Brazilian Economic Growth, 1900-2000: Lessons and Policy Implications

This paper examines Brazilian economic growth as part of the project "Explaining Economic Growth Performance" launched by the Global Development Network (GDN), the purpose of which is to explain economic growth performances across seven regions of the world. According to the author of this study, a better understanding of Brazil's paradoxical growth pattern during the 20th century may not only improve policy formulation but also help generate political support for its implementation. Any proposal for deepening the reform process in Brazil will not win wide acceptance if it is not perceived to respond to a credible account of how policies that are "wrong" in 2001 appeared "right," for half of the last century. With this context in mind, this paper addresses three overarching questions. First, how did Brazil manage to grow so rapidly from 1930 to 1980 while following so many "wrong" policies? Second, why did Brazil then perform so poorly in the final two decades of the century? And third, considering developments in both the domestic and international arenas, how should current public policy priorities be set to maximize Brazil's potential sustainable growth rate? Analysis will look at the aggregate performance of the Brazilian economy in 1930-2000, it will examine micro evidence from firms and households, respectively, and determine whether these patterns are consistent with the macroeconomic observations noted in our initial analysis. The study also provides an evaluation on how should current public policy priorities be set to maximize Brazil's potential sustainable growth rate.