It was the neoliberal prescription implemented in 1990 that led the Brazilian economy to bankruptcy during the Dilma Rousseff government. The practice has demonstrated the infeasibility of the neoliberal economic model in Brazil inaugurated by President Fernando Collor in 1990 and maintained by presidents Itamar Franco, Fernando Henrique Cardoso, Lula and Dilma Roussef. The very low economic growth in Brazil, the sharp de-industrialization of the country, the disproportionate rise in federal debt, widespread business failure, the back of double-digit inflation and mass unemployment during the Dilma Roussef government demonstrate the impracticability of the neoliberal model deployed in the country. Given the accursed economic heritage of PT (Workers`Party) governments, particularly Dilma Rousseff the government, the economic team of the Michel Temer government intends to adopt immediately, measures aimed at the search for the balance of public accounts to deal with the insolvency of the Union and then continue the failed neoliberal economic model. This is an irrationality try to resurrect the failed neoliberal economic model when it should restructure the Brazilian economy inspiring in the developmental experience of the successful Asian countries like Japan, South Korea, Taiwan and China.

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BRAZIL WILL NOT OVERCOMES THE CURRENT CRISIS WITHOUT
ABANDONMENT OF NEOLIBERAL ECONOMIC MODEL
Fernando Alcoforado *
The neoliberal model of development has as its basic principles as follows: 1) Minimum
participation of the State in the direction of the national economy; 2) State-owned
enterprises privatization policy; 3) little government intervention in the labor market; 4)
free movement of international capital and emphasis on globalization; 5) opening the
economy to the entry of multinationals; 5) adoption of measures against economic
protectionism; 6) de-bureaucratization of the state with the adoption of laws and more
simplified economic rules to facilitate the functioning of the economy; 7) decrease in
the size of government to make it more efficient; 8) no State interference in the prices of
products and services to be determined by the market based on the law of supply and
demand; 9) control of inflation by the State through monetary policies based on
inflation targets; 10) adoption by the State of the floating exchange rate policy; and, 11)
obtaining tax surplus for the payment of the public debt service.
It was this neoliberal prescription implemented in 1990 that led the Brazilian economy
to bankruptcy during the Dilma Rousseff government. The practice has demonstrated
the infeasibility of the neoliberal economic model in Brazil inaugurated by President
Fernando Collor in 1990 and maintained by presidents Itamar Franco, Fernando
Henrique Cardoso, Lula and Dilma Roussef. The very low economic growth in Brazil,
the sharp de-industrialization of the country, the disproportionate rise in federal debt,
widespread business failure, the back of double-digit inflation and mass unemployment
during the Dilma Roussef government demonstrate the impracticability of the neoliberal
model deployed in the country. Given the accursed economic heritage of PT
(Workers`Party) governments, particularly Dilma Rousseff the government, the
economic team of the Michel Temer government intends to adopt immediately,
measures aimed at the search for the balance of public accounts to deal with the
insolvency of the Union and then continue the failed neoliberal economic model. This is
an irrationality try to resurrect the failed neoliberal economic model when it should
restructure the Brazilian economy inspiring in the developmental experience of the
successful Asian countries like Japan, South Korea, Taiwan and China.
About Japan, it is important to note that the core of the Japanese development process
since the 1950s is the nationalist project of the developmentalist state, implemented by
the state bureaucracy in the nation's name. The Japanese model of development was
directed to exports based on high competitiveness, made possible by substantial
increases in productivity, the quality of labor and the protectionism of the internal
market, plenty of capital resulting from high savings rate and short-term credit, low
interest rates, sustained effort for technological development with programs for the
acquisition of technology and technological innovation sponsored by the government,
emphasis on industry, industrial policy, shifting from low-tech sectors to medium-
technology and then to the high-tech, following the evolution of technology, the global
demand and the production capacity of Japanese industries.
About the developmentalist experience of South Korea, we highlight that it has
developed between 1948 and 1960. In the early stages of development, the Korean State
assumed a key role through companies and public investment. The Korean government
sought to create an industrial structure based on large Korean companies organized as
conglomerates, has established strong protectionist measures in order to preserve the

