Institutions and development from a historical perspective: the case of the brazilian development bank by Alex Wilhans Antonio Palludeto and Roberto Alexandre Zanchetta Borghi published by Review of Political Economy (2/2020).
“Mainstream economics sees institutions as one of the main reasons why growth trajectories have differed between countries. In particular, this literature regards market-oriented institutions as the basis of economic development (Acemoglu and Robinson 2010). Critical approaches, however, emphasize the historical process of different institutions and a mutual causality between institutions and development (Chang 2011). This paper analyzes the trajectory of a key institution of long-term financing in Brazil, namely the National Development Bank (BNDES). Following an ‘Old Institutionalist’ approach, it takes into account the changes in the bank’s orientation. It also highlights the interaction between the role assumed by the BNDES and the prevailing development conventions over time. The bank’s history is seen as nonlinear, varying according to the socio-economic and political context. Four major periods can be highlighted following each phase of Brazil’s development process: (i) from the creation of the BNDES in 1952 to the debt crisis in the 1980s, a period known as ‘developmentalism’; (ii) the neoliberal movement of the 1990s; (iii) the reintroduction of the BNDES as a relevant tool for development in the 2000s; and (iv) a new neoliberal movement since mid-2016. Each of these periods is marked by a certain political and socio-economic convention regarding development that shapes (and is shaped by) institutions, such as the BNDES. Based on literature review and data analysis, this work sheds light on the role of the bank in the historical context of Brazilian development. The remainder of the paper is divided into three sections. The first section reviews the literature on economic development and institutions. In contrast to the mainstream economics that considers a one-sizefits-allinstitutionfordevelopment,acriticalapproachisadoptedbyhighlightingtheinteractions between development and institutions as historical processes, inspired by the ‘Old Institutional Economics’ approach. The second section analyzes the role played by the BNDES in the aforementioned periods, in order to show how it shapes and at the same time is conditioned by different historical contexts. The third section details BNDES policies since the 2000s, particularly its role as a countercyclical force in the face of the 2008 global financial crisis and the introduction of new directives in recent years. Concluding remarks follow…”
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