eating dust

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By NELSON MARCONI*

To recover the Brazilian economy, it is necessary to change the failed economic model that has prevailed for decades

The Brazilian economy has been eating dust for a long time. In 1980, our per capita GDP was 15 times greater than China's and 1,6 times greater than South Korea's; in 2020 it was equivalent, respectively, to only 79% and 26% of what was observed in these countries.

What did the Asians do? They realized that the most successful countries encourage industry and important sectors around them; soon, they expanded their participation in the international market through manufactured exports, using and abusing planning, good macroeconomic practices, scientific and technological development policies and education, focusing on strategic areas and always defending the interests of their countries.

Around here, we deliver our internal market, with a kiss, via appreciated currency, to producers in other countries, without expanding exports of manufactured goods; while retail sales, discounting inflation, are now double what they were in 2003, industrial production is at the same level as in 2005.

All possible difficulties were created for efficient local producers to operate in the internal and external markets: in addition to the exchange rate, high interest rates, a distorted tax structure, ineffective industrial policies, insufficient investment in education and science and technology, and poor quality public spending.

As a result, we de-industrialized and today we feel the worst consequence of this process: we stopped generating good jobs and people are having to make do in informality, in much more precarious occupations, and the per capita GDP in Brazil today is the same as in 2010. We lost 11 years.

Is it possible to reverse this scenario and go back to generating good jobs, which is one of our main objectives, and encourage real entrepreneurship? Definitely yes! Do we need to invest more in education? Logical, and Ceará by Ciro Gomes and his successors is a world example. Do we need to participate more in international trade? Yes, but by stimulating exports and not annihilating local producers. How to make?

First, it is necessary to structure a macroeconomic scenario favorable to those who produce: we must equate the fiscal issue in the medium term, making the trajectory of the public debt sustainable, through the reduction of subsidies and exemptions, of the change in the budgetary logic – which rewards those who spent more in the past , the institution of progressive taxation on profits and dividends, inheritances and assets, offsetting production on a compensatory basis, and the improvement in the quality of public spending. Thus, the pressures against the drop in interest rates are neutralized, it is possible to maintain the exchange rate at a competitive level and the public investments that we need to resume growth at this time. Actions to reduce inflation and private debt are also fundamental.

From a strategic point of view, we see that the US, Germany and France created plans to recover their industries and their space in the world economy, including high spending on infrastructure and research and development. There is no way we can act otherwise.

A national development plan agreed between the public and private sectors, along the lines defended by Ciro, is essential, providing for both scientific and technological development as well as the reduction of inequalities and the improvement of social indicators, which will recover with the improvement in the quality of jobs, educational advancement and specific policies for the most disadvantaged. Public management should be reoriented towards achieving the goals of this plan, acting in a matrix manner, monitoring and demanding results and rewarding good performance.

The environmental agenda constitutes an investment opportunity: the development of new energy sources, the reorientation of the use of oil, changes in the way of producing meat and other foodstuffs, the implementation of a low-carbon infrastructure and the necessary technological advances in the health sector, for example. All these factors will stimulate innovation and technological sophistication, including microelectronics, software and artificial intelligence. And let's think about all the services that will be demanded by these activities.

There is indeed plenty of room to resume growth, good jobs and the dignity of the Brazilian people. But it takes willingness and courage to change the failed economic model that has prevailed for decades.

*Nelson Marconi, economist, isthe executive coordinator of the Center for Studies on New Developmentalism at the Getulio Vargas Foundation (FGV-SP).

Originally published in the newspaper Folha de S. Paul.

 

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