Bianor Cavalcanti

Interview

Q/ Sustainable development involves objectives related to economic growth, social inclusion and the protection of nature. Addressing this triple challenge requires effective public policies and strong institutions. What do you identify as key ingredients in the institutional framework and what capacities do states need to address it?

First of all, I would like to say that I am very happy to be here and thank CAF -development bank of Latin America and the Caribbean- for inviting me. This question is obviously fundamental. Today, the challenges of sustainable development in its broadest concept, in fact, refer to a convergence of policies related to economic growth, social inclusion and justice, and environmental issues. Mainly, with regard to the climatic threats that we are experiencing, unfortunately, quite intensely and in a very worrying way. In order to face them adequately, it is necessary to take into account the institutional framework and questions about the effectiveness of public policies.

The first point I would like to make as clear as possible is that these three elements of economic growth, social inclusion and justice, and environmental policies require a great deal of integration, as do the institutional elements. As for the necessary institutional framework, the fundamentals, I would say, bring nothing new, but have presented challenges, some even unexpected.

Montesquieu’s institutional framework, of the three powers acting in harmony, does not mean that there cannot be tensions in its dynamics, but there must be a great balance, obviously, within a democratic context. This is the necessary institutional framework. The tensions I am referring to have somehow worsened.

Traditionally, for example, in Brazil, the Executive has always been a very strong power, Brazilian presidentialism always was, but the most recent developments have even led to a certain imbalance in which the Legislative Power, given the most recent process of radicalization, not only in Brazil, but in the world, has generated greater friction, greater difficulty in achieving harmony with the Executive. Many times, this also leads to what is called the judicialization of the Judiciary. So there is a feeling, many times, that it exceeds its function, which basically should be the guardian of the Constitution. The judicialization of certain processes makes the Judiciary, in many cases, make public policy, which generates frictions and poses new challenges.

On the other hand, within an adequate institutional framework, whether in a federalist perspective, of states and municipalities, or in countries that are not federalist but with territorial dimensions of local powers, to some extent, the operation of this machinery requires attributes for the formulation and execution of public policies. And not always the policy, as formulated, is executed. The execution process itself can generate a dynamic of modifications. But the execution is expected to be effective, in the sense of achieving the objectives, right? Efficient, in the sense of achieving those objectives with a good use of resources. Efficient use, this relationship between resources and results, must be healthy; to a large extent, there must be efficacy, efficiency and effectiveness.

Nor is it of any use to achieve certain goals and objectives in any way. It is necessary, then, the institutional framework we were talking about, which establishes laws and regulations; this whole set will require legitimacy in governmental action. These are the basic points I mentioned for a minimally articulated functioning within a democratic framework, as we seek in Latin America and the Caribbean, and which we have somehow developed, often with advances and setbacks.

Q/ To what extent is the lack of capacities in the region’s States conditioning inclusive and sustainable development? How do you assess the role of local and intermediate States, and what are the main areas for improving their capacities?

The necessary capacity at all levels, both national and local or intermediate, in the case of states or districts (districts as in Colombia, states as in Brazil), is planning. When we talk about planning, it is long, medium and short term. There is always a need for a national strategic proposal and there are many failures in this dimension. And in planning it is not enough to project what has already happened. It is necessary to deal with discontinuity, with surprises, with the unexpected, with the great changes we are going through at the global level of geopolitics itself, the commercial movement between countries, climate threats. All this requires a long-term vision so that there can be coherent planning at the decision-making level.

And we are not only talking about the efficiency of the action, but also about what precedes the action, which are the decisions. This is where the second aspect comes in, which is very necessary in terms of the capacity of States, and to which I attach great importance: the capacity to coordinate interdependence. In a less complex world, which is now a thing of the past, there were ministries, well-defined sectors, where certain decisions and actions sought to achieve objectives and deal with problems in an appropriate manner. Today, problems are mixed; it is difficult to have one box on an organizational chart solving complex problems.

Therefore, at the sectoral level, education, health, housing, national defense, public security, there is a great interaction, a great need for coordination at the horizontal, inter-sectoral, inter-ministerial, inter-organizational level, and also at the vertical level, between the national government, the state or district governments and the local governments.

This understanding, this capacity for constructive joint action, everything that has to do with government, public administration, public management, involves politics. Politics always involves degrees of tensions, agreements and disagreements that require negotiations. These negotiations are not easy insofar as there is the need to adhere to a concept of public interest, which is very difficult to define operationally. But it is always necessary to keep in mind the search for an understanding of what the public interest can represent. And today we see, in society itself, that it is very segmented, very fragmented, with diverse interests. In some ways, some are better articulated in terms of economic dominance, capacity of political expression, of articulation to assert their points of view in state assemblies, in the National Assembly, in Congress, but to deal with these problems it is necessary to coordinate interdependence.

