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Explaining Bureaucratic Independence in Brazil: The Experience of the National Economic Development Bank*

Published online by Cambridge University Press:  05 February 2009

Eliza J. Willis
Eliza J. Willis
Affiliation:
Assistant Professor of Political Science atGrinnell College, Iowa.
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Abstract

This article assesses competing explanations of the independence from political and economic elites achieved by Brazil's Banco Nacional de Desenvolvimento Econömico (BNDE) during the 1950s. Whereas others have stressed the actions taken by Presidents Getúlio Vargas and Juscelino Kubitschek, I attribute the Bank's remarkable independence to a cadre of innovative civil servants. In this account, independence is measured by control over personnel recruitment, loan allocation, and generation of funds. The considerable control BNDE bureaucrats exercised over personnel recruitment and loan allocation countered their limited control over funding, permitting the Bank to become an independent and effective development institution.

Type
Articles
Information
Journal of Latin American Studies , Volume 27 , Issue 3 , October 1995 , pp. 625 - 661
Copyright
Copyright © Cambridge University Press 1995

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References

1 The publication of several books about the Kubitschek presidency after the return to civilian rule in 1985 suggests a continuing fascination with this period in Brazilian history. Recent publications include Bielschowsky, Ricardo, Pensamento ecônomico brasileiro: O ciclo ideológico do desenvolvimentismo (Rio de Janeiro, 1988)Google Scholar; Mayrink, G., Juscelino (São Paulo, 1988)Google Scholar; de Assis Barbosa, F., Juscelino Kubitschek: Uma revisão na político brasileira (Rio de Janeiro, 1988)Google Scholar; Federal, Senado, JK, O estadista do desenvolvimento (Brasilia, 1991)Google Scholar; de Castro Gomes, A., O Brasil do JK (Rio de Janeiro, 1991)Google Scholar; Heliodoro, A., JK, exemploe desafio (Brasília, 1991)Google Scholar. Important studies completed before 1985 are Daland, R., Brazilian Planning: Development Politics and Administration (Chapel Hill, 1967)Google Scholar; Cardoso, M.L., Ideologia do desenvolvimento Brasil: JK JQ (Rio de Janeiro, 1968)Google Scholar; Leff, N., Economic Policy-Making and Development in Brazil, 1947–1964 (New York, 1968)Google Scholar; Lafer, C., The Planning Process and the Political System: A Study of Kubitschek's Target Plan, 1956–1961 (Ithaca, 1970)Google Scholar; de Mesquita Benevides, V., O Governo Kubitschek: Desenvolvimento Econömico e Establidade Político 1956–1961 (Rio de Janeiro, 1979)Google Scholar; and Silva, H., Juscelino, O desenvolvimento (São Paulo, 1983)Google Scholar.

2 Sikkink, K., Ideas and Institutions: Developmentalism in Brazil and Argentina (Ithaca, 1991)Google Scholar; Geddes, Barbara, ‘Building “State” Autonomy in Brazil, 1930–1964’, Comparative Politics, vol. 22, no. 2 (01 1990), pp. 217–35CrossRefGoogle Scholar; Geddes, B., Politician's Dilemma: Building State Capacity in Latin America (Berkeley, 1994)Google Scholar.

3 Heclo, H., Modern Social Political in Britain and Sweden (New Haven, 1974)Google Scholar cited in Skocpol, T., ‘Bringing the State Back In: Strategies of Analysis in Current Research’, in Evans, P. et al. , Bringing the State Back In (Cambridge, 1985), pp. 11–12Google Scholar.

4 Skocpol, ‘Bringing the State Back In’, p. 9.

5 The distinction between autonomy and insulation has been clearly drawn by Geddes in Politician's Dilemma, pp. 69–74.

6 Geddes, Politician's Dilemma; Dietrich Rueschemeyer and Peter Evans, ‘The State and Economic Transformation: Toward an Analysis of the Conditions Underlying Intervention’, in Evans et al. Bringing the State Back In, p. 51; Johnson, Chalmers, ‘Political Institutions and Economic Performance: The Government-Business Relationship in Japan, South Korea, and Taiwan’, in Deyo, F.C., The Political Economy of the New Asian Industrialism (Ithaca, 1987), pp. 136–65Google Scholar; Evans, Peter, ‘The State as Problem and Solution: Predation, Embedded Autonomy, and Structural Change’, in Haggard, S.and Kaufman, R., The Politics of Economic Adjustment (Princeton, 1992)Google Scholar.

7 See the discussion in Skocpol, ‘Bringing the State Back In’, pp. 11–14.

8 Ibid., p. 11.

9 Flynn, Peter, ‘Class, Clientelism, and Coercion: Some Mechanisms of Internal Dependency and Control’, The journal of Commonwealth and Comparative Politics, vol. 12, no. 2 (07 1974), pp. 133–56CrossRefGoogle Scholar.

