Brazil’s 35 years-old quasi-stagnation: facts and theory

Produced by: 
São Paulo School of Economics FGV
Available from: 
July 2015
Paper author(s): 
Luiz Carlos Bresser-Pereira
Topic: 
Macroeconomics - Economic growth - Monetary Policy
Politics and Economy
Year: 
2015

Brazil is growing around 1% per capita a year from 1981; this means for a country that is supposed to catch up, quasi-stagnation. Four historical new facts explain why growth was so low after the Real Plan: the reduction of public savings, and three facts that reduce private investments: the end of the unlimited supply of labor, a very high interest rate, and the 1990 dismantling of the mechanism that neutralized the Dutch disease, which represented a major competitive disadvantage for the manufacturing industry. New-developmental theory offers an explanation and two solutions for the problem, but does not underestimate the political economy problems involved. 

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