This requires values or attitudes such as the predisposition to effective and efficient behaviors and actions for the functioning of all this. Also, the capacity for constant monitoring or evaluation to feed back the system and make it correct itself. These capabilities require political, technical, behavioral and instrumental aspects with respect to management technologies, to make things happen. And I want to insist on the coordination of interdependence. Why? Because the problems today require it. If we use the concept of citizenship, because the administration, public management, public service, public servants, politicians, government agents, must be accountable to the public, to society, to social groups, to the citizenry. And what is citizenship? Can an individual be a citizen if he has education but no health? If he has health but no education? If he has health and education but no public safety? Can he not go out in the street? Is he subject to receiving a stray bullet? Or of terrorism, the police invading, shooting to catch anyone, to create tension or fear in society, to turn it against the police and the police against society? The citizenry requires actions that take into account this whole.

When acting with a community, it is necessary that any decision for the implementation of a given public policy considers and reads the implications of the interaction between health, education, housing and mobility, for the work of income generation, so that there is a more adequate distribution, less concentration and serving society.

The other question has to do with decentralization. Well, this and deconcentration. That is, many times, the federal government is decentralizing actions. But another thing is when there is a concentration, a transition to greater local power. This is also increasingly necessary because the citizen occupies the municipality. And we have big differences. Latin America and the Caribbean includes a country the size of Brazil. We have regions like the Amazon, which is shared with Peru, Colombia, Bolivia, Venezuela, the Guianas. In these population regions, 75% of the municipalities have a maximum of 25,000 inhabitants. There are isolated indigenous population centers.

On the other hand, we have large urban concentrations with problems of poverty, deprivation and sanitation at an acceptable level. So, we must know how to deal with them and attack them. In the Andean countries, for example, Ecuador and Bolivia, given the importance or the number of native populations, interesting solutions were sought to institutionalize certain aspects of the local governance process in a more decentralized manner, taking better care of local needs and respecting aspects of local cultures. This was included in the constitutions themselves. This was the case in Bolivia and Ecuador. In Brazil, our most recent constitution, that of 1988, in some way sought greater decentralization, but it involved some commitments assumed in a more decentralized manner by the states, and the resources were not as well matched.

We observe that there are political dysfunctions with respect to administrative policies, to the capacity of local governments, many of which are unable to meet the needs of their population. Many times, the control bodies are weaker, corruption, the money that sometimes passes from the Federal Government to the State Government does not reach the base. And there are certain municipalities or local governments where resources do reach and are better managed. All this also depends on the level of development of the local communities and on what has to do with the level of industrialization, services, administrative capacity, also generated by more effective educational processes.

Financial issues and the quality and capacity of human resources, which are linked to education, are of great importance. And sometimes we are also surprised by the development, for example, of organized crime, which today frightens populations and governments. There is a penetration of organized crime in the elements of governance, the issues of drug trafficking, the illegal mining of national wealth, the flow of weapons, in short, again, all these policies are intertwined.

Q/ In the context of fiscal constraints aggravated by global trends such as climate change and aging, what strategies do you consider most effective to strengthen the fiscal capacity of the countries in the region and improve revenue and expenditure management?

The development of an adequate tax system, somehow more progressive and not regressive, has the difficulty, in our countries, to deal with the tax issue in a fairer way. Certain sectors have the capacity, due to their more active lobbying and strong economic power, many times, to obtain more excessive tax benefits, while the poorer sectors of the population suffer more due to the lack of resources, paying more indirect taxes. Therefore, a more simplified tax system should be sought in some way. Brazil, for example, is extremely complex and we are going through a tax reform in which a value added tax system is only now arriving. There is also double taxation, and all this requires a fairer, simplified and adequate tax system so that there is a greater entrepreneurial capacity, in the service sector, to increase productivity.

The lack of better positioning with respect to productivity is related to the tax process. As for the fiscal problem, there is also the issue of the quality of spending, which, as far as the tax issue is concerned, also includes high tax evasion. It is necessary to have more adequate systems, which, with the development of technology, is happening in a more appropriate way. For example, with the electronic invoicing that has been developed in Colombia and also in Brazil to have greater real-time control over tax liabilities in a more appropriate manner.

