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Brazil’s economic growth strategy: the last two decades (1999-2019).

Gomes, Luiz (2020): Brazil’s economic growth strategy: the last two decades (1999-2019).

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Abstract

In this work we aim to analyze Brazil’s economic growth strategy in the last two decades. Following the works of Bresser-Pereira (2002) and Bresser-Pereira & Nakano (2003), we refer to this strategy as the “growth strategy with foreign savings”. Based on the so-called Keynesian-structuralist theoretical framework, in this article the argument is that growth with foreign savings reinforces the trend of currency appreciation and increases the country’s external vulnerability. Combined with the “Dutch disease”, this growth strategy produces a picture which final outcome is characterized by the strengthening of such processes as de-industrialization and re-primarization of the exports. Because, in general, it promotes consumption and not productive investment, this strategy also results in substitution of foreign for domestic savings and loss of competitiveness of the domestic industry, further strengthening the external imbalance.

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