A note on the impacts of a decade of violations of economic freedom in Brazil

Cristiano Aguiar de Oliveira

Revista Brasileira de Economia - RBE, 2025, vol. 79, issue 1

Abstract: After decades of accelerated economic growth, the eighties in Brazil were marked by hyperinflation and economic stagnation, living up to the epithet of a lost decade. However, the country could not resume its previous economic growth trajectory after that decade. This article supports the hypothesis that this loss of direction is due to changes in economic institutions that occurred during this period, which deteriorated economic freedom and generated strong disincentives for accumulating physical capital and adopting new technologies. To this end, it proposes a longitudinal comparison of Brazil with a group of countries that have chosen a different path concerning economic institutions through a synthetic control model, which allows the evaluation of Brazilian economic growth through a counterfactual analysis. The results indicate a loss of 48.19% in GDP per capita after twenty years. The article concludes that Brazilian economic institutions that could contribute to greater economic freedom remain weakened and create an inhospitable business environment for potential investors. As a result, the country remains economically stagnant.

Date: 2025
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