The Real Plan: institutional complementarities, political struggles, and economic transformations

• In Event: Currency and Taxes

Abstract

The political and economic changes implemented in Brazil to stop inflation were not simply a matter of monetary reform with some minor adjustments to consolidate it. On the contrary, its control required a profound transformation of the prevailing institutions in Brazilian political economy. This paper does not intend to tell the story of how the inflation was controlled in Brazil in the first half of 1990s; with the successful Brazilian stabilization as empirical evidence, the present paper will study how and why institutional complementarities are built. The study of the Real Plan give important insights into the understanding of institutional complementarities because it required numerous institutional reforms to achieve its objective, even if these reforms were not rationally planned nor conceived as a series of stages to follow. These events will be the background of the theoretical argument about how independent political struggles in different arenas became complementary; someone used these struggles strategically because they were complementary to the pursuit of their own objective. Therefore, different actors who followed their own paths transformed these institutions until the interaction between them was perceived as fundamental to the stabilization effort. In fact, these more or less simultaneous transformations ran fairly independently from each other, even if in some instances they were considered as a whole. The paper traces these struggles, the main actors behind them, and how they were bundled within the stabilization program.

Author

• Alejandro Angel Tapias, Université de Montréal