Brazil´s poor strategy to boost growth.

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Por Leonardo Gottems

Ricardo Amorim, a former WestLB specialist in emerging markets and a well-know commentator, criticized the measures taken by the Brazilian government to boost the country’s industry. Business associations and industry workers have protested against the lack of competitiveness to manufacture goods in Brazil.
In a response, president Dilma Roussef announced the “Brasil Maior” (Brazil bigger) program, forcing more taxation on imported wines and shoes, payroll tax reductions to 15 industry sectors, among others. Amorim, who got prominence after predicting Brazil’s take off and the crisis in the developed countries, thinks all the measures will not resolve the problems, especially the taxation on imported goods.
“In addition to subjecting the country to possible trade retaliation, those measures create a more expensive Brazil, not richer. The consumer is already paying. Last year, taxes on imports raised more money than income tax on individuals”, reads an article from Amorim at Istoé magazine.
The solution, according to Amorim, is to decrease government spending and taxes significantly. “Less government spending and taxes are the recipe for a richer country. More taxes on imported products just make a country more expensive”, states the economist, citing also the fact the reduction of interest rates can depart foreign capital.
Robert Solow, author of the theory of the economic growth, also thinks that the program does not attack the roots of the Brazilian industry problems. “Measures of technological development are the real things that can spur to innovation and economic growth”, has stated Solow.