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Growth and stagnation in a dual economy: The case of Brazil

Author

Listed:
  • Carmem Feijo

    (Fluminense Federal University, Rio de Jainero, Brazil)

  • Marcos Tostes Lamonica

    (Fluminense Federal University, Rio de Janeiro, Brazil)

  • Sergiany da Silva Lima

    (Federal Rural University of Pernambuco (UFRPE), Brazil)

Abstract

This paper shows that the stagnation of the Brazilian economy is the result of a vicious cycle of growth, mainly due to premature deindustrialization caused by a growth strategy centered on foreign savings. This strategy implies financial integration, which, in an asymmetric international financial system, narrows the policy space and limits the implementation of developmental policies. Therefore, capital accumulation and technological change do not move along the time to promote the productive transformation that would reduce structural heterogeneity, relax external constraint and improve labour market conditions. In this sense, the paper presents an interpretation for the stagnation of the Brazilian economy, which draws from Kaldor’s theoretical contributions to discuss structuralism and new developmentalism. The paper also shows the results of an econometric exercise based on the circular cumulative causation model for the 1950-2019 period. Based on these results, it can be determined that domestic absorption is the main driving factor of the dynamics of the Brazilian economy.

Suggested Citation

  • Carmem Feijo & Marcos Tostes Lamonica & Sergiany da Silva Lima, 2022. "Growth and stagnation in a dual economy: The case of Brazil," PSL Quarterly Review, Economia civile, vol. 75(301), pages 119-138.
    • Handle: RePEc:psl:pslqrr:2022:23
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    More about this item

    Keywords

    Structural change; cumulative causation; dual economy; new developmentalism; Brazil;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions

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