INSEAD's Felipe Monteiro discusses what changes Brazil is likely to see under its new president elect, Jair Bolsonaro.

Expectations run high for Jair Bolsonaro, the 63-year-old former army captain and president-elect of Brazil, the largest country in South America and the world’s sixth most populous with some 208 million people. Bolsonaro’s far right-wing posture and his promises to root out corruption and violence seem to have struck a stronger chord with voters than his other utterances that critics have described as racist and homophobic.

Called the “Tropical Trump” for his extensive use of social media to bond with his voter base, Bolsonaro won the second round of the two-round Brazilian presidential election on October 28. He earned 55% of the vote, while his nearest competitor, Fernando Haddad of the leftist Workers’ Party, won 45%. Bolsonaro’s win marks a significant shift for a country that has been ruled by the political left for the past 15 years.

Bolsonaro, who will assume office in January, has the opportunity to tame corruption and gang violence and thereby improve public sentiment, said Felipe Monteiro, affiliate professor of strategy and academic director of the Global Talent Competitiveness Index at the INSEAD business school in France. The new government could also work to make the country more business friendly, and introduce economic reforms, notably pension reform, he added. Monteiro is also a senior fellow at the Mack Institute for Innovation Management at the Wharton School.

Monteiro shared his insights on what is in store for Brazil under Bolsonaro on the Knowledge at Wharton radio show on SiriusXM. (Listen to the podcast at the top of this page.)

Decisive, Positive Steps

Monteiro was clear that Bolsonaro’s inflammatory statements about Brazil’s ethnic minorities, women and gays, and his threats to open up the Amazon rainforests for mining and development should be condemned. At the same time, he noted that Bolsonaro is taking some decisive steps to bring about change in the way Brazil is governed. Bolsonaro has named Brazilian economist Paulo Guedes as the country’s new finance minister and Judge Sergio Moro, who led the anti-corruption drive in recent years, as the new justice minister.

”Guedes is going to be a very powerful man,” said Monteiro, describing him as “a very liberal economist.” Guedes was trained at the University of Chicago and founded both a private equity firm and a think tank for liberal economic theories, according to a Bloomberg report.

“People were really tired of the previous governments, and the demand for change was the most important message of this election,” said Monteiro. “These appointments are symbolic. If there’s one thing in Brazil that got a lot of popular support and also will be good in the long term for the Brazilian economy and business environment, it is this fight against corruption. It has been painful for Brazil. But at the same time, it’s going in the right direction.”

Monteiro also felt that “giving the ministry of justice to [Judge Moro] who has been so popular in the sense of representing democratic values is important.” By having Moro lead the fight against corruption and gang violence, Bolsonaro is also effectively muting criticism over his other provocative statements on social media, he said.

Vote against Corruption

Bolsonaro’s win is not necessarily a complete endorsement of him but more a rejection of his closest competitor, Fernando Haddad of the leftist Workers’ Party. “[Haddad] represented a party that was involved with corruption and that a lot of Brazilians cannot stand anymore,” he said.

Haddad was named the presidential candidate by his party after former President Luiz Inácio Lula da Silva was disqualified. Lula, as he is popularly known, is currently serving at 12-year sentence after being convicted for money laundering and corruption.

“People were really tired of the previous governments, and the demand for change was the most important message of this election.” –Felipe Monteiro

Monteiro noted that many members of the previous Congress who faced corruption charges also lost in the latest elections to Congress, held concurrently with the presidential election. Voters are showing more sensitivity to corruption, even on the state level, he pointed out. However, the fact that Haddad secured more than 40 million votes in the final round indicated that many Brazilians still rooted for Lula and his policies, Monteiro said.

Change on the Agenda

“If there’s one word that comes to my mind, it is change,” Monteiro said about what voters are hoping for when Bolsonaro takes office. “His voters are expecting that he will do something different from what Brazil has seen the past 15 years or so.” First and foremost, they will be watching to see if Bolsonaro delivers in the fight against corruption and violence. Reducing corruption would “change the mindset” of Brazilians and consequently prove salutary for the economy, he said.

Secondly, expectations are around economic reforms, Monteiro noted. While measures such as privatization of public-sector enterprises or opening up on foreign trade would need several years to bring results, the government could score some early wins with actions such as decreasing bureaucracy, he said.

In order to fix the economy, Bolsonaro has to begin with pension reforms, Monteiro said, adding that it is high on the president-elect’s agenda. ”I’m confident of their ability to come up with a solid program,” he said. However, Brazil’s Congress has to endorse Bolsonaro’s policies before they are implemented. “It is still a question mark as to how they are going to get approval.”

“Voters are expecting that he will do something different from what Brazil has seen the past 15 years or so.” –Felipe Monteiro

Shifts in Regional Ties

In order for Brazil to play an effective leadership role in Latin America, it must forge “working partnerships” with other countries in the region, and conduct itself in a responsible manner, said Monteiro. He cited Bolsonaro’s earlier threat to pull Brazil from the 2015 Paris Accord for climate change. Bolsonaro changed that position a few days before the final election, and said Brazil would stay on as a signatory.

According to Monteiro, the outcome of the Brazilian presidential election is consistent with “a few shifts in leadership” in Latin America in recent years. Until a few years ago, much of the region had left-wing governments, such as in Argentina, Ecuador, Bolivia, Venezuela and Brazil. But that trend has changed in recent years, with the 2015 election of the center-left Mauricio Macri as president in Argentina and now of Bolsonaro in Brazil, he noted.

Bolsonaro has sent clear signals across Latin America that he wants to strengthen Brazil’s relationship with the U.S. In fact, Trump had called Bolsonaro to congratulate him on his win soon after the election results, Monteiro noted. “It looks like [Bolsonaro and Trump] have some good chemistry in the way they communicate, so maybe this [relationship] is going to be important.” In fact, Bolsonaro has said that the U.S. is one of the first countries he would visit after assuming office.