Mario Gomes Schapiro

Rediscovering the Developmental Path? Development Bank, Law, and Innovation Financing in the Brazilian Economy

This paper examines the financing of innovation by BNDES (Brazilian Development Bank). In spite of representing a tiny portion of the Bank’s disbursements, innovation financing contains at least three elements that characterize the new state activism: a new agenda, specific tools and a unique rationale resulting from state intervention. In terms of agenda, innovation is a new item in the developmental action, which is normally driven to pick the winners in traditional sectors. Concerning the tools developed for this new mission, they have represented a break in the Bank’s paradigm (used to financing large enterprises with physical assets); it relies on flexible legal structures that, formally or informally, favor a financial relationship subject to trajectory revisions and adaptations. Ultimately, instead of the top-down and pre-defined financial operations, designed to meet economic planning requirements, the financing of innovation has been based on alliances and public-private partnerships between the private companies and the public Bank. This is the case of joint operations established between BNDES and capital market investment groups, which come together to form venture capital private funds. It is far from clear, however, in what extent this new institutional set will dictate the entire future of BNDES intervention. Despite being quite evident that the Bank developed new tools to support the new industries, it is uncertain whether innovation financing will be the hallmark of the new administrative governance or whether BNDES will deal with topics of innovations as only a residual part of its broad agenda. Among other factors, political economy tensions between old industrial sectors and innovative companies may prevent the consolidation of a completely different path for public financing of development.

AMARRANDO AS PRÓPRIAS BOTAS DO DESENVOLVIMENTO: A NOVA ECONOMIA GLOBAL E A RELEVÂNCIA DE UM DESENHO JURÍDICO-INSTITUCIONAL NACIONALMENTE ADEQUADO

, de Dani Rodrik,talvez uma maneira aceitavel de iniciaruma resenha seja justamente apresen -tando o argumento de outros autores.Nao por nenhum lampejo de erudicaoesteril, mas apenas para aproximar odebate proposto por Rodrik de algu -mas outras abordagens com as quaisseu argumento e convergente. Porestes meios, acredita-se que, se, aomenos, a resenha nao se tornar consis-tente, o autor, que nao e economista,estara protegido, ja que as suas referen -cias iniciais serao justamente trabalhosde dois professores de Direito, com osquais Rodrik tem apresentado um fer-til dialogo: Charles Sabel e RobertoMangabeira Unger. Pois bem, em uma conferencia,ocorrida em 2004, sobre a

The dilemmas of the developmental state: democracy and economic development in Brazil

Abstract Is it possible to reconcile one of the institutional strategies to promote development, known in the literature as “the developmental state”, with contemporary democratic systems of government? If so, what are the challenges, trade-offs and potential gains that such an effort may entail? The vast literature on “the developmental state” claims that it is more likely to succeed under autocratic regimes. While a “democratic developmental state” seems possible in theory, there is very little empirical evidence to show how it would work in practice. This article tries to contribute to this debate by analyzing the case of Brazil, a country that transitioned from a military dictatorship to a democratic regime in the late 1980s, and has been moving towards increasing state interventionism since 2002. While the policies implemented by the “New Developmental State” in Brazil have been explored in the academic literature, their democratic dimensions remain unchartered. There has not been a detailed analysis about how the autocratic features that characterized the developmental states in Latin America from the 1950s to the end of the 1980s (i. e. political exclusion of the majority of groups, and control of economic policies by an elite) have played out in its renewed version. Understanding the interactions between the New Developmental State and the democratic system not only allows for a better understanding of the Brazilian case, but it also sheds light on one of the most important theoretical questions raised by the development literature: is a democratic developmental state possible? Based on the Brazilian case study, we argue that it is not hard to reconcile “the developmental state” with a thin conception of democracy, i. e. with free and fair elections. In contrast, the picture is more complex if the question is whether it is possible to reconcile developmental policies with a thicker conception of democracy that includes demands for transparency, protection of minority groups, a system of checks and balances, and due process. To develop this argument, this article is divided in three parts. In the first part, we provide an overview of the literature, outlining the concept of developmental state, and the tensions that the developmental state policies may create in a democratic setting. In the second part, we focus on the Brazilian case (the “new developmental state”), exploring how these tensions played out in three concrete settings: industrial policy, infrastructure sectors, and social policies. In the third part, we identify some of the research implications of the challenges identified in the Brazilian case, especially for future law and development scholarship.

