Brazil political and administrative regime has great potential for economic growth and social development. Workers’ Party played crucial role in this process due to it launched mechanisms of participatory budgeting, e-government and social programs. The study is based on the concepts of governance and dynamic state capacities. According to the concept of governance there is transition to the new form of coordination between the state and civil society. Instead of hierarchical and market coordination mechanisms there is horizontal network interaction between civil society organizations, and the state acts here not as an equal player but as a referee controlling the compliance of rules and creating infrastructure. According to the second concept of dynamic state capacities, the state in a changing environment should constantly demonstrate specific qualities such as dynamism, openness, responsiveness, ability to innovate. The state should ensure inclusive political and economic institutions, build human capital, support the broad inclusion of civil society in political decision-making on the basis of trust and transparency. At the moment, the most effective way of people direct inclusion into the governance institutions in Brazil are not political parties, and not representative bodies, but participatory budgeting practices.
