Professor Bresser-Pereira receives title of researcher emeritus from CNPq

Economist Luiz Carlos Bresser-Pereira, professor emeritus from Fundação Getulio Vargas, has recently been granted the title of Researcher Emeritus of the National Council for Scientific and Technological Research (CNPq), one of the highest Brazilian honors in the field of science. Bresser-Pereira was chosen for his contributions in the field of economy and his prestigious academic reputation.

Professor Bresser-Pereira has dedicated decades of his career to teaching, researching and publishing articles in the field of economy. In partnership with other renowned scholars, he developed an applied macroeconomic theory coined New Developmentalism, regarded by the professor as one of his main contributions to the economic debate.

Targeting middle-income countries such as Brazil, the New Developmentalism theory is based on balancing the so-called five macroeconomic prices – profit rate, interest rate, exchange rate, inflation rate and wage rate. “The main pillar is the exchange rate, which is directly related to the country’s checking account,” said the professor. According to the professor, the theory addresses, as well as the fiscal responsibility, and exchange rate’s responsibility in avoiding checking account deficit.

“Economists generally defend the checking account deficit, which is considered an external savings account. This theory shows that this argument is invalid and unveils its true nature as an exchange populism strategy of sorts,” said the professor. According to Bresser-Pereira, constant exchange rates rises for a long period, such as the case in Brazil, ultimately curtails investments, hinders development, and promotes deindustrialization.

“The Brazilian exchange rate rose between 2007 and 2014. During this period, in today’s prices, the rate was BRL 2.60 per USD when it should be BRL 3.80 to be competitive and more attractive for the industry. This explains why companies took on significant debts and some of them even went bankrupt, ultimately triggering the crisis we see today. This is a financial crisis of the companies caused by reckless exchange policies,” said the professor.

According to the researcher, since the market is unable to maintain this balance, a macroeconomic developmentalism policy is necessary – albeit completely different from the one created in the 1950s. “I believe the government should have much less power to intervene in the economy. It should intervene in the economy’s non-competitive sector – infrastructure, public services and some primary industries – and adopt a highly active macroeconomic policy, particularly regarding the exchange rate and checking account deficit. The rest should be left to be regulated by the market and free competition. In short, this is the concept behind the New Developmentalism theory”, concluded the professor.

Bresser-Pereira is one of the oldest acting professors at FGV, joining the foundation in 1959 as an assistant professor. Until 1999, he divided his time between teaching and researching activities and other ventures. The professor also gained notoriety in the private sector and in politics, mostly known for his time as minister of several departments. Since 1999, however, he has dedicated his time exclusively to his academic career. “This new phase of going back to full-time teaching and researching has been very productive. And I am very happy to have received such acknowledgment,” said Bresser-Pereira.