International Development Economics
Associates (IDEAs)
INTERNATIONAL CONFERENCE ON
FINANCIAL INSTABILITY AND INEQUALITY IN
AN ECONOMICALLY INTEGRATED WORLD
Tsinghua Sanya International Mathematics Forum (TSIMF)
22-24 February 2016
Andrés Lazzarini
UFRJ (Brazil) – UNSAM (Argentina)
alazzarini@gmail.com
Some Notes on Economic Growth,
Macroeconomic Policies and in
Income Distribution in Argentina
and Brazil, 2003-2015
Outline
 Intro & theoretical premises
 Effective demand principle (Kalecki, Keynes)
 External constraints (Structuralist approach)
 Political limits (Kalecki 1943)
 Period 2003-2015
 Accelerated growth
 Argentina: 2003-2008
 Brazil: 2006-2010
 Deceleration
 Argentina: 2012-2015
 Brazil: 2011-2015
 Perspectives
Effective demand principle: Kalecki and Keynes
• Investment creates savings (and not the other way
round)
Demand as engine of growth: consumption, public
spending, public and private investment, exports
Limits:
1. Structural limits (supply conditions): in particular in non
industrialized countries (periphery) problems of
external constraints
2. Political limits: more general nature, Kalecki: check on
workers’ real income at the expense of lower
employment and even lower profit margins
2000s
Context
• Better terms of trade for the periphery
• Rise in international reserves
• Low interest rates in international capital
markets
• Remarkable increase in South-South trade
•Decoupling (at least until a very few years
ago..)
Better external conditions for countries
exporting commodities (developing countries)…
That improvement in part explains the very
good performance of some Latin American
economies
DECOUPLING
Tasas promedio de crecimiento del PBI per cápita a dólares constantes del 2005 por
regiones
SOURCE World Bank
Terms of trade for Latin America, China
and India
SOURCE World Bank
International reserves
(as a % of GDP)
1994-1998
1999-2003
2004-2008
2009-2013
Angola
5.0%
7.4%
15.7%
25.2%
Sudáfrica
3.0%
5.9%
9.8%
13.1%
India
6.7%
11.3%
19.4%
17.3%
Indonesia
11.3%
17.3%
12.3%
12.6%
China
13.0%
18.3%
39.3%
45.2%
Rusia
3.9%
12.2%
27.7%
28.9%
Argentina
5.9%
7.4%
12.2%
8.9%
Brasil
6.4%
6.8%
9.4%
15.0%
Chile
21.8%
20.3%
12.9%
14.9%
Colombia
9.5%
10.3%
10.2%
10.3%
Perú
18.7%
17.8%
22.2%
30.3%
SOURCE:
World Bank data base
South-South trade
Brazil: total exports and exports to China. Chinese
share on total Brazilian exports. 1970-2010.
Exportaciones Brasil
Totales
China
1970
2.738.712.832
1.327.122
(0,00)
1975
8.669.454.336
67.357.912
(0,01)
1980
20.132.055.040
72.225.672
(1,06)
1985
25.638.731.776
817.582.208
(3,50)
1990
31.396.964.352
381.792.448
(0,91)
1995
46.145.355.776
1.203.741.184
(0,78)
2000
54.743.553.226
1.085.301.597
(2,19)
2005
118.069.804.976
6.834.996.980
(7,28)
2010
195.546.557.878
30.752.355.631
(14,15)
Source: COMTRADE data base
Argentina: total exports and exports to China and
Brazil. Chinese and Brazilian shares on total
Argentinean exports. 1970-2010.
Exportaciones Argentina
Totales
China
Brasil
1970
1.773.170.432
2.516.097
(0,14)
138.561.088
(7,81)
1975
2.961.259.776
21.448.888
(0,72)
213.480.560
(7,21)
1980
8.019.175.936
188.788.736
(2,35)
764.968.256
(9,54)
1985
8.395.986.432
311.004.064
(3,70)
496.293.408
(5,91)
1990
12.351.521.792
240.968.608
(1,95)
1.422.653.184
(11,52)
1995
20.962.545.664
285.730.784
(1,36)
5.484.101.120
(26,16)
2000
26.244.851.702
796.927.268
(3,04)
6.990.801.568
(26,64)
2005
39.963.954.009
3.154.288.661
(7,89)
6.328.294.321
(15,84)
2010
66.174.370.291
5.798.633.567
(8,76)
14.424.597.623
(21,80)
Source: COMTRADE data base.
GROWTH RATE
EXPORTS GROWTH RATE
Were external conditions alone the main
responsible that help boos the Latin American
economies, such as Argentina and Brazil?
One of the debates (at least involving Argentina
and Brazil discussion in policy and academic
circles) has been around the question of
whether it is advisable to promote and keep
“competitive” exchange rate policies
But again is exchange rate the most importan
variable for growth?
Nominal Exchange rate (Reais-USD)
Job creation in formal sectors
HOUSEHOLDS SPENDING GROWTH RATE
Wage share and Gini coefficient
Unit wage costs (blue) and output per worker
(red) in manufacturing sector
Gross capital formation and apparent
machinery consumption: GROWTH RATE
Public expenditure growth rate
BRAZIL Key variables：growth rate
Brazil： Public sector Balance
BRAZIL GDP growth rate
Argentina
ARGENTINA：growth rate
ARGENTINA：GDP & Investment growth rates
ARGENTINA：Durable equipment Investment
growth rate
ARGENTINA：Private consumption growth rate
ARGENTINA：Fiscal policy impact on GDP
growth
ARGENTINA：Real wage growth rate
ARGENTINA：Wage share（％ of GDP）
ARGENTINA：Minimum wage and pensions
ARGENTINA：Nominal wages （growth rate）
and inflation
ARGENTINA：Real wage growth rate
ARGENTINA：Social transfers （total and ％
growth rate）
Deceleration 2012- 2015
Latam countries：GDP growth rates
ARGENTINA：non－financial private sector
foreign assets demand （millions USD）
ARGENTINA：Interest rates differential
（domestic vs foreign）
ARGENTINA：International reserves（millions
USD）
ARGENTINA：current account，capital flows &
international reserves（millions USD）
Deceleration 2012- 2015
Argentina: external constraint...
Brazil: political causes....limits to full employment
strategies (Kalecki 1943)
Perspectives
Argentina: external constraint is the limit to growth
so deepening industrial policies （ which were
lacking broadly speaking）
But…recent shift in political orientation as of dec.
2015 is likely to drive the economy to a further crisis
with all the already-known consequences
Brazil: complex scenario
Int’l reserves amount to 370 billions USD, so
external conditions seem not to be the problem...
However, by carrying out fiscal adjustments and
depreciation policies (50% in 2015): fiscal deficit will
increase along with the inflation rate, and inequality
(due to fall in real wages and GDP fall)
At risk: many of the achievements over the last
decade
A plausible explanation of this remarkable
slowdonw has to be sought in the political nature of
the recent changes in economic policy economy.
Thanks!
alazzarini@gmail.com