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Raising Investment in Brazil

Low investment rates are limiting Brazil’s future potential growth rate. This paper analyses a number of potential reasons for these low investment rates and discusses policy options to achieve faster capital accumulation. A shortage of domestic saving appears to be a major constraint to higher investment rates in Brazil. Due to high levels of current expenditures, in particular pension entitlements, public sector saving is negative. In addition to being costly, the pension system redistributes income to individuals with relatively low saving propensities, thereby reducing private saving as well. In order to control pension expenses in the future, this paper suggests a number of parametric pension system reforms. Beyond a scarcity of domestic savings, major curbs on investment include the high level of real interest rates, whose reasons are not easy to pin down, and thin long term credit markets, which are dominated by the national development bank BNDES. Going forward, engaging commercial lenders in the provision of long term funding will be necessary to cover the country’s investment needs. This will require leveling the playing field, which can only be achieved by removing BNDES’ exclusive access to low-cost funding from a workers’ welfare fund and through budget transfers. Another factor limiting investment is the fragmented tax system, which raises firms’ compliance costs and adds to an already high tax burden. Finally, regulatory reforms, including the removal of remaining entry restrictions as well as reductions in trade protection, may reduce firms’ costs and enhance investment incentives. This Working Paper relates to the 2011 OECD Economic Review of Brazil 2011 ( Accroître l'investissement au Brésil La faiblesse des taux d’investissement limite le futur taux de croissance potentielle du Brésil. Cet article analyse des possibles raisons pour cette faiblesse et propose des réformes qui pourraient accélérer l’accumulation de capital. Un déficit de l’épargne intérieure semble constituer un sérieux obstacle à une accélération des taux d’investissement au Brésil. L’épargne du secteur public est négative en raison de l’importance des dépenses, notamment au titre des droits à retraite. Outre son caractère onéreux, le système de retraite redistribue des revenus à ceux qui sont relativement peu enclins à épargner, et entame ainsi l’épargne privée. Pour pouvoir maîtriser demain les dépenses de retraite, cet article propose une série de réformes des paramètres du système des retraites. Parmi les principaux freins à l’investissement figurent le niveau élevé des taux d’intérêt réels, qui ne s’explique pas aisément, et l’atrophie des marchés du crédit à long terme, dans lesquels la banque nationale de développement, la BNDES, joue un rôle dominant. Dans l’avenir, il faudra inciter les organismes de crédit privés à procurer des financements sur le long terme pour financer les besoins du pays en investissement. Ceci impliquera un besoin d’établir des règles du jeu équitables, en éliminant l’accès privilégié de la BNDES à des financements nettement moins onéreux que ceux des banques par le biais du fonds d’aide aux salariés et grâce à des transfers du gouvernement. De plus, l’investissement est limité par la fragmentation du système fiscal, qui alourdit le coût de la discipline pour les entreprises et accentue une pression fiscale déjà forte. Enfin, l’adoption de mesures visant à réformer la réglementation, et notamment la suppression des restrictions à l’entrée sur le marché qui persistent, ainsi que l’assouplissement de la protection douanière, pourrait diminuer les coûts supportés par les entreprises et renforcer les incitations à l’investissement. Ce document de travail se rapporte à l’Étude économique de l’OCDE du Brésil 2011 (

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 900.

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Date of creation: 21 Oct 2011
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Handle: RePEc:oec:ecoaaa:900-en
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