Neo-liberalism and market concentration in Brazil: the emergence of a contradiction?
Three of the major policy prescriptions of the neo-liberal school of the late 20th century were: to drastically reduce import tariffs and non-tariff barriers to imports, to permit foreign firms to enter markets from which they had been excluded, and to reduce the presence of the state through massive privatization programmes. This paper examines the degree of market and firm competitiveness that developed in Brazil in the 15 years since the introduction of neo-liberal policies. In particular, it seeks to evaluate the extent to which trade liberalization and the freeing-up of domestic markets has resulted in more competitive firm performance and market structures.The structure of the paper is as follows. It first reviews the policy measures associated with the dismantling of ISI, in particular domestic market de-regulation, privatization and trade liberalization. Second, the impacts of these policies on domestic market concentration and import penetration are analyzed. Next, the competitive performance of Brazilian enterprises is evaluated and linked to underlying changes in market structure and contestability. The objective here is to assess the relative validity of the SCP and CMH approaches in the Brazilian context. It also examines the impact of market concentration on Brazil's distribution of income. Finally, by way of a conclusion, some policy recommendations are advanced.
Manchester, UK, CRC Working Paper, No. 122, 18 pp.