Shaping business interests: The politics of neo-liberalism in Brazil, 1985-1992

This study analyzes the rise and rapid collapse of Fernando Collor's neo-liberal reform project between 1989 and 1992 in Brazil. While some countries, such as Chile, have progressed much farther in implementing these reforms, Brazil has noticeably lagged behind. Explanations for Brazil's failure have focused on several issues: the absence of an electoral coalition supporting reforms; poor political leadership; private business resistance due to limited adaptability and dependence on protection and subsidies; and the weakness of business organizations in leading a transformation of capitalism.;This study argues that these views misperceive the reform process in Brazil. It argues that Collor successfully built a neo-liberal electoral coalition that included private business. However, his inability to build a legislative coalition against inflation undermined the implementation of the reforms. This inability stemmed from fundamental weaknesses in Brazil's political party system. The weakness of Brazil's parties makes politicians particularly dependent on patronage and deficit-financing, which are critical obstacles to anti-inflation policies.;To make this argument, the study analyzes Collor's neo-liberal program as a problem of adjustment at three levels: the micro level of business operations; the meso level of business organizations; and the macro level of economic management. The study demonstrates that liberalization provoked considerable changes at the micro and meso levels. However, macro failures undermined these efforts and broke political support for costly adjustments. The study concludes that without reform of the party system, it will be hard for any development program to renew growth in Brazil.