10 Graham, L., Civil Service Reform in Brazil: Principles vs. Practice (Austin, 1968)Google Scholar; Geddes, Politician's Dilemma, pp. 51–61.

11 C. Lafer, The Planning Process.

12 Several books and manuscripts have noted the centrality of the BNDE to Brazil's industrial development during the 1950s. In addition to the recent books by Sikkink and Geddes, see Daland, Brazilian Planning; Lafer, The Policy Process; de Paiva Leite, C., ‘Brazilian Development: One Problem and Two Banks’, Inter-American Economic Affairs, vol. 14, no. 1 (Summer 1960), pp. 3–24Google Scholar; Pinto, R., ‘The Political Ecology of Brazil's National Development Bank (BNDE)’ (Washington, 1969)Google Scholar; Baer, Werner and Villela, Annibal, ‘The Changing Nature of Development Banking in Brazil’, Journal of Inter-American and World Affairs, vol, 22, no. 4 (11 1980), pp. 423–40CrossRefGoogle Scholar; Viana, Ana Luiza d'Avila, ‘O BNDE e a Industrialização Brasileira, 1952–1961’, unpubl. M.A. thesis, Universidade de Campinas, 1981Google Scholar; Lessa, C., Quinze Anos de Político Econômica (Rio de Janeiro, 1982)Google Scholar; Sola, Lourdes, ‘The Political and Ideological Constraints to Economic Management in Brazil, 1945–1963’, unpubl. Ph.D. diss., Oxford University, 1982Google Scholar; Martins, L., Estado Capitalistae Burocracia no Brasil pós-64 (Rio de Janeiro, 1985), pp. 83–124Google Scholar.

13 See discussion on the importance of ministerial location in Willis, E., ‘The State as Banker: The Expansion of the Public Sector in Brazil’, unpubl. Ph.D. diss., University of Texas at Austin, 1986, pp. 58–59Google Scholar

14 Geddes, Politician's Dilemma.

15 Sikkink, Ideas and Institutions.

16 Excellent discussions of the debate over developmentalism during Kubitschek's presidency are Sikkink, Ideas and Institutions; Cardoso, Ueologica do Desenvolvimento; Bielschowsky, Pensamento econômico brasileiro; Sola, , ‘The Political and Ideological Constraints’ Mantega, G., A Econ⊚mica Politico Brasileira (Sāo Paulo, 1984)Google Scholar; Furtado, C., A fantasia organispda (Rio de Janeiro, 1985)Google Scholar; Campos, Roberto, A Lanterna na Popa: Memórias (Rio de Janeiro, 1994)Google Scholar.

17 Graham, Civil Service Reform in Brazil; Siegel, Gilbert, ‘The Vicissitudes of Government Reform in Brazil: A Study of the DASP’, unpubl. PhD diss., University of Southern California, 1966Google Scholar; Draibe, Sônia, Rumos e metamorfoses: um estudo sobre a constituçicão do Estado e as alternativas da industrializaçãs no Brasil, 1930–1960 (Rio de Janeiro, 1985)Google Scholar.

18 Geddes, Politician's Dilemma and Graham, Civil Service Reform.

19 See Baer and Villela, ‘The Changing Nature of Development Banking’; Willis, ‘The State as Banker’; Martins, Estado Capitalista; Celina Amaral Peixoto Moreira Franco, ‘A Criação do Banco Nacional de Desenvolvimento Econômico’, unpubl. mss. (Rio de Janeiro, no date).

20 For a discussion of the technical missions led by Morris Llewellyn Cooke and John Abbink during the 1940s, see Skidmore, T., Politics in Brazil, 1930–1964: An Experiment in Democracy (Oxford, 1967), pp. 45, 72–3Google Scholar.

21 Joint Brazil-United States Economic Development Commission, The Development of Brazil (Washington, D.C., 1954)Google Scholar; Willis, ‘The State as Banker’, pp. 149–60.

22 Joint Commission, The Development of Brazil, p. 42.

23 For a more extensive discussion of these options see Willis, ‘The State as Banker’, pp. 166–174.

24 Dreifuss, René Armand, 1964: A Conquista do Estado (Petropolis, 1981)Google Scholar.

25 Author interview with Guilherme Arinos, Rio de Janeiro, 18 April 1984. Arinos served as an adviser to Vargas during this period. Vargas later appointed him to the Bank's Conselho de Administrção.

26 Franco, ‘A Criação’; Martins, Estado Capitalista.

27 Lafer had settled on the figure of 500 million dollars because he believed that was the amount Brazil would received from the World Bank and the Export-Import Bank to cover the foreign currency costs of the Lafer Plan. See Franco, ‘A Criação’.

