Productivity, investment and capital flow: the failure of growth with foreign savings in Brazil

Marcos Tostes Lamonica () and Sergiany da Silva Lima ()

Brazilian Journal of Political Economy, 2022, vol. 42, issue 3, 572-591

Abstract: This work analyzes productivity and the hypothesis that capital flow does notinfluence investment in the Brazilian economy. To do so, we present a productivity equationconditioned on the rates of: investments, wage costs, and external demand. The relationshipbetween productivity and investment and wage rates suggests a possible simultaneity, giventhe distributive nature of aggregate income between capital and labor. Therefore, estimatorsthat treat endogeneity in two stages are used: the Two-Stage Least Squares (MQ2E) and theGeneralized Least Moments (MMG), to increase the robustness of the results. We find thatthe investment rate explains productivity, but capital flow does not determine productive investment. In addition, Brazilian investment is more susceptible to the parameters ofmarginal capital efficiency, whose fall has affected Brazilian productivity since the 1980s. JEL Classification: O11; O16; 047.

Keywords: Productivity; investment rate; capital flow (search for similar items in EconPapers)
Date: 2022
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