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In Search of the Chains that Hold Brazil Back

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  • Ricardo Hausmann

    (Center for International Development at Harvard University)

Abstract

This paper performs a Growth Diagnostic for Brazil. It shows that many aspects of the Brazilian economy have been improving including the macro picture, educational progress and the external front. Moreover, Brazil has many productive possibilities and high-return investments. Yet growth is hampered because of a relatively old-fashioned problem that has been solved in many other countries in the region: creating a financially viable state that does not over-borrow, over-tax or under-invest. We show that domestic saving is the binding constraint on growth and that it has a fiscal cause. Although things are trending in the right direction, the challenge is to exploit the current good times to create the fiscal basis for a sustained growth acceleration.

Suggested Citation

  • Ricardo Hausmann, 2008. "In Search of the Chains that Hold Brazil Back," CID Working Papers 180, Center for International Development at Harvard University.
    • Handle: RePEc:cid:wpfacu:180
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    References listed on IDEAS

    as
    1. Ms. Agnes A Belaisch, 2003. "Do Brazilian Banks Compete?," IMF Working Papers 2003/113, International Monetary Fund.
    2. World Bank, 2007. "How to Revitalize Infrastructure Investments in Brazil : Public Policies for Better Private Participation, Volume 2. Background Report," World Bank Publications - Reports 8045, The World Bank Group.
    3. Ricardo Hausmann & Bailey Klinger, 2007. "The Structure of the Product Space and the Evolution of Comparative Advantage," CID Working Papers 146, Center for International Development at Harvard University.
    4. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2007. "What you export matters," Journal of Economic Growth, Springer, vol. 12(1), pages 1-25, March.
    5. Fabia A. de Carvalho & Cyntia F. Azevedo, 2008. "The Incidence of Reserve Requirements in Brazil: Do Bank Stockholders Share the Burden?," Journal of Applied Economics, Taylor & Francis Journals, vol. 11(1), pages 61-90, May.
    6. World Bank, 2007. "How to Revitalize Infrastructure Investments in Brazil : Public Policies for Better Private Participation, Volume 1. Main Report," World Bank Publications - Reports 8047, The World Bank Group.
    7. Ricardo Adrogué & Martin Cerisola & Gaston Gelos, 2010. "Brazil's long‐term growth performance: trying to explain the puzzle," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 37(4), pages 356-376, September.
    8. World Bank, 2007. "Brazil - Improving Fiscal Circumstances for Growth : Volume 2. Main Report," World Bank Publications - Reports 8005, The World Bank Group.
    9. Fabia Aparecida de Carvalho & Cyntia F. Azevedo, 2008. "The incidence of reserve requirements in Brazil: Do bank stockholders share the burden?," Journal of Applied Economics, Universidad del CEMA, vol. 11, pages 61-90, May.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. André Roncaglia de Carvalho, 2013. "Inflation, structural change and conflict in post-disinflation Brazil: a structuralist appraisal," Working Papers, Department of Economics 2013_25, University of São Paulo (FEA-USP).
    2. Borodin, Konstantin & Strokov, Anton, 2011. "Central banks' interest rate and international trade in BRIC countries: Agriculture vs machinery industry?," IAMO Forum 2011: Will the "BRICs Decade" Continue? – Prospects for Trade and Growth 18, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
    3. Khan Shahrukh Rafi, 2011. "Growth Diagnostics: The Puzzle of Pakistan's Lagging Economic Growth," Global Economy Journal, De Gruyter, vol. 11(4), pages 1-19, December.
    4. Mr. Alex Segura-Ubiergo, 2012. "The Puzzle of Brazil's High Interest Rates," IMF Working Papers 2012/062, International Monetary Fund.
    5. André Roncaglia, 2016. "Structural Change, De-Industrialization And Inflation Inertia In Brazil," Anais do XLII Encontro Nacional de Economia [Proceedings of the 42nd Brazilian Economics Meeting] 077, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    6. Dani Rodrik, 2009. "Growth after the Crisis," World Bank Publications - Books, The World Bank Group, number 27937, December.
    7. World Bank, 2011. "Turkey - Country Economic Memorandum (CEM) : Sustaining High Growth - The Role of Domestic savings : Synthesis Report," World Bank Publications - Reports 12264, The World Bank Group.
    8. André Roncaglia de Carvalho, 2014. "Structural change, de-industrialization and inflation inertia in Brazil," Working Papers, Department of Economics 2014_29, University of São Paulo (FEA-USP).
    9. Mueller, Bernardo & Mueller, Charles C., 2012. "The Impact Of The 2007-08 Food Price Crisis In A Major Commodity Exporter : Food Prices, Inflation, And Inclusion In Brazil," WIDER Working Paper Series 095, World Institute for Development Economic Research (UNU-WIDER).
    10. Renata Klafke & Alexandre Roberto Lages, 2017. "Why Has Brazil Stopped Growing? Reverberation about the Brazilian Crisis," International Business Research, Canadian Center of Science and Education, vol. 10(10), pages 102-105, October.
    11. Flavio Feferman, 2014. "Brazil: good governance in the tropics–the rise of the Porto Digital Cluster of Innovation," Chapters, in: Jerome S. Engel (ed.), Global Clusters of Innovation, chapter 12, pages 296-338, Edward Elgar Publishing.
    12. Bernardo Mueller & Charles C. Mueller, 2012. "The Impact Of The 2007-08 Food Price Crisis In A Major Commodity Exporter: Food Prices, Inflation, And Inclusion In Brazil," WIDER Working Paper Series wp-2012-095, World Institute for Development Economic Research (UNU-WIDER).
    13. Yaroslava Babych & Michael Fuenfzig, 2012. "An Application of the Growth Diagnostics Framework: The Case of Georgia," Working Papers 001-12, International School of Economics at TSU, Tbilisi, Republic of Georgia.
    14. Alston, Lee J. & Mueller, Bernardo & Melo, Marcus André & Pereira, Carlos, 2010. "The Political Economy of Productivity in Brazil," IDB Publications (Working Papers) 1123, Inter-American Development Bank.
    15. Ricardo Hausmann & Bailey Klinger & Rodrigo Wagner, 2008. "Doing Growth Diagnostics in Practice: A 'Mindbook'," CID Working Papers 177, Center for International Development at Harvard University.
    16. Harald HABERMANN & Pablo PADRUTT, 2011. "Growth Diagnostics: Strengths and Weaknesses of a Creative Analytical Framework to Identify Economic Growth Constraints in Developing Countries," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 1(7), pages 1-25, December.
    17. repec:unu:wpaper:wp2012-95 is not listed on IDEAS
    18. Dragan TEVDOVSKI & Vladimir FILIPOVSKI & Igor IVANOVSKI, 2014. "A Diagnostics Approach To Economic Growth In Small Open Economies: The Case Of The Republic Of Macedonia," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 13, pages 47-68, June.
    19. Mr. Nicolas E Magud & Ms. Evridiki Tsounta, 2012. "To Cut or Not to Cut? That is the (Central Bank’s) Question In Search of the Neutral Interest Rate in Latin America," IMF Working Papers 2012/243, International Monetary Fund.

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    More about this item

    Keywords

    Growth Diagnostics; Brazil;

    JEL classification:

    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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