The efficiency of the regulatory, institutional and legal framework for the operation of an economy explains, along with education and the supply of physical infrastructure, income differentials between Brazil and developed countries, said the researcher of the Brazilian Institute of Economics (FGV/IBRE), Samuel de Abreu Pessôa, in his column for the newspaper Folha de São Paulo. According to the economist, the educational level of Brazilian workers highly affects the level of productivity of our labor force, but it is not the only factor that determines the gap between the Brazilian economy and that of other nations.What do I impute this difference to? The academic literature suggests that two other factors are related to it. The first is the amount of physical capital. Workers in developed countries have a larger quantity of machinery and equipment at their disposal, and the economy has a much broader amount of capital in the form of physical infrastructure, said Pessôa, who then mentioned another factor. Second, the efficiency of the institutional and legal framework in which rich economies operate is generally much better, he added.Also according to the economist, Brazil's main problems with regard to physical capital are the logistics infrastructure - including ports, highways, roads, etc. - and urban infrastructure, such as public transportation and sanitation. According to him, the supply of these services depends on the direct action of the State or State regulation to allow proper collaboration of the private sector, whether with privatization, concessions, or public-private partnerships, explained the researcher.However, the supply of machinery and equipment depends solely on private decisions, which demonstrates the need for a regulatory framework that encourages the correct investment by entrepreneurs.Please click here and read the full column on Folha's website (in Portuguese).