IDEAS home Printed from https://ideas.repec.org/p/ecr/col035/5113.html
   My bibliography  Save this paper

Macroeconomic volatility and social vulnerability in Brazil: the Cardoso government (1995-2002) and perspectives

Author

Listed:
  • Macedo, Roberto B.M.

Abstract

This paper addresses the social effects of macroeconomic volatility in Brazil, as well as the burdens and challenges it has been imposing on social policies. Volatility is analyzed both in terms of its internal causes and those related to the world economy, as well as in its social effects and on policies aimed at counterbalancing them. The period covered by the analysis extends from 1995 to 2002, and coincides with President Cardoso's two terms. It is marked by increasing economic volatility, as he moved from the first to the second term. To understand this increased volatility the paper looks at its origins and at the macroeconomic policies adopted to counteract it. Volatility is also examined in the context of a new national and international scenario in which three main processes can be identified: economic and financial globalization, the privatization of state companies and foreign trade liberalization. The analysis shows that Cardoso's government made major advances in terms of price stability. It has failed, however, in its attempt to lead the country towards sustained growth, as it relied on misguided macroeconomic policies, particularly its exchange and fiscal policies during the first term which increased the economy's external and domestic vulnerability. After analyzing macroeconomic volatility, the paper moves to its primary focus, the social effects of economic problems and policies, and what has been done to mitigate them. Following this approach, it examines the performance of social indicators of the period. In this respect, the analysis reveals that the government accomplished major advances in education, health and income transfers to the poorest groups, following a sharp increase of the tax burden, which it was able to introduce even in conditions of sluggish growth, in a counter cyclical fashion. In a new international scenario that has overemphasized the role of markets in solving economic and social problems, it was not a surprise that Brazil had to rely on income transfers in order to alleviate the plight of the poorest groups. Poverty conditions found in the country are so severe that it would be naïve to expect that they could be significantly reduced by the interplay of market forces, even in the medium term. The paper also addresses the perspectives for the next government. In the short run, the serious economic scenario inherited by President Lula makes it difficult to implement new and major advances in expanding social expenditures, as the tax burden is coming close to a saturation point and faces increasing opposition. Thus, the situation is such that it requires a renewed attention to the quality of macroeconomic management, in order to improve growth rates and open room for sustainable social policies based on increased tax revenues coming from an expanded tax basis. Given this picture, a thin path has been identified to lead the country in this direction and out the current difficulties, which have recently become less dramatic because of the adjustment presented by the foreign sector accounts, and by the stand adopted by the elected president in announcing policies that have dissipated most fears of their mismanagement. This path involves continuing fiscal discipline by maintaining and even enlarging the primary fiscal surplus, with an eye to bargaining this movement for the market's willingness to accept lower interest rates on the public debt. In the foreign front, an emphasis on export promotion and a new round of import substitution, this time coming with enhanced competitiveness on the part of local producers. In essence, what is sought is to reduce vulnerability and volatility, both from domestic and external sources. Looking at the medium and long term, and taking into account a new national and international scenario created by economic and financial globalization, privatization and trade liberalization, other lessons from the Cardoso period are clear. In particular, they point to less dependence on external finance, more caution with globalization in general, a different course for privatization -including constraints on the use of its resources by the government, a screening of the pricing policies of the privatized sectors and a move towards public offers that democratize ownership of capital property- and an external trade and financial policy explicitly guided by national interests, with selective attention to some Trojan horses offered by globalization -as was the initially easy access to financial globalization- all this consistently sustained by other policies, in particular a realistic exchange rate.