On the expenditure side, more effective controls are also needed. We have made progress on this, yes. In all our countries, in some way, we have progressed technically with better equipped courts of accounts, which have introduced performance audits, which are not only linked to aspects of the specific legality of expenditures and the question of whether legal regulations are being complied with, but also analyze performance, whether those investments and expenditures are generating the expected results in relation to the programs . There has been an increase, an improvement, more personnel training, more training and development of public officials, more internalization of the necessary techniques, but there is still a long way to go, many resources that leave the federal government often go to local governments or certain federal programs are also wasted, they do not comply with traceability aspects, that is, it is not known where the money goes and who is responsible for those resources. The works are being concluded, so there is a volume of works scattered throughout the country, of unfinished works. Bridges, viaducts, highways, what was projected to be built in three, four years, sometimes takes ten or fifteen years and is not completed. Therefore, many resources are lost.

In Latin America and the Caribbean there are poor countries, such as Haiti, and rich countries, such as Brazil, where there are poor to rich states, such as São Paulo. But there are problems in relative terms in all these political-administrative constituencies. There is a need for greater concern about the diversion of resources. In Brazil there are movements in this direction. Many are even criticized because they fall into the example I mentioned about the judicialization of administrative processes, but justice, the Superior Court, is demanding greater traceability of the resources arranged in Congress to be spent through decisions of its committees or deputies’ funds to spend, known as amendments. Therefore, there is a whole need to perfect these systems. And I come back to this point. Yes, they have evolved. Throughout the continent there have been considerable advances, with better trained personnel, better equipped monitoring and oversight bodies. There have been, no doubt, but there is still much to be done.

Q/ In situations where technical solutions are clear, but the political and social agreements to implement them are not consolidated, how can the political capacity of States to lead and sustain reforms be strengthened?

How can the political capacity of States be strengthened to lead and sustain reinforcements? Somehow, public management, governance, requires great sensitivity on the part of those in power, even in the Executive, to connect with society. Society is also developing instances of mobility, groups of greater mobility, capable of influencing the political system.

A lesson that I believe our countries have learned is that when the crisis reaches a bottom, the political element, because it is a political element, has a certain level of sensitivity. When the crisis is very big, the politicians themselves begin to move in a differentiated, more positive way to overcome the chaos that could be installed in a more definitive way. This is a process of tensions, but it is evolving as there is a greater demand, a greater manifestation of society with respect to the political system.

There is a great crisis of credibility and representativeness in many of our countries. The populations do not feel an acceptable degree of confidence in certain congresses and assemblies. Mistrust sometimes transcends the political core of the legislative congress, but it also extends to the judicial system as a whole, to the Executive and to institutions in general. This crisis of representativeness also has much to do with political parties. These are expected to be programmatic.

First, that they are not so many that they hinder the whole process of political articulation necessary for the effectiveness of the governance system of a country, a state, a municipality, or whatever. There is a need for the parties to have and commit themselves to programs that are not what we call physiological, the system of «taking from here to there», of everything in the short term, everything is won or lost now, in this legislature, and all the thought and energy in the next election. It is that situation in which it is neither so much sea, nor so much land. That is to say, the professional politician, at the moment he is elected, already begins to think about his reelection, whether he is in the Executive or in the Legislative. Within certain parameters, this is normal, since they live off the vote. Now, how is this done? There can be variations that reach very dangerous extremes, collusions absolutely outside the law, organized crime and so on. This is happening in Brazil today, in Mexico, in Colombia. It is possible to change these processes, as for example in Colombia, which I have just talked about.

In Colombia, there are problems of violence, yes, but there was a peak of confrontation of the power of the State that managed to overcome the great crisis of powerful groups wanting to influence the State and really control it. The country overcame those dramatic moments in this sense. Now, it requires a lot of articulation, the search for greater reliability, the capacity for dialogue and not polarization. And all of us, not only our countries, but also abroad, went through polarizations. We saw in the United States itself, in what is considered the largest democracy in the world, unthinkable moments of polarization. I lived and studied in Washington, in the capital; in Virginia, in the Washington area, and because I studied public management, public administration, I had a lot to do with that. I was constantly going to Congress and talking there, seeing groups of students from all over the country coming to make frequent visits to the Lincoln Memorials. And, all of a sudden, we saw what we saw in the congressional invasion, which was the same as in Brazil. Polarization affected a lot. But here comes the point you were referring to in your question.

Politicians have political sensitivity at some point. And when things become dramatic, they are capable of talking, of resuming dialogue, of finding forms of political dialogue that are necessary for the Administration to function. It can function with greater technical intelligence, technologies are increasingly available, but public administration, in public management, is always related to politics. And good public administrators or managers work as a transmission wheel, they are able to make the bridge, to transmit what the politician often dreams and wants with adequate results.

