ABSTRACT
The purpose of the paper is to show that endogenous growth theory is at best insufficient to explain Brazilian economic underdevelopment. The main reason for this is that this theory gives a major importance to the role of human capital in the process of economic growth which is not justifiable in the Brazilian case. Instead of this, the main problem of the Brazilian economy seems to be the incapacity of its modem sector to absorb the majority of the population. This cannot be done only through human capital increase; it requires in first place a major physical investment program in order to enlarge the size of the modem sector nowadays opened only to a minority of the population which is insufficient to allow Brazilian economy recovery.
KEYWORDS:
Endogenous growth model; human capital; employment determination