Legend has it that Charles de Gaulle said that “Brazil is the country of the future and will always be.” This view not only reflects the sad reality that during most of the twentieth century Brazilian growth had booms full of optimism followed by drastic contractions, usually following commodity prices. It also captures the popular Brazilian belief that “things change to always stay the same.” Thus, it is refreshing to Alston et al.’s work, which highlights how in Brazil, since 1960, changes in beliefs—the mental constructs mapping institutions onto outcomes—have led to institutional changes that have improved developmental outcomes for its citizens.

The main claim of the book is that due to changes in beliefs, heroic leadership, and windows of opportunity, Brazilian citizens and politicians now hold dearly two key beliefs: Aversion to inflation (or sound fiscal policy) and social inclusion (p. 14). Thus, the country “has become economically orthodox, politically open, and socially inclusive” (p. 6). Before the 1990s, Brazil had close to 100 years of high inflation, recurring balance of payments crises, growth cycles tied to commodity prices, and multiple authoritarian governments (the last one lasting from 1964 to 1985). The re-alignment of beliefs around democracy, fiscal soundness, low inflation, and social inclusion took place between the 1980s and the 1990s. Then, a “window of opportunity” opened up, as new powerful actors brought different beliefs that challenged the beliefs the dominant network that sustained the status quo. During these windows of opportunity “the beliefs of those in power as well as among citizens become malleable… [and are] up for grabs.” This is when leadership is important to coordinate actors around the “major anxiety facing a society” (p. 15). In the case of Brazil, the leader that saw the window of opportunity and coordinated the country around a new set of beliefs in the 1990s was President Fernando Henrique Cardoso. The new equilibrium of fiscal soundness and social inclusion was deepened since then. With this new alignment of beliefs, the authors argue, Brazil could do a critical transition from middle- to high-income country in the near future.

The argument of the book is presented in three parts. The first part focuses on the conceptual framework and includes the introduction and Chapter 2. Chapter 2 presents the analytical framework that explains the evolution of institutions in Brazil since the 1960s. The framework is based on beliefs, dominant networks, leadership, and windows of opportunity as the keys to change institutions.

Part II then applies the conceptual framework of the book to the context of Brazil and it is divided into four episodes: the military regime, 1964–1984 (Chapter 3); the democratic transition, 1985–1993 (Chapter 4); the Cardoso years, 1993–2002 (Chapter 5); and the deepening of outcomes under Presidents “Lula” Da Silva and Dilma Rousseff, 2003–2014 (Chapter 6). In Chapter 3, the military regime is portrayed as a failure, because despite the economic success of the 1970s using central planning and import substitution, the closed political system, inflation, and the debt crisis of the 1980s led to the collapse of the regime. Chapter 4 is key to understand the transition and the rise of a window of opportunity because after the military regime, the middle class demanded more inclusion and the franchise was expanded in the Constitution of 1988. The chapter examines the 1988 Constitution in detail and argues that it crystallized the beliefs of social inclusion with fiscal sustainability. Moreover, the Constitution strengthened checks and balances, but also gave the executive leeway to enact changes that reflected these new beliefs. The window of opportunity, however, came also because of the hyperinflation years (1986–1993), when politics was up for grabs and many coalitions could have taken over power. Among the chaos, and due to the strong anti-inflation sentiment, President Cardoso emerged as the leader who could capitalize on the change of beliefs and could coordinate actors to overcome the up-front costs of setting Brazil on a fiscally sustainable path, with low inflation and more inclusion. To a large extent he did this with its successful stabilization plan called the Plano Real and by introducing a variety of redistributive policies. Chapter 6 explains in detail how after the transfer of power to the leftist Workers Party, the path set in place during the Cardoso years was deepened and how specific policies were continued (e.g., redistributive and fiscal policies). The chapter ends by cleverly discarding alternative hypotheses and confounding factors that could challenge the overall argument of the book.

Part III of the book then looks at the generalizability of the conceptual framework. The key question in Chapter 7 is why have not other middle-income countries embarked on a similar transition? The answer is that not all countries have windows of opportunity and when they have them, not all countries have leaders who seize them and can move their nations to new equilibria. That is, they see “a circumscribed, yet often crucial, role for leaders as the catalysts during windows of opportunity” (p. 175). They also emphasize the alignment of beliefs in society, especially in the “dominant network” to undertake a transition, something hard to achieve. The chapter goes on to formalize the conceptual framework in a simple, accessible way. Then they apply the framework to explain how Argentine leaders failed to do a positive transition in that nation in the early part of the twentieth century and thus failed to capitalize on the early economic success of the country. Despite this fast, yet thought-provoking application of the model, the general conclusion of this chapter is that the transferability of the conceptual framework to other countries will depend on the context, leaving the reader feeling that there is an element of randomness behind the factors needed for these developmental transitions. Chapter 8 concludes and examines why events in 2014, when social unrest grew dramatically in Brazil, would not be a challenge to the predictions of the model and leaves us hopeful that the transition to a higher level of development in Brazil would take place sometime in the near future.

In the years since this book manuscript was finished, Brazil has undergone an impeachment (which some called a coup), the worst economic depression since the 1980s, a corruption scandal that tainted the democratic institutions of the country, and the election of a nationalist leader who opposes basic rights for minorities and has appointed military officers to cabinet positions. Still, so far, the stable equilibrium portrayed in the Alston et al. book has actually held some of its ground: the economic and political crises have been solved without any major changes in fiscal soundness, without increases in inflation, and most redistributive policies have continued. Yet, the critical transition to a higher level of development has been put on pause and some of the democratic beliefs have been eroded. Hence, the jury is still out there on whether the predictions of the book will come to fruition.

Despite the recent trials and tribulations of the Brazilian economy, this book is the best analytical narrative about the last 50 years of institutional change in Brazil. It is also the most careful study of the modern process of institutional change in Latin America. Due to its accessibility and comparative approach, it is a great volume to use in advanced undergraduate or graduate courses on development or economic history.