Suggested Citation

  • Macedo, Roberto B.M., 2003. "Macroeconomic volatility and social vulnerability in Brazil: the Cardoso government (1995-2002) and perspectives," Financiamiento para el Desarrollo 5113, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  • Handle: RePEc:ecr:col035:5113
    Note: Includes bibliography
    as

    Download full text from publisher

    File URL: http://repositorio.cepal.org/handle/11362/5113
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Montoya, Silvia, 1997. "Reformas al financiamiento del sistema de salud en Argentina," Financiamiento para el Desarrollo 5269, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    2. Sorto, Francisco Angel, 1999. "Alternativas de políticas para fortalecer el ahorro de los hogares de menores ingresos: el caso de El Salvador," Financiamiento para el Desarrollo 5296, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    3. Tokman, Víctor E., 2003. "Hacia una visión integrada para enfrentar la inestabilidad y el riesgo," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    4. Gonzales Arrieta, Gerardo M., 2002. "El crédito hipotecario y el acceso a la vivienda para los hogares de menores ingresos en América Latina," Financiamiento para el Desarrollo 5102, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. Vieira, Solange Paiva & Pinheiro, Vinícius Carvalho, 2000. "Reforma previsional en Brasil: la nueva regla para el cálculo de los beneficios," Financiamiento para el Desarrollo 5305, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    6. Fox, M. Louise & Palmer, Edward, 2001. "Pension reform in Europe in the 90's and lessons for Latin America," Financiamiento para el Desarrollo 5092, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    7. Ramón Abel Castano & José J. Arbelaez & Ursula Giedion & Luis Gonzalo Morales, 2001. "Evolución de la equidad en el sistema colombiano de salud," Documentos de Investigación 2651, Cepal Naciones Unidas.
    8. Requena Pinto, Juan Carlos, 2002. "Alternativas de políticas para fortalecer el ahorro de los hogares de menores ingresos en Bolivia," Financiamiento para el Desarrollo 5101, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    9. Ruedi, Nora & Szalachman, Raquel, 1999. "Un perfil del déficit de vivienda en Uruguay, 1994," Financiamiento para el Desarrollo 5282, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    10. Escobar, Andrés & Steiner, Roberto, 1995. "Acumulación de reservas internacionales: sus causas y efectos en el caso de Colombia," Financiamiento para el Desarrollo 5232, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    11. Uthoff, Andras & Bravo, Jorge Horacio, 1999. "Transitional fiscal costs and demographic factors in shifting from unfunded to funded pensions in Latin America," Financiamiento para el Desarrollo 5295, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    12. Errázuriz, Enrique & Ochoa C., Fernando & Olivares B., Eliana, 2001. "El ahorro familiar en Chile," Financiamiento para el Desarrollo 5095, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    13. Herrera, Javier & Hidalgo, Nancy, 2003. "Vulnerabilidad del empleo: un enfoque a partir de encuestas a hogares," Financiamiento para el Desarrollo 5111, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    14. Almarza Alamos, Sergio, 1997. "Financiamiento de la vivienda de estratos de ingresos medios y bajos: la experiencia chilena," Financiamiento para el Desarrollo 5246, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    15. Arrau Pons, Patricio, 1994. "Fondos de pensiones y desarrollo del mercado de capitales en Chile: 1980-1993," Financiamiento para el Desarrollo 5153, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    16. Vargas, Juan Rafael, 1995. "Flujos financieros internacionales privados de capital a Costa Rica," Financiamiento para el Desarrollo 5237, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    17. Chisari, Omar & Ferro, Gustavo & González, Mariano & León, Sonia & Maquieryra, Javier & Mastronardi, Leonardo & Roitman, Mauricio & Romero, Carlos & Theller, Ricardo, 2010. "Modelo de Equilibrio General Computado para la Argentina 2006," UADE Textos de Discusión 63_2010, Instituto de Economía, Universidad Argentina de la Empresa.
    18. José Antonio Ocampo & Camilo Ernesto Tovar, 1999. "Price-based capital account regulations: the Colombian experience," Documentos de Investigación 3372, Cepal Naciones Unidas.
