings in the light of the current difficulties of the country. Using institutional and political economy approach we argue that under the Lula administration (2003–2010) a special economic policy mix has emerged, which although maintained some continuity with both the old Brazilian developmental state and the neoliberal reform period, can be regarded as a new model of developmental state (DS) in Brazil. The way how Brazil has achieved pro-poor and inclusive growth since the Millennium offers useful lessons for other emerging and developing countries. At the same time, economic and social processes of the last 4-5 years have highlighted the fragility of the new Brazilian developmental state model and finally led to its dismantling (while even raising questions whether it can be regarded as a DS at all).