28 These provisions are discussed in Law 1.628.

29 Ibid.

30 Graham, Civil Service Reform; Roett, R., Brazil: Politics in a Patrimonial Society (Boston, 1972)Google Scholar.

31 Sikkink claims Maciel Filho had served on the CMBEU. However, this was not the case. He was part of a large delegation of Brazilians who negotiated with the World Bank over possible future loans. See Franco, ‘A Criação’.

32 Franco, ‘A Criação’, p. 62. The Superintêndencia refers to the Superint≖ndencia da Moeda e Crédito (SUMOC) which performed many of the functions of a central bank before 1964. Vargas appointed Maciel Filho to head both SUMOC and the BNDE.

33 Interview with Celso Furtado, Projeto Memória, Rio de Janeiro, 22 June 1982.

34 Campos, A Lanterna na Popa, p. 194.

35 Helio Jaguaribe, ‘A Comissão Mista’, unpubl. mss, no date.

36 The importance of career patterns of bureaucrats for state capacity and independence has been discussed by Skocpol, ‘Bringing the State Back In’. For an interesting analysis of the career patterns in Brazil in comparative perspective see Schneider, B.R., Politics Within the State Elite Bureaucrats and Industrial Policy in Authoritarian Brazil (Pittsburgh, 1991)Google Scholar; Schneider, Ben Ross, ‘The Career Connection: A Comparative Analysis of Bureaucratic Preferences and Insulation’, Comparative Politics, vol. 25, no. 3 (04 1993). pp. 331–50CrossRefGoogle Scholar

37 Several bureaucrats who were recruited during this period spoke of the high wages offered by the Bank. Author interviews with Ézio Távora dos Santos, Rio de Janeiro, April 1984; Juvenal Osório Gomes, Rio de Janeiro Nov. 1983.

38 Interview with Celso Furtado, Projeto Memória, 22 June 1982; Hélio Schlittler, BNDE, Projeto Memória, 12 Feb. 1982; Campos, A hanterna na Popa. p. 164.

39 Campos, A Lanterna na Popa, p. 195.

40 The idea for this arrangement had been suggested by ECLA head, Raúl Prebisch. Interview with Celso Furtado, Projeto Memória, 22 June 1982.

41 Interview with Juvenal Osório Gomes, BNDE, Projeto Memória, 10 Feb. 1982.

42 BNDE, ‘Exposição Sobre o Programa de Reaparalhamento Econômico: Exercício de 1957. Interview with Campos, Projeto Memória, 27 03 1982Google Scholar.

43 The only exception to this practice occurred soon after the Bank was created. A member of the National Congress asked to appoint two individuals to positions as elevator operators for the new institution.

44 This discussion draws upon a variety of sources including meeting minutes of the diretoria and Conselho de Administração interviews, and annual reports of the BNDE.

45 BNDE, ‘Exposição Sobre O Programa e Keaparelhamento Econômico: Exerci'cio de 1954’, (Rio de Janeiro, 1954), p. 71Google Scholar.

46 These criteria were outlined by the Technical and Economic Departments. They also suggested not funding highly developed sectors of the economy, such as the cement industry. Minutes of diretoria meeting, 23 June 1955.

47 Cited in Martins, Estado Capitalista, p. 89.

48 Bank officials insisted on the right to appoint members of the board governing the Companhia Petróleo da Amazonia (COPAM) which received credits in 1955. This case was discussed during a meeting of the Conselho de Administração held on 28 July 1955.

49 These provisions were discussed as a meeting of the Conselho de Administração held on 10 Oct. 1955.

50 Campos, A Lanterna na Popa, p. 194.

51 This discussion draws on minutes of Conselho de Administração meetings held on 10 March 1953 and 25 May 1953.

52 Joint Brazil-United States Economic Development Commission Report, No. 19. Also meeting minutes of the Conselho de Administração held on 10 March 1953.

53 BNDE, ‘Exposição Sobre O Programa de Reaparelhamento Econômko: Exercício de 1955’, (Rio de Janeiro, 1956)Google Scholar. According to Bank records, Vargas did not authorize Lafer to use BNDE funds in this way. Meeting minutes, Conselho de Administração, 10 March 1953.

54 BNDE ‘Exposição de 1955’. 1955’.

55 Campos, A Lanterna na Popa, p. 207.

56 BNDE, ‘Exposição de 1954’.

57 Meeting minutes, Conselho de Administração, 12 July 1954.

58 For a discussion of the implementation of this policy, see Tendler, J., Electric Power in Brazil: Entrepreneur ship in the Public Sector (Cambridge, 1968), p. 216CrossRefGoogle Scholar; Interview with João Mesquita Lara, Projeto Memória, 15 Feb. 1982.

