The last decade 2011-2020 was not easy to the Brazilian people. Governments after governments in Brasilia only gave us disappointment. We all Brazilians must fight for a better country because this country has everything to become a prosperous place: one of the largest area of cultivable land of the world, one of the largest potential of renewable energy of the world, one of the 5 biggest world's productors of: iron ore, niobium, manganese, tantalum, tin, bauxite, one of the most peaceful relationships with others nations of the world (no need to spend money in arms), one of the largest tax revenue of the world (around 33% of GDP, the government has money to spend), the tenth-largest oil-producing country in the world. So, we all should agree that what Brazil need is more investment in education and in projects that can release its potential of development. We know it is not easy to overcome the middle income trap, but we can't accept low GDP growth and Brazil stuck decades in this social and economic situation. This post is a summary of four artcles. The first article was published in May 2017 at file:///C:/Users/User/Downloads/ANDRE-NASSIF-BRAZILIAN-KEYNESIAN-REVIEW-3-1-1st-SEMESTER-2017.pdf. The second was published at https://www.bloombergquint.com/politics/brazil-risks-a-lost-decade-without-fiscal-reforms-oecd-says. The third was published at https://blogs.iadb.org/ideas-matter/en/another-lost-decade-for-latin-america-and-the-caribbean/. The fourth was published at https://www.scielo.br/j/rep/a/bdcXKRCLxyR54pRRkQsXjNs/?lang=en
The Brazilian economic recession was considered the deepest in Brazil's economic history. Between 2015 and 2016, Brazil accumulated a contraction of 7.5% in its real GDP, representing a dramatic accumulated fall in its per capita income of 9.2% in just these two years. It is not surprising that such an economic downturn has severely worsened social indicators in Brazil. The roots of the current Brazilian crisis are associated with both structural and shor-term causes. The main structural cause is related to the premature deindustrialization of the Brazilian economy, from 2005 to 2016, the share of the manufacturing sector in total GDP was reduced from 15.3% to 9.8%. Most brazilians economists agree with the importance of a long-term fiscal adjustment, believing it to be an important instrument not only for restoring confidence, but also for augmenting the room to maneuver so that Brazil's Central Bank can bring high real interest rates to lower levels compatible with international standards. The main pressure on the increase in public sector gross debt in Brazil after 2015 has been coming from the jump in interest rates payments. In an environment of recession, the best option to quickly reduce unemployment rates as well as reactivate private aggregate demand would have been an increase of public investment in infrastructure. With debt levels soaring following the government's pandemic-driven aid package, sustained growth hinges on fiscal adjustments and compliance with public expenditure rules, the OECD warned in an economic survey of Brazil. Speaking from Paris, OECD Secretary General Angel Gurria, cautioned that the challenge ahead was "spending better, rather than spending more." President Jair Bolsonaro's economic stimulus program is widely credited for saving Brazil from a deeper recession and driving poverty down while the coronavirus raged. But pushed public debt to over 94% of GDP, has left markets on edge as the leader has tried to extend part of the aid. The OECD cited concerns with productivity, efficiency in spending, corruption and rising inequality. The report also called on Brazil to increase efforts to combat deforestation. "Many of Brazil's institutional and policy settings were made for a world that is very different from the challenges of today," the report said. The Covid-19 pandemic has unleashed a health and economic crisis. Countries are providing exceptional support to families and firms. Debt ratios are rising. Getting fiscal policy right and maintaining financial stability will be key to ensuring a return to growth. Indeed, most countries are caught between the objectives of providing relief and maintaining economic recovery, and the need to adjust to halt the rise in debt due to exceptional spending and a fall in revenues. A V-shaped recovery would help, reversing revenue losses. The next years are going to be challenging as countries seek to boost growth and maintain fiscal sustainability. The risks are very real. The war against the virus is not yet won. Getting the fiscal policies right and maintain financial stability will be critical for a health recovery. The Brazilian economy has shown low resilience to grow since the 2015-2016 recession. The cumulative decline in the biennium is far from being offset by the 1.1% growth rate observed in 2017 and in 2018. Besides, these disapponting results have a direct impact on the labor market. The year 2018 registered more than 12 million unemployed in the country with increasing precariousness in the creation of new jobs. In this paper, we will argue that in order to understand the difficulty of the recovery of the Brazilian economy one must take into account the process of premature deindustrialization observed in the 1990s and 2000s. The loss of importance of the manufacturing sector in the productive structure has important implications for the economy's aggregate productivity performance, because it limit the positive spillovers of productivity gains from the manufacturing industry throughout the economy. In the absence of these sustained gains, long-term growth is jeopardized.
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