    19. White, Joseph B., 1997. "A comparative study of health care policy in the United States and Canada: what policymakers in Latin America might and might not learn from their neighbors to the North," Financiamiento para el Desarrollo 5256, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    20. Acosta, Olga Lucía & Ayala, Ulpiano, 2001. "Reformas pensionales y costos fiscales en Colombia," Financiamiento para el Desarrollo 5093, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    21. Bertranou, Fabio & Grushka, Carlos O. & Shulthess, Walter, 2000. "Proyección de responsabilidades fiscales asociadas a la reforma previsional en Argentina," Financiamiento para el Desarrollo 5302, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    22. Mora Alvarez, Humberto, 2000. "Riesgo del aseguramiento en el sistema de salud en Colombia en 1997," Financiamiento para el Desarrollo 5303, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    23. Titelman Kardonsky, Daniel & Calcagno, Alfredo Fernando & Manuelito, Sandra, 2003. "From hard-peg to hard landing?: recent experiences of Argentina and Ecuador," Financiamiento para el Desarrollo 5106, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    24. Camacho, Arnoldo R., 1994. "La experiencia en el financiamiento de la pequeña y mediana empresa en Costa Rica," Financiamiento para el Desarrollo 5142, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    25. Durán Valverde, Fabio & Herrero, Fernando, 2001. "El sector privado en el sistema de salud de Costa Rica," Financiamiento para el Desarrollo 5086, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    26. Rivas G., Carlos, 1997. "Reforma al sistema financiero y regulación de conglomerados financieros en Argentina," Financiamiento para el Desarrollo 5270, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    27. Morales Sánchez, Luis Gonzalo, 1997. "El financiamiento del sistema de seguridad social en salud en Colombia," Financiamiento para el Desarrollo 5263, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    28. Humberto Mora Alvarez, 2000. "Riesgo del aseguramiento en el sistema de salud en Colombia en 1997," Documentos de Investigación 3474, Cepal Naciones Unidas.
    29. Ruedi, Nora & Szalachman, Raquel, 2000. "Un perfil del déficit de vivienda en Chile, 1994," Financiamiento para el Desarrollo 5299, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    30. Arrau Pons, Patricio, 1996. "Nota sobre el aumento del ahorro nacional en Chile: 1980-1994," Financiamiento para el Desarrollo 5241, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    31. Brunton, P. Desmond & Kelsick, S. Valerie, 2001. "International finance and Caribbean development," Financiamiento para el Desarrollo 5094, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    32. Arenas de Mesa, Alberto, 2000. "Cobertura previsional en Chile: lecciones y desafíos del sistema de pensiones administrado por el sector privado," Financiamiento para el Desarrollo 5083, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    33. -, 1991. "Regulación y supervisión de la banca e instituciones financieras: estudios de caso de América Latina y el Caribe: conclusiones y recomendaciones, Santiago 3-5 diciembre 1990 y 22-23 agosto 1991 = Regu," Financiamiento para el Desarrollo 5275, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    34. Held, Günther, 2000. "Políticas de viviendas de interés social orientadas al mercado: experiencias recientes con subsidios a la demanda en Chile, Costa Rica y Colombia," Financiamiento para el Desarrollo 5304, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    35. Restrepo Trujillo, Mauricio, 1997. "La reforma a la seguridad social en salud de Colombia y la teoría de la competencia regulada," Financiamiento para el Desarrollo 5244, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guillermo Cruces & Quentin Wodon, 2007. "Risk-adjusted poverty in Argentina: measurement and determinants," Journal of Development Studies, Taylor & Francis Journals, vol. 43(7), pages 1189-1214.
    2. Cruces, Guillermo & Galiani, Sebastian, 2007. "Fertility and female labor supply in Latin America: New causal evidence," Labour Economics, Elsevier, vol. 14(3), pages 565-573, June.
