ABSTRACT
The aim of this paper is to discuss the evolution of the Brazilian labour productivity in the 1990s and 2000s to shed some light on the resilience of the Brazilian economy to recover growth. Labor productivity growth in Brazil, after showing positive annual rates between 1950 and 1979, became stagnant after 1980. Following McMillan and Rodrik’s (2011McMillan, M.S. and Rodrik, D. (2011). “Globalization, structural change and productivity growth”. NBER Working Paper Series 17143. Cambridge, MA: National Bureau of Economic Research.) methodology, this paper at first decompose labor productivity growth in the period 1950-2011, according to “structural change” (which is considered growth-enhancing) and “within effect” (which is growth-reducing, if not accompanied by significant structural change while the country is still pursuing its catching-up process). Next, an econometric exercised is presented to explain the determinants of the structural change component of the labour productivity since economic opening in the 1990s. The results show that the stagnation of the Brazilian productivity is explained by the overvaluation trend of the Brazilian currency, the reprimarization of the export basket, the low degree of Brazil’s trade openness and the high real interest rates prevailing in the period.
KEYWORDS:
Economic development; catching-up; labor productivity growth; structural change
Source: Central Bank of Brazil for short-term nominal interest rates and real effective exchange rate indices. Brazilian Institute of Geography and Statistics (IBGE) for consumer inflation rate (IPCA). Real interest rates (SELIC) calculated by the authors and deflated by IPCA.
Source: Groningen Growth and Development Center database.
Source: Calculated by the authors, based on Groningen Growth and Development Center database.