MACROECONOMICS OF strongSTAGNATIONstrong AND NEW DEVELOPMENTALISM IN LATIN.pdfVIP

MACROECONOMICS OF STAGNATION AND NEW DEVELOPMENTALISM IN LATIN AMERICA Luiz Carlos Bresser-Pereira To be published in Keynes for the Twentieth Century: The Continuing Relevance of the General Theory (New York: Palgrave-Macmillan). Paper presented at the 9th Post Keynesian Conference, Kansas City, September 14-18, 2006. Revised October 10, 2007. After the failure of conventional orthodoxy to promote macroeconomic stability and development, Latin America has become home to a clear movement for rejecting the “macroeconomics of stagnation” that it contains. Given that, the question is whether there is an alternative to the diagnoses and policies that the North offers to Latin America. In this paper, after examining the crisis of the national development strategy that was old developmentalism, I compare the rising new developmentalism with its earlier version, as well as with the set of diagnoses and policies that rich nations have prescribed and pushed to developing countries since the neo-liberal ideological wave became prevalent worldwide: conventional orthodoxy. In the first section, I discuss old developmentalism, its initial success, its obsolescence due to a series of new facts and distortions, and its replacement with conventional orthodoxy since the late 1980s. In the second section, I discuss the importance of the concept of the nation and of the “national development strategy” institution. In the third section, I discuss new developmentalism as a “third discourse” lying between the