In the May 14th column, I presented the performance of the Brazilian economy in the last 120 years, since 1900. This column complements that one. I will look in more detail at our last 40 years, from 1981 to 2021.
The table presents the average growth rate of the economy and of labor productivity for the different periods of the last 40 years. The data are from the FGV Ibre Productivity Observatory. The first year of each of the time intervals is the base year from which the rates of change were calculated.
The output of the economy is given by the total value added — therefore, it excludes indirect taxes paid by companies. Labor productivity is given by the product per hour worked.
Our performance was mediocre. As the last row of the table documents, the average growth of the economy was 2.2% per year and that of labor productivity was very low 0.6% per year. An hour worked in Brazil produced, in 1981, BRL 27.5 and, in 2021, BRL 35.1, always at 2019 prices.
That is, per month, an average worker produced BRL 4,758 in 1981 and BRL 6,086 in 2021, a growth of 28% or 0.6% per year. The annual income per capita and per worker in 1981 was R$21,522 and R$62,476, respectively, and R$29,921 and R$69,911 in 2021.
The Brazilian economy suffers from enormous mediocrity. In the same period, labor productivity for the US economy grew at a rate of 2% per year.
The only relatively good period was from 2006 to 2013, which I called interventionism. There is a great difficulty for me. I consider that the economic policy in this period was of worse quality. How do I deal with this fact?
I think it is important to consider legacies, boundary conditions and inheritances. The period was preceded by a long process of macroeconomic housekeeping and institutional construction, the period I have called stabilization and liberalization. That’s the inheritance.
On the other hand, the bulk of the commodities supercycle took place from 2006 to 2013. It is worth remembering that, in the period immediately following the great global financial crisis of 2008, the commodities boom became even more accentuated, due to the recovery in China having been much faster than the rest of the world. That was the boundary condition.
Finally, the period of interventionism left a heavy legacy for the later period: in the three years of our great crisis, we fell by 1.9% annually and labor productivity declined by 1% a year.
The reader may have noticed that in the pandemic biennium, 2020-2021, productivity growth was relatively good, at 1.4% per year. This fact should be reversed when we have the closed numbers for 2022.
In 2022, with the reopening of the economy and the normalization of lower productivity sectors, the economy’s labor productivity is expected to fall.
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