Making the Developmental State Work: How Does a Mandate Matter for the Brazilian Development Bank?

State-owned banks are a fairly common financial alternative in most developing countries. They play important roles, but also have significant weaknesses. In the literature of the field, considerable attention has been paid to their economic performance, but there is a particular problem which deserves further consideration: the lack of public control over their actions. Based on the Brazilian experience, marked by the work of a large development bank – BNDES (Brazilian Development Bank), this article evaluates the limits and possibilities of mandates serving as accountability tools for state-owned banks. Similarly to the case of Central Banks, a mandate in this case does not refer to the positions of managers within the bank; instead, it means a public delegation of performance goals. This tool has been adopted by successful state-owned banks such as the Development Bank of Canada and the Development Bank of Southern Africa. In both cases, however, mandate is described only as a tool designed to ensure good economic performance. In this paper, in turn, mandate is discussed as an accountability tool capable of providing both information for financial choices (disclosure) and of allowing for greater developmental responsiveness for lending policy.

Repensando a relação entre estado, direito e desenvolvimento: os limites do paradigma rule of law e a relevância das alternativas institucionais

Taken the prevalence of institutionalist and Rule of Law approach in the contemporary debate on economic development, this paper intends to discuss some theoretical limits of this literature, either positive or normative, mainly in its application to discussions related to the financial sector. this article claims that the spurring of development based on Rule of Law programs usually assumes a very limited view of the roles played by the law. according to the prevailing view, the role played by institutions in economic development is restricted to providing legal protection for private investors, who are assumed to be the central actors of the financial system. this paper, however, takes a different path and tries to argue that there are different institutional alternatives of economic organization, which goes beyond an arrangement based on capital market and atomized shareholders. an example of that is the brazilian financial system: in spite of recent Rule of Law type of reforms it is still dependent of a developmental bank - BNDES. as a conclusion, the article sustains that indeed law and institutions matter for development, but there are a variety of possible institutional arrangements and also several roles and functions to be played by legal tools, a lot broader than it is supposed by Rule of Law development programs. a successful institutional organization based on a development bank is an example of that.

Legalidade ou discricionariedade na governança de bancos públicos: uma análise aplicada ao caso do BNDES

This article aims to evaluate the institutional design of the political delegation that shapes The Brazilian Development Bank’s (BNDES) financial activities. It employs a normative framework of administrative law, concerning the types of political delegation, and studies two of them: legality and discretion. Legal governance is a type of arrangement in which policy objectives are delegated by the Congress, while discretionary public governance policy objectives are defined in the Executive branch of government. Both types have different comparative advantages in governing policies. Whereas legality favors predictability and publicity, discretion enables flexibility and less political involvement. The main claim is that, due to Brazil’s institutional environment, discretionary governance has proven advantageous. BNDES has been kept from the games of political and parliamentary clientele and it has suitable operational flexibility to act in times of economic crisis. However, this configuration also has costs, including financial agenda opacity and social accountability deficits.

Discricionariedade desenvolvimentista e controles democráticos:uma tipologia dos desajustes

This paper aims at presenting a “law in context” type of analysis, informed by the tensions established between development and democracy. Bearing in mind this institutional context, this article tackles typical problems of public law, which are the power and its control. The objective of this research is conceiving an analytical framework of possible inadequacies presented by accountability tools. This typology focuses on two types of possible problems: quantitative and qualitative ones. The argument developed is not empirical, but a heuristic one. In other words, it is driven to construct ideal types of accountability mismatches that can affect the relationship between executive discretion and democratic controls.