Capital Accumulation, External Restriction, Technology Gap and Structural Change: Theory and the Brazilian Experience

Brazilian economy was the most dynamic in terms of growth among developed and developing economies from post-War until 1980, when a severe external constraint interrupted this trend. We propose in this paper a model, based on Kaldor, where capital accumulation, technological gap and long run external constraint are connected. Our hypothesis is that capital accumulation, under certain circumstances, can overcome external constraint if the accumulation effort promotes structural change increasing the importance of sectors more technological-intensive. It is expected that the structural change in this direction will contribute to an increase in the income-elasticity of exports and to a decrease in income-elasticity of imports, resulting in the increase in the growth rate of real product compatible with the balance of payments equilibrium in the long period. The last part of the paper shows that the high investment rate observed in the Brazilian economy from the post-War until the end of the 1970s resulted in the deepening of the import substitution process, what, in our interpretation, contributed to partially increase the long run growth rate of the Brazilian economy compatible with the balance of payment equilibrium.structural change, technological progress, industrialization, external restriction

NOTES ON ECONOMIC DEVELOPMENT IN A DUAL ECONOMY: THE RISE AND FALL OF BRAZILIAN MANUFACTURING INDUSTRY

Since the second half of 2010, the Brazilian economy is stagnant with negative consequences on productivity and employment growth. We will argue that the loss in economic dynamism is rooted in significant structural changes since the economic opening in the 1990s, resulting in fast deindustrialization and deterioration in the labour market. Our theoretical hypothesis is that of endogenous technical progress. Assuming that it is incorporated in the new machines and equipment, capital accumulation is the key variable to explain. Following early works by Kaldor and Kaldor Mirrlees, we assume that capital accumulation and the incorporation of technical progress are fundamental to promoting structural transformation. However, the presence of a dual labour market may impair the process. Also, as explained by the new developmentalist theory, financial integration of developing economies (a strategy to grow with external savings) in a hierarchial international monetary-financial system imply that real interest rates tend to be high, and the real exchange rate is appreciated, which does not induce accumulation in productive capital. In this case, the economy tends to specialize in its comparative advantages. Early deindustrialization deepens economic heterogeneity and operates as a barrier to increasing aggregate productivity. This is the case of Brazilian economy that failed to develop an endogenous core of technical progress during the fast industrialization process and did not succeed after economic opening either. Duality in the labour market and productivity heterogeneity have been deepened since the 1990s and the Brazilian economy is stagnant.Since the second half of 2010, the Brazilian economy is stagnant with negative consequences on productivity and employment growth. We will argue that the loss in economic dynamism is rooted in significant structural changes since the economic opening in the 1990s, resulting in fast deindustrialization and deterioration in the labour market. Our theoretical hypothesis is that of endogenous technical progress. Assuming that it is incorporated in the new machines and equipment, capital accumulation is the key variable to explain. Following early works by Kaldor and Kaldor Mirrlees, we assume that capital accumulation and the incorporation of technical progress are fundamental to promoting structural transformation. However, the presence of a dual labour market may impair the process. Also, as explained by the new developmentalist theory, financial integration of developing economies (a strategy to grow with external savings) in a hierarchial international monetary-financial system imply that real interest rates tend to be high, and the real exchange rate is appreciated, which does not induce accumulation in productive capital. In this case, the economy tends to specialize in its comparative advantages. Early deindustrialization deepens economic heterogeneity and operates as a barrier to increasing aggregate productivity. This is the case of Brazilian economy that failed to develop an endogenous core of technical progress during the fast industrialization process and did not succeed after economic opening either. Duality in the labour market and productivity heterogeneity have been deepened since the 1990s and the Brazilian economy is stagnan

Uma interpretação sobre a evolução da produtividade industrial no Brasil nos anos noventa e as "leis" de Kaldor [An interpretation of industrial productivity evolution in Brazil in the nineties and the Kaldor 'laws']

The aim of this paper is to recover Kaldor´s propositions to shed some light on the recent debate about industrial productivity in Brazil. Nowadays, it is a well-disseminated idea that the opening of the economy has contributed to the increased industrial productivity in the nineties. However, theoretical arguments have emphasized supply sources as the main cause of such an increased productivity. Following the Keynesian tradition, Kaldor emphasizes the importance of the aggregate demand components to explain productivity growth. In conclusion, we call attention to the fact that sustainability of productivity growth depends basically on the factors working on the aggregate demand side.industrial productivity, industrial growth, structural change

Concentração industrial e produtividade do trabalho na indústria de transformação nos anos 90: evidências empíricas

This paper discusses the evolution of industrial concentration from 1985 to 1998. In the first part we associate this discussion to the degree of technological intensity in industry. To conduct this investigation, we had to make comparable the industrial classification in 1985, 1994 and 1998. After that, we classified all the industrialsectors according to the intensity in technology. In the second and third parts of this paper we discuss the association of employment and technological intensity and productivity and industrial concentration. We add to this last discussion an investigation about concentration and the participation of foreign capital in industry.industrial concentration, productivity, technology

Nota exploratória sobre o consumo e a classificação socioeconômica no Brasil baseada em evidências da pesquisa de orçamento familiar

O objetivo desta nota é analisar diferentes critérios de estratificação utilizados no Brasil, tendo em conta os perfis de família e considerando variáveis socioeconômicas, demográficas e de endividamento. Os diferentes perfis dos estratos socioeconômicos são gerados por dois critérios de estratificação nacionalmente conhecidos, com base nos dados das duas últimas edições da Pesquisa de Orçamento Familiar (2002/2003 e 2008/2009). Assim, é possível comparar o resultado dos distintos critérios de classificação e identificar características específicas das mudanças de padrão ao longo do tempo. O artigo confirma uma melhoria econômica de 2003 a 2009 para os indivíduos classificados no estrato socioeconômico mais baixo, juntamente com um aumento da renda média total e per capita,e um aumento de despesas. Por outro lado, também foram observadas redução do nível de poupança das famílias e elevação nos níveis de endividamento

Estatísticas oficiais: credibilidade, reputação e coordenação

This paper calls attention to the role of the official statistics in the decision process of modern economies. Official statistics, to become well accepted, should be credible and the official producer should have a good reputation. In this sense, we identify that the discussion about quality in the production of official statistics should stress the distinction between credibility of the statistics and the reputation of the official producer. Also we add thatthe new System of National Accounts plays an important role as an instrument ofcoordenation in the decentralized production of official statistics

Structural change, catching up and falling behind in the BRICS: A comparative analysis based on trade pattern and Thirlwall’s Law

The BRICS (Brazil, Russia, India, China and South Africa) have gradually become more than an acronym as their governments have been engaging in international and political negotiations as if they were a regional economic group. The main goal of this paper is to compare the structural change of the BRICS using econometric evidence based on estimates of Thirlwall’s law for the period 1995-2013. Thirlwall’s equations have become powerful indicators to evaluate whether a country is in a catching-up or falling-behind long-term path. Our basic assumption is that the way in which each country engages in international trade and global capital flows affects, positively or negatively, structural change and the catch-up trajectory. Though our results cannot confirm Russia’s long-term growth trajectory, they do confirm that over the period analysed China and India have shown a rapid catching up path, while Brazil and South Africa have entered into a falling behind path. JEL: 011; 014; 019; 047; P5

O debate sobre a produtividade industrial e as estatfsticas oficiais*

The recent release of the National Accounts System includes estimates about the evolution of the industrial productivity growth in the nineties. In this paper we compare the results obtained through the monthly industrial surveys and the New National Accounts System discussing the methodological differences between each source