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

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.