Productivity in Brazil has not shown sustained growth since the 1980s, when the country began to fall behind other emerging and developed countries. In this paper, we map Brazilian productivity policies (both pro- and anti-) according to the typology proposed by Van Ark, de Vries and Pilat (2023, 2024). We show that policies aimed at factor accumulation and technological and structural change did boost labour productivity between the 1950s and the 1970s. However, they also created long -term liabilities that undermined the country’s economic performance in the 1980s.
Reforms implemented from the 1990s onward, focusing on market efficiency, resource allocation and internationalisation, contributed to some productivity gains. Nevertheless, the persistent challenges to the ease of doing business and the high degree of rent-seeking hindered creative destruction, led to resource misallocation, and reduced business dynamism.
We argue that local institutions shape the policies as either pro- or anti-productivity. In a context of “crony capitalism”, poorly targeted policies aimed at the accumulation of factors and technological and structural change may result in lower-than-expected productivity gains. Additionally, we discuss the obstacles to the adoption of more efficient pro-productivity policies in Brazil and highlight future challenges.
Authors Fernanda De Negri, Luiz Ricardo Cavalcante