Brazil: Big Government Is Big Problem

William W. Lewis

in The Power of Productivity

Published by University of Chicago Press

Published in print April 2004 | ISBN: 9780226476766
Published online February 2013 | e-ISBN: 9780226477008 | DOI:
Brazil: Big Government Is Big Problem

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This chapter presents an analysis of the Brazilian economy. Brazil is one of the richest of the low-income countries, yet so much poorer than the advanced countries. This is evidenced by the vast settlements (favelas) of cardboard, paper, cloth, and canvas shelters on the outskirts of the big Brazilian cities, and especially São Paulo and Rio. The favelas suggest that the people living in them have a different kind of economic life. They are living outside the legal framework of their country. They are unregistered as workers, they pay no taxes, the enterprises in which they work don't look like anything seen anymore in the rich countries, and their productivity is on average about 15 percent of the average productivity in the United States. The chapter argues that Brazil ought to be doing better economically than it is. The country suffers a huge legacy from bad economic policy. Brazil has protected its domestic industries, protected foreign direct investment, merrily indulged in hyperinflation, let the government own and run a large part of its economy, and kept a fixed exchange rate too long.

Keywords: Brazilian economy; settlements; productivity; low-income countries; economy policy

Chapter.  12253 words.  Illustrated.

Subjects: Economic Development and Growth

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