ARTICLE – FECOMERCIOSP

Or the modernization of the State, or mediocrity

In recent years, Brazil has been suffering from low growth. To give an idea, we often refer to the 1980s as the “lost decade” because the average growth rate during that period was 1.6%. However, between 2010 and 2020, growth was only 0.6%.

There is only one path to development: increasing productivity — as seen in South Korea, Singapore, Hong Kong, Taiwan, and even China. Obviously, this process involves education, but it is a long-term plan. What needs to be done now? Reforms that modernize the State. A common factor in all successful cases is the opening of trade to integrate the economy into global production chains.

Moreover, it is necessary to increase the level of investment in the economy, which should come from the private sector. The problem is that during this period, the tax burden has increased from 25% to 34% of Gross Domestic Product (GDP), while public spending has reached 40% of GDP (considering interest payments). This expansion of the state has been driven by rising current expenditures (without concern for efficiency), affecting investment rates, productivity, and consequently, the country’s growth potential.

We have not yet managed to transition from a middle-income to a high-income status, as other countries have done. To achieve this, it is necessary to modernize the State through Administrative Reform and trade openness. Otherwise, we will be condemned to mediocrity.

Source: Eletrolar News Ed. 161