59 Meeting minutes, Conselho de Administração, 10 Feb. 1955.

60 Comments made by Viera, João Pedro Gouveia in an interview with O Globo, 17 01 1982Google Scholar.

61 BNDE, ‘Exposição de 1955’, p. 113.

62 One member of the Conselho de Administração suggested publishing and distributing a pamphlet outlining the criteria used in analysing loan requests. He argued that this might help free the Bank from public criticism. Such pamphlets were produced by the Bank during this period. Meeting minutes, Conselho de Administração, 5 April 1956.

63 Bank officials had several debates on the question of how to define a basic industry. Some officials argued that the BNDE should not consider as basic any industry producing consumer goods for domestic use. Others were more willing to adopt a broader, more inclusive definition. In practice, the Bank did not extend loans to producers of consumer nondurable goods. Meeting minutes, Conselho de Administração, 1 Sept. 1958.

64 Baer and Villela, ‘The Changing Nature’, p. 429.

66 The following discussion draws upon two Bank documents, ‘Relatório do Group Trabalhador Resolution No. 45/58, 10 Oct. 1958; BNDE Report to the Escola de Guerra Superior, ‘As Soluções para o Petroleo da Bolivia’ and Roberto Campos's memoir, A Lanterna na Popa, pp. 365–7.

66 Campos claims that Kubitschek was frightened by ‘this absurd explosion of irrelevant nationalism’. Campos, A Lanterna na Popa, p. 369.

67 Although the Robore incident did strain his relationship with Kubitschek, Campos decided to resign after the President rejected the stabilisation programme he had designed with the Minister of Finance, Lucas Lopes. Kubitschek was not willing to accept the austerity measures proposed by the IMF-style programme. For a more extended discussion of this controversy, see Willis, ‘The State as Banker', pp. 269–71; Campos, A Lanterna na Popa, pp. 376–7.

68 Some técnicos claim that Campos attempted to ‘destroy’ the Bank when he became Minister of Planning after 1964. Interview with Amauri Abreu, Projeto Memoria 14 April 1982. Campos vigorously denies this charge. Interview with R. Campos, Projeto Memória, 27 March 1982 and interview with author, 4 May 1984.

69 Interview with José Pelúcio Ferreira, Projeto Memória, 13 May 1982; Interview with Juvenal Osório Gomes, Projeto Memória, 10 Feb. 1982; Interview with Amauri Abreu, Projeto Memória, 14 April 1982; Meeting minutes of the Conselho de Administração, Processo F-30, Feb. 1957. Though it is discussed by several former técnicos and is well documented by internal memos, Campos has said he does not remember the controversy over the SANBRA loan. Interview with author, Rio de Janeiro, 4 May 1984.

70 Interview with A. Abreu, Projeto Memória, 14 April 1982.

71 According to Campos, Schmidt thought Campos was a leftist radical and did not appear to trust him. See Campos, A Lanterna na Popa, p. 276.

72 For differing perspectives on the tension between differing ideological perspectives on development, see Skidmore, Politics in Brazil, pp. 87–100; Bielschowsky, Pensamento econômic brasileiro: Sola, ‘The Political and Ideological Constraints’; Campos, A hanterna na Popa, pp. 295–7.

73 Campos's later dispute with Kubitschek over stabilisation policies also revealed the limits to the Bank's independent influence over monetary policy. For a discussion of this dispute see Willis, ‘The State as Banker’, pp. 269–271; Campos, A Lanterns na Popa, pp. 352–355.

74 Conselho de Administração, Processo F-30, Feb. 1957.

75 I will not discuss temporary sources (i.e., foreign credits and earmarked funds) that were available to the Bank during this period.

76 Geddes, ‘Building “State” Autonomy’, pp. 219–20.

77 These annual reports offered particularly detailed accounts of Bank activities during the 1950s. A good summary of the basic information included in these reports during the 1950s is available in Viana, ‘O BNDE e a Industrialização Brasileira’.

78 BNDE, ‘Exposição de 1955’.

79 Interview with Mário Lara, Projeto Memória, 24 March 1982.

80 Baer and Villela, ‘Th e Changing Nature’, p. 427.

81 Ana Luiza d'Avila Viana, ‘O BNDE e a Industrialização Brasileira’, p. 106.

82 BNDE, Portaria 90, April 1956.

83 Campos, A Laitterna na Popa, p. 256.

84 Ibid. Campos also discusses these provisions in his interview for Projeto Memoria, 27 March 1982.

85 Martins, Estado Capitalista, pp. 88–89; Interview with Roberto Campos, Projeto Memória, 27 March 1982.

86 Ibid.

87 The Bank eventually received 94 per cent of the total amount of the FRE collected by the Treasury between 1952 and 1964. BNDE, ‘Origin, Resources, Structure, and Operation’ (Rio de Janeiro, 1965), p. 10Google Scholar.

88 The role of the Bank as financier of the private sector is discussed at length in Martins, Estado Capitalista, pp. 83–124; Willis, ‘The State as Banker’, pp. 310–476.