Introduction

The divergent paths of the diffusion of neoliberal reforms and the return of development agendas across countries in the last 30 years allow us to set aside the conventional view which states that there has been a tendency towards institutional convergence due to globalization, especially in its financial dimension. Thus, this chapter will explore which aspects of national path-dependency contribute to domestic narrow or expand the degree of freedom when it comes to adapting these globalization agendas to local scenarios. Given the centrality of monetary policy in Brazil, the state's role in creating an incentive structure capable of dealing with a more coordinated trajectory – like that identified by the concept of selective industrial policy (Chang 2003; Huber 2002) – is being delimited by a double-sided economic policy model. If, on one hand, floating exchange rate policies and the liberalization of capital flow restrict the sovereignty of the country for long-term planning, then on the other hand, the legacy of state capacities and the specific pattern of reform trajectory creates room for maneuvers in the formatting of public development policies.

In order to evaluate this process, this chapter combines a variety of theoretical perspectives that aim to comprehend the importance of the discourse produced in epistemic communities which was legitimized by the experience of indebtedness, rampant inflation in Latin America, and the normative coercion brought about by structural adjustment policies advocated by multilateral financial institutions.