The Political Economy of Productivity in Brazil

62 Pages Posted: 12 Apr 2011

See all articles by Lee J. Alston

Lee J. Alston

Ostrom Workshop; National Bureau of Economic Research (NBER)

Bernardo Mueller

Universidade de Brasilia

Marcus Andre Melo

Universidade Federal de Pernambuco (UFPE)

Carlos Pereira

Getulio Vargas Foundation (FGV)

Date Written: March 2010

Abstract

This paper explores the link between Brazil’s political institutions and its disappointing productivity and growth in recent decades. Although political institutions provide the president with incentives and the instruments to pursue monetary stability and fiscal discipline they simultaneously raise the costs of achieving those very objectives. The insulation of certain expenditures from presidential discretion necessitates the use of other policy options, such as high taxation levels and cuts in unprotected expenditures, which put a drag on productivity and growth. In a context of robust checks and balances and interest group fragmentation, a state overburdened by constitutional entitlements has resorted to massive increases in taxation. The resulting environment possesses both essential elements for sustainable economic growth and distortions that conspire against its realization. While some improvements in productivity and growth have occurred in the past decade, the pace has been slow and incremental.

Suggested Citation

Alston, Lee J. and Mueller, Bernardo and Melo, Marcus André and Pereira, Carlos, The Political Economy of Productivity in Brazil (March 2010). IDB Working Paper No. 21. Available at SSRN: https://ssrn.com/abstract=1807606 or http://dx.doi.org/10.2139/ssrn.1807606

Lee J. Alston (Contact Author)

Ostrom Workshop ( email )

513 N. Park Avenue
Bloomington, IN 47408–3895
United States

HOME PAGE: http://ostromworkshop.indiana.edu/alston/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Bernardo Mueller

Universidade de Brasilia ( email )

Dept. de Economia
Universidade de Brasilia
Brasilia, DF 70910-900
Brazil
55 61 981110349 (Phone)
55 61 3349-1303 (Fax)

HOME PAGE: http://bpmmueller.wixsite.com/bernardo-mueller

Marcus André Melo

Universidade Federal de Pernambuco (UFPE) ( email )

Cidade Universitária
Cidade Universitária, Pernambuco 50670-901
Brazil

Carlos Pereira

Getulio Vargas Foundation (FGV) ( email )

R. Dr. Neto de Araujo 320 cj 1307
Rio de Janeiro, Rio de Janeiro 22250-900
Brazil

HOME PAGE: http://ebape.fgv.br/en/faculty-members/carlos-pereira

Register to save articles to
your library

Register

Paper statistics

Downloads
234
rank
127,611
Abstract Views
1,006
PlumX Metrics