Volume 43, Number 171,
October-December 2012
Structural Limits on Economic Development:
Brazil (1950-2005)
Bibiana Medialdea*
Date submitted: November 27, 2011. Date accepted: April 13, 2012

This article proposes that the reproduction of Brazilian underdevelopment is explained by a set of elements that operate as structural obstacles: we call them structural limits on economic development. First, an interpretative proposal is set forth to articulate the key variables that affect economic dynamics that either favor or hinder accumulation processes. Later, the specific circumstances of the Brazilian economy in the period from 1950-2005 are analyzed. The article touches on both the Brazilian economy’s productive weaknesses as well as aggregate demand and income distribution. To conclude, these factors determine a restriction on internal savings. The relationship between these limits explains the reproduction of underdevelopment in the country.

Keywords: structural limits on economic development; accumulation process; Brazil.

Throughout the twentieth century, Brazil has undergone a variety of important economic and social transformations. However, the conditions of underdevelopment that characterize their economy have continued to be reproduced.1 This article proposes that the reproduction of Brazilian underdevelopment is explained by the persistence of a set of elements that operate as structural obstacles, and in whose presence it is unfeasible to overcome the circumstances of underdevelopment. We call this set of elements structural limits on economic development. The first section establishes the basic foundations of this interpretation and proposal. In other words, it articulates the main variables that play a role in economic dynamics, either favoring or impeding the accumulation process. The following sections are centered on the specific conditions of the Brazilian economy from 1950-2005.2 First we address the productive weaknesses that determine a limited accumulation process and reduced working productivity. Later, we consider the elements related with aggregate demand and income distribution that explain this limitation. To conclude, these factors determine insufficient internal savings, as well as a propensity to use savings in a non-productive manner. As such, the interrelationship between these limits explains the reproduction of underdevelopment in Brazil.


The question of (under)development is one of the broadest and most controversial themes that economic analysis can address.3 This work does not intend to take on all aspects of this issue, and instead is limited to formulating an interpretative proposal to explain how a series of structural links that reproduce underdevelopment are produced in a non-developed economy.

To do so, a conceptual delimitation is established that compares how a few specific fundamental economic variables interact in a developed economy and in an underdeveloped economy. Commonly, the most immediate or intuitive way to make this distinction is to use certain global indicators, like gdp per capita. Even though this indicator has notable weaknesses, we will see that it also provides significant information on the Brazilian economy and its evolution.

In analytical terms, the first approximation that should be made to establish the distinction between development and underdevelopment is based on the classical political economy, focusing specifically on proposals from Smith, Ricardo, and Marx, fundamentally, regarding the accumulation process. At first glance, accumulation capacity appears to be defined by the magnitude of capital stock and the internal structure. On the one hand, the supply of capital is the fundamental determinant of sustained growth possibilities for production. As such the dimension of stock is a decisive factor for development and becomes a structural obstacle for economies that lack a sufficient level and must make a large investment effort to broaden their accumulation capacity. On the other hand, the technical composition of the capital stock determines the structure of the sectors of productive activity. Historically, the transformation process that developed economies have undergone has been based on industrialization and, specifically, on the growing weight of capital goods as an ever more important component within production. In this way, both the relative weight of industry within the economy as well as the branches of capital goods within the industrial structure are fundamental elements whose interaction determines an economy’s ability to widely reproduce its accumulation dynamics.

* Professor at the Universidad Complutense de Madrid, Spain. E-mail: bibiana@ccee.ucm.es

1 This does not mean Brazil does not present some economic indicators at levels above average in comparison to other underdeveloped economies.

2 As a result, this analysis cannot automatically be extrapolated to any other underdeveloped economy.

3 A panorama of fundamental contributions and controversies can be found in Todaro (1985), Griffin (1989), Szirmay (2005) and Puerto (2008).

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 195 October-December 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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