Q/ Emerging technologies and artificial intelligence promise to improve state effectiveness. What opportunities and risks do you identify in their adoption to strengthen state capabilities? How to accelerate their implementation in a way that promotes efficiency and equity, while ensuring responsible use?

The first important point is that we must develop a culture in society, in the public sector, in its interactions and in the experiences of interaction with private companies. It is necessary to believe in science. That is the first point. That is the link, science, technology and application. Applied science. That relationship is fundamental. In the past, when you talked about management, you talked only about efficiency. But you can do things more efficiently, move more efficiently and economically into the abyss, because the previous decision was not the right one. Technology, today, the computer, when it was introduced, made things faster. But that has changed. The computer stopped only speeding up the processes of personnel administration, of human resources, and started to speed up certain procedural aspects in the provision of public services.

Today we have reached the point of artificial intelligence, where it is feeding what? Decisions, the decisional process. And we believe that this development of cybernetics, of generative artificial intelligence, where voice, sound, images and data begin to interact effectively. This multiple interaction generates the ability to make large databases that can inform critical decisions, more and more, that come closer and closer to the ability of people, men and women, to make decisions.

This can really help us a lot in dealing with complex issues. But, on the other hand, it offers the dangers that are already becoming present and require regulation. All technological development, since the first Industrial Revolution, has had times when technological development required regulation. And it is no different with the issues that may arise with this development that we are experiencing now with artificial intelligence, even generative intelligence. As, for example, the question of whether we can use artificial intelligence in selective processes, for scholarships or for employment in the public or private sector, that is, is it valid to hand over decisions of this nature to artificial intelligence or is it possible, convenient, within certain parameters? What parameters are those?

Doubts arise related to genetic issues when dealing with life, death, drug development, also about authorship and remuneration for authorship. That is, to what extent was there contribution of the human element, and how is this distributed in terms of economic, financial results, because that is how the logic of society works. I see it as everything was seen in the past. Technological developments that brought us a lot of happiness and, at other times, pain. Airplanes were used both for the most appropriate mobility worldwide, and for war and for violence, the administration of violence.

Effective in ensuring the responsible use of new technologies? I think it is the regulation, the processes carried out so that more appropriate parameters can be identified. The most sophisticated analysis possible is needed. This also requires the use of appropriate mathematical models. I think it requires exchange of information between pilot projects, between the experiences of different countries, to get to perfect controls and regulation. I see this as an ongoing and very fast and intense process.

Q/ What role do you think multilateral organizations should play in improving the quality of public policies in Latin America and the Caribbean? To what extent can they contribute to the generation and dissemination of knowledge and the strengthening of state capacities in the region?

Multilateral organizations, multilateralism, I believe, have been effectively consolidated. Many multilateral organizations play a role in educational processes, bringing knowledge, for example, in public management. In Latin America , for many years, multilateral organizations have financed courses, and very important courses, for example, on budgets, the capacity of governments to develop personnel trained to manage public budgets, implement public budget systems, implement cultural management systems, museology and important things in terms of national identity, the historical vision of a given country and its cultural elements, its cultural heritage.

In many dimensions, as in engineering, for example, I had the good fortune, the honor, even, to participate in an important movement oriented to integrated water resources management. This is a very complex area, subject to conflicts in the use of water, because it feeds agriculture, irrigation is the major use, but it also generates important electricity, river transport, food for industries, animal hydration, human consumption, tourism, fishing, food production. So, imagine how many things, how can we manage this resource in an integrated manner? It was a very serious problem that we shared in Latin America.

Argentina, an excellent integrated management center with a very good experience in Mendoza. In Venezuela, in Merida, a university city in the mountains, there was also a center oriented to integrated management. ECLAC, a multilateral organization, played an important role in articulating the intelligence of this area, of water resource engineers, administrators, economists, to seek management solutions at the basin level, to enable the basin committees to resolve conflicts in these conflicting uses, to introduce payment systems, an economic rationality complementary to the concession system, which is a command and control system. All this to generate laws, or, in the Brazilian case, Law 9433, if my memory serves me correctly, to order this integrated management. We have reached a point where none of our countries can handle everything. Mutual learning makes it possible to find solutions more quickly, such as those of institutional modeling in the example I am giving, but it also involves technical aspects of water engineering to bring all this together, to organize, to create spaces for dialogue. And multilateral organizations do this well, generating contributions for academic and scientific groups or associations.

