Tuesday, April 22, 2014

The Problem with Protectionism: Brazil's Stagnant Productivity

A nice article in The Economist about the startling lack of labor productivity gains in Brazil since 1960.  Startling because of the recent economic boom - a boom more about commodity prices and huge oil reserves than a modernizing economy.

I have seen it all first hand: the tremendous drag of the bloated bureaucracy, the massive protection manufactured and high tech goods receive in Brazil.  Heck, even in my extremely well-funded private university the professors computers were old and slow because replacing them in Brazil is so expensive.  I had a Brazilian-made monitor that was so bad it was hard to read the screen at all.

A perfect example of what is wrong in Brazil is Petrobras - the state-owned petroleum megafirm that is a complete mess.

It is time for the state to start retreating from the commanding heights of the economy and let some market discipline in...before it is too late.


alex said...

What other factors could be factored into this? Norway has enjoyed an increased productivity rate despite aggressive protectionism.

Patrick Emerson said...


Good point, the other side is what a government does with the rents and how it implements the protectionist policies.

Brazils public services are woeful, most importantly their public education system, and their industrial policy appears to afford too much shielding from the discipline of the market.