    3. -, 2004. "Régime de croissance, vulnérabilité financière et protection sociale en Amérique latine. Les conditions "macro" de l'efficacité de la lutte contre la pauvreté," Financiamiento para el Desarrollo 5123, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. Palmer, Edward, 2006. "Public policy for pensions, health and sickness insurance: potential lessons from Sweden for Latin America," Financiamiento para el Desarrollo 5156, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. Willmore, Larry, 2006. "Non-contributory pensions: Bolivia and Antigua in an international context," Financiamiento para el Desarrollo 5145, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    6. Paddison, Oliver, 2006. "Social security in the english-speaking Caribbean," Financiamiento para el Desarrollo 5152, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cruces, Guillermo & Galiani, Sebastian, 2007. "Fertility and female labor supply in Latin America: New causal evidence," Labour Economics, Elsevier, vol. 14(3), pages 565-573, June.
    2. Guillermo Cruces & Quentin Wodon, 2007. "Risk-adjusted poverty in Argentina: measurement and determinants," Journal of Development Studies, Taylor & Francis Journals, vol. 43(7), pages 1189-1214.
    3. Willmore, Larry, 2006. "Non-contributory pensions: Bolivia and Antigua in an international context," Financiamiento para el Desarrollo 5145, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. Palmer, Edward, 2006. "Public policy for pensions, health and sickness insurance: potential lessons from Sweden for Latin America," Financiamiento para el Desarrollo 5156, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. Paddison, Oliver, 2006. "Social security in the english-speaking Caribbean," Financiamiento para el Desarrollo 5152, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    6. Titelman Kardonsky, Daniel & Calcagno, Alfredo Fernando & Manuelito, Sandra, 2003. "From hard-peg to hard landing?: recent experiences of Argentina and Ecuador," Financiamiento para el Desarrollo 5106, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    7. Fox, M. Louise & Palmer, Edward, 2001. "Pension reform in Europe in the 90's and lessons for Latin America," Financiamiento para el Desarrollo 5092, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    8. Studart, Rogério, 2000. "Pension funds and the financing productive investment: an analysis based on Brazil's recent experience," Financiamiento para el Desarrollo 5079, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    9. José Antonio Ocampo & Camilo Ernesto Tovar, 1999. "Price-based capital account regulations: the Colombian experience," Documentos de Investigación 3372, Cepal Naciones Unidas.
    10. -, 2004. "Régime de croissance, vulnérabilité financière et protection sociale en Amérique latine. Les conditions "macro" de l'efficacité de la lutte contre la pauvreté," Financiamiento para el Desarrollo 5123, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    11. González R., Marino J., 2001. "Reformas del sistema de salud en Venezuela (1987-1999): balance y perspectivas," Financiamiento para el Desarrollo 5089, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    12. Titelman Kardonsky, Daniel & Uthoff, Andras, 2003. "The role of insurance in social protection," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    13. Cuadros, Jéssica & Jiménez, Luis Felipe, 2003. "Expanding the coverage of pension systems in Latin America," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    14. Bravo, Jorge H., 2001. "The Chilean Pension System: A Review of Some Remaining Difficulties After 20 Years of Reform," Discussion Paper 7, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    15. Bravo, Jorge Horacio, 2000. "Population ageing and pension systems in Latin America," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    16. Randall P. Ellis & Juan Gabriel Fernandez, 2013. "Risk Selection, Risk Adjustment and Choice: Concepts and Lessons from the Americas," IJERPH, MDPI, vol. 10(11), pages 1-34, October.
    17. Uthoff, Andras, 2006. "Gaps in the welfare State and reforms to pension systems in Latin America," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    18. Chisari, Omar O. & Maquieyra, Javier & Romero, Carlos A., 2009. "Liberalization of trade in services: A CGE analysis for Argentina, Brazil and Uruguay," MPRA Paper 15336, University Library of Munich, Germany.
    19. Ximena Quintanilla, 2011. "Did Chileans Maximize Pensions when Choosing between PAYG and DC?," Working Papers 46, Superintendencia de Pensiones, revised Sep 2011.
    20. Calvo, Esteban & Williamson, John B., 2006. "Old-Age Pension Reform and Modernization Pathways: Lessons for China from Latin America," MPRA Paper 4872, University Library of Munich, Germany, revised 2007.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecr:col035:5113. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Biblioteca CEPAL (email available below). General contact details of provider: https://edirc.repec.org/data/eclaccl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.