Varieties of capitalism and institutional complementarities: an analysis of Brazil’s oil policy and the feasibility of the “Pre-Salt Project”

Abstract

This paper aims to analyze Brazil’s oil policy and, more specifically, the feasibility of the “Pre-salt Project” (Almeida, 2013) from the point of view of Varieties of capitalism (VOC) and with a special emphasis on the concept of “institutional complementarities”, which is essential to this kind of literature. It is argued that Brazil’s oil policy is actually a combination of specific public policies, which are ultimately coordinated by the energy policy. Faced with the challenge posed by the “pre-salt project”, these public policies have experienced and will continue to experience a process of reevaluation and resizing so that their implementation can be carried out on a more appropriate scale. In many cases, these public policies are jointly reevaluated and resized in order to assess whether their respective goals and tools are mutually compatible. It is argued that this task can be interpreted as a search for “institutional complementarities”. In other words, decision makers seek to strengthen or create synergies between public policies, so as to “increase each other’s returns”, in line with that set out in Hall and Soskice (2009). The article makes reference to alternative perspectives on institutional complementarities – such as Becker (2007), Crouch (2009), Amable (2009) and Peck and Theodore (2007) – to examine whether public policies such as energy, the environment, education, financing, macroeconomics, industry and foreign trade are prepared to meet the needs of the “pre-salt project”. Based on this analysis, the conclusion is that there is a tendency for the “pre-salt project” to succeed in the long term, although at a slower pace and to a level below that expected initially by the government. In view of this, the political and economic implications of the “Operação Lava Jato” and the fall in oil prices are interpreted as “exogenous shocks” that temporarily affect the search for institutional complementarities, but do not represent a serious risk to the “pre-salt project”.