Factor Inputs And Brazilian Economic Growth

Brazil is the largest country in Latin America, both in terms of its population, its territory and its economic power. However, such an important country as Brazil is heavily under-researched in China. The thesis takes up a daunting task to unveil the secrets behind Brazilian economic growth since last century.Brazil used to be one of the fastest growing countries in the first eight decades of the20th century. However, Brazilian growth came to a sudden halt in the1980s. Throughout the1980s, Brazil could barely survive from the oil shock and debt crisis. In1994, Brazil embarked on political and economic reforms, which pulled Brazilian economy out of the trenches and drove it to become the sixth largest economy in the world in2010.The thesis aims to unveil the secrets of the ups and downs of Brazilian economic growth from the perspective of factor inputs and total factor productivity. After the introduction, literature review and a brief overview of Brazilian economic history, the thesis examines how much the factor inputs (natural resources, labor, human resources, capitals) and total factor productivity contribute to Brazilian economic growth respectively. The thesis finds that as a natural resource abundant country, Brazil benefits from its abundancy. In the meantime, however, it suffers from the natural resource curse with the signs of de-industrialization appearing. The thesis then endeavors to make policy suggestions with a view to minimizing the effects of the resource curse. In the following Chapters Five and Six, the thesis measures how labor and capital factors contribute to Brazilian economic growth. The calculation indicates that throughout the20th century, Brazil remains a factor-driven economy. Also, based on the calculation of the total factor productivity in Brazil from1960to2010with growth accounting and Malmquist Index, the thesis finds that institutional reforms, which bring forth the growth of Brazilian TFP, are the driving forces behind the Brazilian economic takeoff in the early21st century.Upon summarizing the features of Brazilian economic growth, the thesis points out the huge fluctuations of Brazilian economy result from its over-dependence over international market for exports and over-reliance over a factor-driven growth model domestically. Moreover, Brazil lacks a strong human resource pool to support its innovation and industrial restructuring. With all the above reasons combined, Brazilian economic growth pulled a sudden stop in the early1980s. The institutional reforms, unleashed by the Real Plan, enable Brazil to embark on a new recovery. However, to make the recovery sustainable, Brazilian government need reduce Brazil’s dependence over commodity exports, further stabilize its domestic economy against external shocks, and accelerate the pace of human resource accumulation to encourage innovation and industrial restructuring.