Three questions for Edmar Bacha

The economist and former president of the BNDES talks about the expectation of economic growth, increased formalization and international competitiveness in the country.

1. With each new projection commissioned by the Central Bank, expectations for growth in the Brazilian economy for 2013 are reduced. In your opinion, what measures would be necessary to reverse this scenario?

More important than low growth is its combination with high inflation. In other words, the Brazilian economy seems to be less productive today than in the recent past. There is the effect of the end of the external bonanza, which benefited the country in the second half of the decade, but equally important is the paralysis of the liberalizing economic reforms in the Lula and Dilma governments. The resumption of these reforms is essential to allow the country to grow again with inflation under control.

2. When disclosing the 2012 Underground Economy Index, ETCO and the Brazilian Institute of Economics of Fundação Getulio Vargas (IBRE / FGV) warned of the “institutional limit” of formalizing employment. In your opinion, what factors contribute to this limit and how would it be possible to resume the growth of formalization?

The greater incorporation of labor in the formal sector of the economy was another factor that allowed to accelerate the GDP growth rate in the second half of the past decade. With the reduction of informality and the reduction of the unemployment rate, the continuous incorporation of labor now depends on the adoption of a more vigorous labor reform, in the lines that has been indicated by José Pastore, for example.

3. Mr. do you believe that the reduction of the tax burden would leverage the integration of Brazil as a competitive economy in the international scenario?

No doubt. Equally important would be a reduction in protection against imports (tariff and non-tariff barriers, especially domestic content requirements) to allow Brazilian industry to participate in globalized production chains.


Three questions for Maria Tereza Sadek

ETCO's advisory adviser, Maria Tereza Sadek, talks about impunity, legislation and justice. PhD in political science and professor at the Department of Political Science at USP, she is one of the most respected justice researchers in Brazil.

1) Although the winds of modernization are blowing strong in Brazil, there are still obstacles that hinder a real process of institutional renewal. The feeling of impunity still reigns and feeds corrupt and corrupting people who are not afraid for their actions. Is it certain that the law in Brazil does not produce results? Why?

The institutional renewal process has been slow and has met with resistance. The practically widespread perception of the existence of impunity is based on everyday data. Reports of corruption accumulate and punishment is rare. The feeling on the part of the population is that opportunities provided by legislation and the slowness of justice favor criminals. Impunity reinforces perceptions that the law is not the same for everyone, the existence of privileges and, equally serious, leads to disbelief in justice and democracy.

2) Is it just a matter of legislation or are there other factors involved?

Legislation is important, but it is far from being the only factor or determinant. International research shows that the certainty of punishment is a more important factor in inhibiting transgressions than the severity of the penalty. Factors such as education, cultural traits and the effectiveness of the law are fundamental. Furthermore, comparative studies have concluded that corruption tends to be greater the greater the size of the state machine and the greater the state's control over the economy.

3) What measures are necessary to create greater efficiency and agility in complying with the laws? Is it difficult to change this scenario?

The indisputable difficulty in changing the scenario cannot be a paralyzing factor. Policies aimed at strengthening institutions, increasing levels of transparency and control, as well as educational projects should be encouraged. In this sense, the justice system and especially the Judiciary must be considered a priority. Improving the distribution and effectiveness of justice are indispensable factors for guaranteeing rights and for building a democratic society, governed by law, composed of citizens.