Ben Schneider’s article (Confidence and Concertation in Brazil and Mexico, 1997) attempts to explain why Brazil and Mexico, both pursuing similar ISI development strategies at the beginning of the 1980’s, took different approaches to neoliberal economic reform, with Mexico enacting deep and rapid reforms and Brazil taking a slow and less drastic approach.
While he attributes the depth of reform to the severity of the economic crises that preceded them, Schneider seeks to explain the pacing and success of stabilization and liberalization policies, arguing that this depended heavily on the nature of government business relations.
In government-business relations, he downplays the importance of high-level officials relationships with business leaders and the process of policy hold-up by business interests earning rent from the status quo. He also faults institutionalist explanations for failing to explain the timing of reforms. Instead, he asserts the importance of concertación (or in Brazil pacto social) a process of regular meetings between representatives of business associations, the government and sometimes labor unions to negotiate the details of policy implementation. He argues that neoliberal reforms (such as policies to combat hyper-inflation) must be both credible and flexible to succeed but that flexibility undermines credibility. Concertación is one of the few ways to enhance both.
He points to high levels of concertación in Mexico as having reduced the costs of reform and led to more rapid stabilization than in Brazil where concertación was weak and restructuring programs where “stabilization came and the implementation of structural reforms such as trade liberalization was slow and uneven”.
So one is apt to ask, why was concertación weak and not fomalized in Brazil as it was in Mexico? Schneider argues that the difference was political stability, strong business associations, and shared perceptions of vulnerability. Brazil was a fledgling democracy with many parties attempting to lead the country in different directions, while Mexico was firmly under PRI control. With respect to business associations, Mexico had a formal peak organization (the Consejo Coordenador Empresarial or CCE) representing sectoral associations, so that officials could effectively communicate with business as a whole. Brazil lacked such a business umbrella organization.
Although he successfully motivates the role that Concertación plays in the policy making and implementation process, he fails to meaningfully explain why concertación differed in Mexico and Brazil, without relying on the very explanations for reform that he bgins the article by downplaying. The first difference that he argues led to differences in concertación was “political stability”. Its hard to see how this departs from institutionalist arguments. If political stability is not driven by institutions and exogenous shocks, then where does this variation on “political stability”come from? Secondly, the existence of peak associations in business as a “cause” of differences in concertacíon seems plausible but is of little value without going deeper. What caused business in Mexico to organize in representing its preferences to government while business in Brazil did not? Again, it would be hard to answer this without making institutional arguments or relying on the incentives of rent-seeking coalitions to apply pressure through political means. Schneiders third difference contributing to variance in concertación, “shared perceptions of vulnerability” is not really developed.
The argument is interesting and the article offers good insight into business government relations, the processes by which business preferences are organized and represented to government, and he drivers of successful stabilization programs. But the conclusions offered overreach or leave important questions like why Brazil lacked a peak business organization or formalized concertación procedures unexplained. It would be fascinating to find a source of difference between Brazil and Mexico separate from institutional factors or rent-seeking behavior that led to differential neoliberal reforms. But concertación does not seem to meet this criteria. It appears to be essentially the result of both of these.
3 responses so far ↓
monicapachon // February 28, 2008 at 7:58 am
Good points made and good critique of the reading. It would seem that his view is compatible with institutionalist arguments – yet he dismisses them – I would say that the question on timing proposed is interesting – just because I would say the government has enough incentives to give their friends time to “adapt” as in the Argentinian case with the Unions.
eengelman // February 28, 2008 at 11:04 am
Then wouldn’t we find slower pacing in mexico where corporatist relations between governement and business were more institutionalized? I guess the slow pacing of brazilian neoliberal reforms doesnt necessarily point to “adaption allowances” if business did not know what to expect.
What is the main non-electoral channels of organized interest influence in Brazil? Or can we say Brazil is less corporatist?
kpsharp // February 28, 2008 at 9:54 pm
Since Mexico’s business associations were united under a single “peak organization” and stabilization was in the interest of all business perhaps the individual needs to “adapt” for any one industry was outweighed by the collective incentive to stabilize the economy and bring about the reforms that were deemed necessary by the washington consensus.
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