Author: Lino Rodrigues

Source: O Globo (RJ) - 22/07/2010

Sector weight, however, it fell from 21% to 18% of everything produced in the country.

SAO PAULO. The underground or informal economy generated R $ 578 billion last year, or 18,4% of the Brazilian Gross Domestic Product (GDP, set of goods and wealth produced).

The value is greater than the GDP size of neighboring Argentina (about R $ 560 billion), and corresponds to all production of goods and services that have not passed through government control mechanisms. Measured based on figures from the National Household Sample Survey (PNAD) on the informal labor market and the income generated by this underground job, the index was released yesterday by the Brazilian Institute of Ethics in Competition (Etco) and by the Getulio Vargas Foundation (FGV ).

Since it started being calculated in 2003 by FGV, the rate has registered successive declines. In these six years, a period that corresponds to the Lula government, the index dropped from 21% of GDP to the current 18,4%. In values, the money moved by the informal economy in the country went from R $ 357 billion to R $ 578 billion.

The weight of the underground economy in Brazil, of 18,4%, is considered high when compared to developed countries, which present rates of up to 10% - as in the United States. But it is much smaller than most developing countries, where the informal economy accounts for 30% to 40% of everything that is produced in the country.

Economic growth was a 'holy remedy' says FGV In the assessment of the researcher Fernando de Holanda Barbosa Filho, responsible for the study, the reduction of informality in Brazil in the last six years is directly related to the growth of the Brazilian economy. From what he called the “virtuous circle”, companies started to give more importance to formalization in the labor market. In addition, the expansion in the volume of credit in the country served as an incentive for workers to require registration in the portfolio.

- Without proof of income in the portfolio, they would not be able to access this credit - says Barbosa Filho, recalling that, on the business side, the effect was similar: with increasing consumption, companies needed formalization to have access to credit in banks private and public.

- The growth of the economy ends up being a holy remedy - sums up Luiz Schymura, director of Ibre.

Etco's president, André Franco Montoro Filho, believes that, if the forecasts of a GDP growth of around 7% this year are confirmed this year, the weight of the underground economy should register another fall in 2010.

For him, informality, in addition to maintaining relations with organized crime, brings direct damage to society, reduces the potential for expansion of the Brazilian economy and inhibits investment by companies.