Why Brazil has not grown: a comparative analysis of Brazilian and Chinese economic management

This paper aims to answer a very basic question asked by not only Brazilians, but people in other developing countries where liberal reform agendas were oversold, namely: why has China grown so rapidly and Brazil not. The first section establishes the basis for comparison between China and Brazil by contextualizing these countries within the BRICs concept. The second section aims at a partial explanation by surveying the results of a generation of Washington Consensus era growth. Given the agnosticism about total liberal packages and the puzzle of why incomplete reformers grew better, the paper engages in a comparative analysis of Brazilian and Chinese reforms focusing only on the issue of macroeconomic policy, especially the monetary and exchange rate regimes, and its effect on growth in the third section. That is, the Brazilian experience with inflation targeting and flexible exchange rate regime, since 1999, has contributed to slow start-stop growth and has been relatively high inflation, while the more managed approaches favored by China have done the reverse. Finally, the paper concludes offering policy advice to the other developing countries, BRICs, N-11, or otherwise.