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Income distribution and external constraint: Brazil in the commodities boom [Income distribution and external constraint: Brazil in the commodities boom]

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  • Antonio Soares Martins Neto

    (ECLAC)

Abstract

Within the commodities price boom, Brazil experienced rising dependency on primary exports, along with falling inequality (as a result, among others, of extensive distributive programs). However, productivity growth was meager during the period. Not only this path is unsustainable in the medium run, but may also have harmed the long-run growth consistent with BOP equilibrium. This paper discusses, in a BOP-dominated macrodynamic model based on Ribeiro et al. (2016), the impact of Brazilian distributive policies in the BOP-constrained rate of growth. It is suggested that distributive programs can harm long-term growth due to rising income elasticity of imports and higher technological gap. Lastly, it is argued that the right balance of public investment and distributive programs would allow a virtuous cycle of growth and income distribution to emerge.

Suggested Citation

  • Antonio Soares Martins Neto, 2017. "Income distribution and external constraint: Brazil in the commodities boom [Income distribution and external constraint: Brazil in the commodities boom]," Nova Economia, Economics Department, Universidade Federal de Minas Gerais (Brazil), vol. 27(1), pages 7-34, January-A.
    • Handle: RePEc:nov:artigo:v:27:y:2017:i:1:p:7-34
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    More about this item

    Keywords

    BoP-constrained growth model; income distribution; public investment;
    All these keywords.

    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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