Volume 43, Number 171,
October-December 2012
Structural Limits on Economic Development:
Brazil (1950-2005)
Bibiana Medialdea
CONCLUSION

The combination of elements analyzed in this article is expressed in the morphology and behavior of internal savings. On the one hand, weak investment restricts Brazil’s accumulation capacity and with it, possibilities for growth. The income distribution scheme simultaneously reinforces weak investment and the inflexibility and duality of the internal consumer market. As a result, savings generated internally are systematically low, in such a way that they are insufficient to allow a powerful or sustained increase in investment. This savings insufficiency essentially becomes an additional structural obstacle for the economy because it severely restricts the possibility that investment could be internally financed.

This restriction operates with two mechanisms. On the one hand, because the level of national income is low and moreover is distributed in such a way that a majority of it is in the hands of social groups with no incentive to invest, most income is dedicated to consumption, which reduces the margin to increase savings. On the other hand, if the context does not favor channeling the low savings available towards social groups with a propensity to invest, the savings will leave the country or remain in the country without being involved in any productive activity.

This double restriction on savings, in terms of reduced magnitude and low mobilization towards productive means, has been constant in the Brazilian economy, which has adopted different measures over time. The growth period in 1950-1980 contributes evidence as to how alternative methods that tried to “quell” this restriction, in the absence of economic and social transformations that would deactivate the structural limits on development that we have analyzed, end up being unsustainable. On the one hand, the option of inflationary growth financing until the mid-1960s (Giambigi et al., 2005), and on the other, using international banking credits throughout the 1970s (Carneiro, 2002), are proof of this. It is useful to propose here, by way of reflection, that trying to reduce the structural limits on development, without tackling the profound transformations that would be required to free the country from these limits, invariably results in additional problems (like the unsustainable level of inflation in the mid-1960s or the outbreak of the external debt crisis at the beginning of the 1980s).

The Brazilian experience corresponding to the period 1950-2005, analyzed and summarized in this article through the main macroeconomic relationships, definitely makes clear that throughout these decades, Brazil’s economy has been subject to structural restrictions that interact with each other and consolidate its underdevelopment.

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 194 July-September 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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