B
razil’s economic growth has been disappointing over the last three decades, because of a productivity breakdown. This book is the most comprehensive and rigorous diagnosis of the reasons behind the productivity breakdown. The authors dig deep into the market and, more importantly, government failures in capital, credit, and labor allocation that explain why misallocation of resources has hampered growth. Excessive intervention in factor markets, and lack of competition in input and product markets, are the reasons for the productivity breakdown. The book goes the extra mile and outlines an evidence-based policy strategy that will boost inclusive growth. It is essential reading for all interested in the Brazilian economy, especially policy makers. João Manoel Pinho de Mello Secretary for the Promotion of Productivity and Competition, Brazil Ministry of Finance The timely and judicious work of the World Bank demonstrates the ineffectiveness of Brazilian public policies, especially those of subsidies and financial and tax incentives, to raise the average per capita income between 1990 and 2016, based on the United States. This result, unacceptable, becomes even more dramatic when compared to the trajectory of countries with similar and even lower income profiles. For Brazil to grow again in a sustained manner, and achieve the goal of being a country with high per capita income and lower social inequality, we need to reverse the recent trajectory of stagnation and even decreased productivity of production factors, which has been extensively analyzed in the report. We need to act without delay and the agenda of changes necessarily goes through the search for the improvement of the business environment in the country. The work of the World Bank details a number of initiatives, including ending inefficient policies of incentives and allocating these resources to innovation and support for workers, reducing external and internal barriers to competition, expanding and improving infrastructure, and simplifying the tax system. Maria Silvia Bastos Marques Former President, BNDES (Brazil’s National Bank for Economic and Social Development) This World Bank book about productivity is a must-read for all who care about this crucial theme for improving the well-being of the Brazilian population. In addition to providing new evidence about productivity, it offers a conceptual framework for interpreting existing facts, based on the diagnosis that the lack of internal and external competition distorts factor allocation and reduces efficiency. The policy recommendations combine technical rigor with special attention to implementation details and social consequences. Fernando Veloso Researcher, Brazilian Institute of Economics / Getulio Vargas Foundation
ISBN 978-1-4648-1320-7
SKU 211320