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Productivity, investment and capital flow: the failure of growth with foreign savings in Brazil

Author

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  • Marcos Tostes Lamonica
  • Sergiany da Silva Lima

Abstract

This work analyzes productivity and the hypothesis that capital flow does notinfluence investment in the Brazilian economy. To do so, we present a productivity equationconditioned on the rates of: investments, wage costs, and external demand. The relationshipbetween productivity and investment and wage rates suggests a possible simultaneity, giventhe distributive nature of aggregate income between capital and labor. Therefore, estimatorsthat treat endogeneity in two stages are used: the Two-Stage Least Squares (MQ2E) and theGeneralized Least Moments (MMG), to increase the robustness of the results. We find thatthe investment rate explains productivity, but capital flow does not determine productive investment. In addition, Brazilian investment is more susceptible to the parameters ofmarginal capital efficiency, whose fall has affected Brazilian productivity since the 1980s. JEL Classification: O11; O16; 047.

Suggested Citation

  • Marcos Tostes Lamonica & Sergiany da Silva Lima, 2022. "Productivity, investment and capital flow: the failure of growth with foreign savings in Brazil," Brazilian Journal of Political Economy, Center of Political Economy, vol. 42(3), pages 572-591.
    • Handle: RePEc:ekm:repojs:v:42:y:2022:i:3:p:572-591:id:2340
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    More about this item

    Keywords

    Productivity; investment rate; capital flow;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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