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internal market for Korean companies. Given the limited purchasing power of the
domestic market, the government decided to maintain a totally focused strategy for
export-based industry. The state caused the fusion of Korean companies in the form of
large vertical networks. The government has produced several five-year economic plans
and directed the Korean companies for the sectors considered strategic for the national
economy. It was only in the 1970s, when the foundations of the South Korean economy
were solidly established that the government sought foreign direct investment. The
government was very selective in allowing foreign investment, seeking, above all,
companies that could facilitate some technology transfer.
About Taiwan, it is noted that its development was achieved largely with productivity
and competitiveness generated by a flexible production system. Flexibility concerns the
industrial structure itself and its overall adaptability to the conditions of the world
economy constantly changing under the direction of a strong State. During the
development process, the model of economic growth has drastically changed the
emphasis in the industry to replace the import of the 1950s, through export-oriented
industrialization in the 1960s (the period of takeoff) and reaching the stage called
"replacement of import oriented to export" during the 1970s and 1980s (ie. the
expansion of the industrial base to supply exports of manufactured goods). The
government of Taiwan has attracted foreign investment as a way of raising capital and
access to international markets. The Taiwanese State was the main agent in the direction
and coordination of the industrialization process in assembling the infrastructure, the
attraction of foreign capital, the choice of priorities for strategic investments and
imposing its conditions where needed.
China's integration into the global economy began in the 1980s with the policy of
Special Economic Zones which created four Export Processing Zones offering labor and
land cheap, tax exemption and social discipline to foreign investors, especially
multinational companies in order they are used as export platforms. Once adopted this
policy, capital flowed from around the globe to China. The provincial and local
governments of China invested in joint ventures with foreign investors. In the mid-
1990s, the development process was under the supervision of the Chinese State. In
1997-98, China consolidated its economic power and remained relatively stable,
resisting the destructive assault of financial flows and avoids falling into a recession.
One factor that kept China in the path of development was the administration by the
government of its integration pace in international trade and the adoption of fixed
exchange rate linked to the dollar. The main factor explaining China's relative ability to
absorb the shock of the crisis is its limited integration into the global economy,
particularly in terms of financial markets. The government control of the links between
the Chinese financial system and global markets functioned as a shield, protecting the
system to withstand the movements of financial flows around the world.
From the foregoing, it is evident to developmentalist successful experiences of Japan,
South Korea, Taiwan and China that cannot stop having the active participation of an
efficient and effective state in promoting the development of a nation like Brazil. In the
specific case of Brazil, the alternative to the neoliberal economic model is the national
economic developmentalist selective model of opening of the Brazilian economy that
should consider the adopting of an economic policy that prioritizes: 1) the sharp
reduction in interest rates to encourage investment in productive activities; 2) the
transformation of Brazil into a platform for exports; 3) the reintroduction of market
reserve in areas considered strategic for national development; 4) the capital input flow

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and capital outflow control to prevent tax evasion and restrict access of speculative
capital in the country; 5) the retake of development investing R$ 2 trillion in economic
infrastructure (ports-R$ 42.9 billion, railways - R$ 130.8 billion, highways - R$ 811.7
billion, waterways and river ports - R$ 10 9 billion, airports - R$ 9.3 billion, electricity
sector - R$ 293.9 billion, oil and gas - R$ 75.3 billion, sanitation - R$ 270 billion and
telecommunications - R$ 19.7 billion) and social (health sector - R$ 83 billion / year,
the education sector - R$ 16.9 billion / year and the public housing sector - R$ 160
billion) through public-private partnership; and, 6) the adoption of fixed exchange rate
policy to replace the floating exchange rate linked to exchange bands in place to
contribute to the stability of the Brazilian economy and raise the competitiveness of
Brazil's exports.
The immediate priority should be investment in economic and social infrastructure and
the adoption of fixed exchange aimed at reactivating the economy. On exchange rate
policy, it should be noted that the exchange rate is crucial for the growth of an economy.
It should be emphasized that one of the policies that boosted China's exports was the
fixed exchange rate. It is important to note that with a floating rate linked to exchange
rate bands, as in Brazil, the Central Bank must daily make interventions in the foreign
exchange market to make the dollar is near the price determined by the Central Bank.
The option of exchange rate regime linked the exchange rate band is expensive because
this regime does not inspire confidence in international investors - because a
devaluation can occur at any time - and given the continued need to always be attracting
dollars to keep international reserves at minimal levels comfortable, interest rates must
be quite high contributing to raise public debt that tends to become explosive. It can be
seen from the above that the national developmentalist model would cause Brazil to
take on the direction of its destination, unlike the neoliberal model that makes the future
of the country be dictated by market forces all of them committed to the international
capital.
* Fernando Alcoforado, member of the Bahia Academy of Education, engineer and doctor of Territorial
Planning and Regional Development from the University of Barcelona, a university professor and
consultant in strategic planning, business planning, regional planning and planning of energy systems, is
the author of Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova
(Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São
Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado.
Universidade de Barcelona, http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e
Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX
e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of
the Economic and Social Development-The Case of the State of Bahia (VDM Verlag Dr. Muller
Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe
Planetária (P&A Gráfica e Editora, Salvador, 2010), Amazônia Sustentável- Para o progresso do Brasil e
combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011),
Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012) and
Energia no Mundo e no Brasil- Energia e Mudança Climátic