There is criticism of multilateral organizations. For example, the UN, because conflicts occur, violence occurs in a barbaric manner. In the 21st century, we are witnessing very painful clashes, both in quantity and drama. And the UN is criticized for the way its security system is institutionalized, which makes it incapable of making decisions that are possibly more adequate and capable of being fulfilled. We are looking for the climate issues, the spaces for discussion to increase more quickly the financial viability of the transfer from the richer countries to the poorer ones, which suffer more from critical climate events. And much of the climate problem is generated by the richer nations. But this negotiation is not easy.

For its part, the carbon negotiations are making progress. All of this requires assistance, the ability to articulate, a certain exercise of leadership, driving, in a way, complex processes that involve different countries, often ideologically different, with different cultures. But these multilateral organizations have a fundamental attribute and that is that they are also multicultural. People who work a lot internationally learn to see the differences between human beings according to their national, cultural origins, but also develop the ability, the capacity to recognize the universality of the human being, what we all have in common.

Staff working for these multilateral organizations come to develop institutionally competencies to catalyze complex processes, to assist in the training of human resources, to generate financial flows and accelerate major projects, sometimes of a pilot nature, to share learning. So, they may be subject to criticism, but, at the same time, they have a great importance, a great capacity for collaboration. And all these organizations, with their differences, go through this.

You mention the Getulio Vargas Foundation, which was created in 1946 to bring modernization to the development process of the Brazilian State, of the nation, in its various dimensions. Over time, it expanded and diversified. It began with a more direct commitment to the area of public administration. Then, almost in parallel, with economics, the Brazilian Institute of Economics. Later, schools of economics. Today the foundation has schools of administration, economics and law in Rio de Janeiro and São Paulo, which may be in the same field, but independently of each other, under the aegis of the foundation as maintainer. More recently, the School of Communication, here where we are, the School of Applied Mathematics, which is very important. And this whole set feeds the decision-making process, the capacity for execution both through the generation of knowledge, the production of new knowledge, and the transmission of already codified knowledge. But it is even an interactive process, because one thing generates the other. Transmission helps production, knowledge production helps transmission. And the foundation had and has a role, and I say this because it is only justified by innovating.

The foundation can only be justified by having a commitment to the country, to national development and to innovation. The area of economics developed national accounting in Brazil. Regarding the inflationary process, Brazil had a time in the past when inflation was rampant, immense, and just as in every hotel you go to, all over the world, they have the Bible at the head of the bed, in Brazil all sectors, services, industry, agricultural production, commerce, had the magazine Conjuntura Econômica with tables to follow the development of inflation. And then it also developed sectoral data solutions for cost formation, pricing, in short. It is what is called a think tank.

What is a think tank? The operational definition is institutions that have the capacity to influence governmental decisions and business strategies, as well as social mobilization, thanks to the knowledge they generate. It has that catalytic effect that I was telling you about banks, but not only banks, but also multilateral organizations.

The Foundation has a great catalytic capacity due to the areas of knowledge it masters, its ability to influence decisions, as I was saying, and over the years it has developed a great and very important heritage. I am not referring to the patrimony it has, its buildings, its actions, but to a patrimony called credibility. There is the concept that some are organizations. Others have such a particular character, important, recognized, of trust, of credibility, that they are characterized as institutions. It is not an organization, it is not a company, it is an institution. So, this makes the foundation, just one example, in a very sensitive area such as defense and security policy, to be classified as an important organization for the defense of the country. This is related, for example, to the innovation I mentioned.

Why? Because Brazil is developing very advanced technology projects, absorbing that of other countries, developing its own and others that are disseminated in society, in the Brazilian industrial world at the forefront. And the foundation has the credibility to be involved in these sensitive processes. And this, in the area of economic policy, health, in the school of applied mathematics, develops models to deal with certain aspects of public health policies. We deal with public education policies, helping to develop educational policies in municipalities and the most adequate execution of the educational effort, which is fundamental, strategic for Brazil, as it is for Colombia, Argentina, and all Latin American countries, and in some cases for Africa.

The foundation has this fundamental commitment. And you ask about the private sector. This is a sector under construction. The Brazilian one has important associations. The industry federations in Brazil, FIESP (Federation of Industries of the State of São Paulo), Firjan (Federation of Industries of the State of Rio de Janeiro), FIEP (Federation of Industries of the State of Paraná), are organized in a set of federations that cover different areas of the economy and are very important. And innovation, today, is marked by the public-private relationship. The foundation has a very strong relationship with the private sector. It can be associated with education processes, human resources training, help in financing resources. And there, the private sector and the public sector, together, can do a lot for the country.