Brazil's long-term growth performance: trying to explain the puzzle

Author： Adrogué Ricardo Cerisola Martin Gelos Gaston

ISSN： 0144-3585

Source： Journal of Economic Studies, Vol.37, Iss.4, 2010-09, pp. : 356-376

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Abstract

Purpose - This paper seeks to assess Brazil's growth performance from a long-term perspective. Brazil's growth performance over the past 25 years has been lackluster, and various hypotheses have been advanced to explain Brazil's disappointing growth record. Design/methodology/approach - In contrast with the existing literature, the paper uses cross-country and panel estimation techniques to analyze Brazil's growth record, building on the vast empirical literature on growth and its long-term determinants. It examines the extent to which fundamental factors found to be related to growth in the cross-section help to explain Brazil's growth performance during 1960-2000. It also explores the dynamics of growth across time by using panel data models to assess the role of various fundamentals that may have influenced Brazil's growth performance since 1960. Findings - The empirical evidence presented confirms that macroeconomic stability and several reforms have helped raise per capita growth in Brazil since the mid-1990s. The results also show that some long-standing structural weaknesses continue to weigh negatively on per capita growth. Practical implications - Reducing the high level of government consumption would help lower the overall consumption level in the economy and lower its intertemporal price - the real interest rate, thus helping to foster investment and growth. Originality/value - The paper provides useful information on Brazil's growth performance from a long-term perspective.