موسسات و توسعه اقتصادی در برزیل

This paper investigates the effects of institutional reforms in Brazil. It first provides a comparative assessment of the level of institutional development of Brazil with other Latin American countries such as Chile and Argentina. It considers institutional indicators on “doing private business”, including those related to the start up costs, employment rigidity, the expropriation of private investment and bankruptcy law. In general, Brazil presents a lower level of institutional development than Chile and Argentina. As an example, the number of procedures to start a business in Brazil is roughly twice as large as in Chile. We evaluate the importance of institutional differences on economic development using data for a wide cross-section of countries. As in Acemoglu, Johnson, and Robinson [Acemoglu, D., Johnson, S., & Robinson, J. A. (2001). The colonial origins of comparative development: An empirical investigation. American Economic Review, 91(5), 1369–1398], we use the European mortality rate in the colonial period and the “legal origin” to exploit exogenous variation in the level of institutions. We identify issues where institutional reforms are likely to significantly affect per capita gross domestic product (GDP), the ratio of private credit to GDP and the ratio of investment to GDP. We then construct three indices developed in Tavares [Tavares, J. (2004). Institutions and economic growth in Portugal: a quantitative exploration. Portuguese Economic Journal, 3, 49–79] that measure the potential of institutional reforms by using institutional distance, in our case between Brazil and Chile. The most promising reforms for the Brazilian economy, as far as their effects on output per capita, are, in decreasing order: (i) reducing the number of procedures to open a business; (ii) decreasing the average time involved in insolvency proceedings; (iii) increasing labor market flexibility; and (iv) increase effective creditor's protection.

Theoretical and empirical studies have shown that institutions have a first order effect on per capita income and on economic development (see Hall and Jones (1999)).1 Such studies have corroborated the Douglass North (1990) hypothesis that institutions are the underlying determinant of long-run economic performance of nations. Countries with better institutions not only invest more in physical and human capital, but they also use these factors more efficiently. In economics we cannot use laboratory experiments to determine the impacts of different policies and institutions on economic development. However, in the real world, there are various historical incidents that come close to the concept of “natural experiment”. Some examples, as pointed out by Mancur Olson (1996), are the divergent path of North and South Korea, East and West Germany, and Hong Kong and Mainland China, countries that were divided for political reasons and followed divergent economical paths.2 Another “experiment” is the colonization of the new world by Europeans. As argued by Acemoglu, Johnson, and Robinson (2001), Europeans adopted very different colonization policies in different colonies, originating a very diverse set of institutions.3 Where settler mortality was low and long stays palatable, colonizers adopted institutions that provide a legal environment that protected private property and constrained government and elite expropriation of private investment. In contrast, where settler mortality was high, colonizers created an extractive state, whose main purpose was the transfer of as much of the resource base as possible to the colonizers. Since there is path dependence on institutional changes, past institutions are correlated to current institutions and therefore affect current economic performance.

This paper investigated the effects of institutional reforms on long-run output per capita, on the investment rate and on the credit-to-output ratio. Regarding their effects on long-run output per capita, we found that the most promising reforms for the Brazilian economy are: (i) the reduction of the procedures to open a business; (ii) the decrease in the average time involved in insolvency proceedings; (iii) increased labor market flexibility; and (iv) the increase in effective creditor's protection. We found similar results for the effects of institutional reforms on the ratio of total private credit to GDP and on the investment rate. From our estimates it is clear that the Brazilian economy would benefit substantially from institutional reforms that improve the average level of institutional development. For instance, the reduction in the number of procedures to open a business from 17 to 9 – the Chilean level – is quite significant. However, it is important to observe that the simple reduction of legal procedures in Brazil would not necessarily strongly affect its economy since we are not controlling for other factors that can interact with the direct impact of the number of procedures, such as the overall quality of the Brazilian and Chilean bureaucracies. In fact, the number of legal procedures to open a business in Brazil is twice what is observed in Chile, but the average time to register a business is about 5.6 times higher. Therefore, Brazil should not only simplify its legal code to register a firm as in Chile, but should also improve the efficiency of its bureaucracy.