Brazil needs to have productivity gains to sustain growth, according to IBRE

13 September 2013

With the approach of the end of its demographic bonus, Brazil urgently needs to show productivity gains. That is what the study by economists Regis Bonelli and Julia Fontes, of the Applied Economics Department of FGV's Brazilian Institute of Economics (IBRE), indicates.

According to the survey, which develops different projections for the GDP until 2022, if the country maintains the pattern that characterized its growth from 2000 to 2012, focused on the activity increase of sectors which demanded a high level of labor, an expansion above 2% would not be feasible due to a demand coming from an employed population greater than the economically active population (PEA) available.

Some alternatives to revert this scenario would be to stop growing or grow no more than 2% per year; changing the structure of Brazilian production for sectors of higher productivity and even a large-scale immigration of professionals. Nothing, however, is more effective than a strong and continuous increase of productivity in general, states Bonelli.

The researcher further emphasizes that, in recent decades, the fixed capital per worker increased at small rates (indicating a decrease in investments, which boosts productivity) and that the Brazilian productivity in services is lower than in many countries. If we take the level of relative productivity of the United States between 2000 and 2008 as a basis, Brazilian productivity in the services sector decreased 1.7 %, while in Colombia it increased 2.8 %, Chile, 1.8% and Korea, 4.8 %, he warns.

Click here and learn more about the research produced by IBRE. (In Portuguese)


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