Author: Marcos Mendes
475 Pages; ISBN: 85-7475-128-6
The Brazilian state is very large, whatever rule they will use to measure it: public debt, taxation or the total expenditure. The large and inefficient public spending, which over the years, forged a heavy state, is among the leading causes of various imbalances in the country, such as overvalued exchange rate, the interest rate stratospheric, large spreads, endemic corruption, low economic growth. Nevertheless, a significant portion of Brazilian society continues to demand more government jobs, more tax incentives, retirement at an early age. Periods of electoral propaganda show politicians offering more and more programs funded by the exchequer. None of them propose to control spending, or risk being wiped out at the polls.
Each of the three components of the "big government" (taxes, spending and debt) generates macro and microeconomic impacts that negatively affect drivers of long-term economic growth: private investment, exports, productivity and innovation. The high taxes levied on production, discouraging investment and reducing export competitiveness. The heavy debt that prevents the country to reach the "investment grade", away from direct foreign investments.