Series: The Productivity Trap in Brazil – Part 7
Introduction
Diagnosing the problem is just the beginning. Brazil’s low productivity has deep roots — but it can also be addressed with clarity, courage, and responsibility. This final article in the series proposes concrete ways to break the cycle of stagnation, based on a liberal agenda focused on efficiency, economic freedom, and real competition.
These are not magic formulas, but rather structural choices. The same ones that emerging countries like Vietnam, Chile, Estonia and South Korea have made — and reaped the rewards.
1. Strategic trade opening
Brazil still operates as an isolated island, with high tariffs, non-tariff barriers and an artificially protected domestic market. The result is a complacent industry, with low innovation and expensive products.
Opening the economy to the world — with transparent trade agreements, gradual tariff reductions and integration into global chains — boosts competitiveness, stimulates economies of scale and expands access to technologies.
According to FecomercioSP, trade liberalization is also a tool to combat structural inflation, by making inputs cheaper and increasing competition.
2. Real tax reform
More than simplifying taxes, it is necessary reduce the burden on producers. The Brazilian tax system penalizes investment, increases payroll costs and encourages informality.
An efficient reform must:
- Unify consumption taxes with neutrality;
- Reduce taxes on labor and capital;
- Reward those who invest, save and generate value.
This requires abandoning the tax-collection bias that sees the productive sector as an enemy — and seeing it as the foundation of prosperity.
3. Reduction of bureaucracy and legal certainty
Brazil needs a less obstructive and more reliable state. To achieve this:
- Laws and regulations should be simplified and clear;
- The Judiciary needs to act with predictability and speed;
- Regulatory agencies should focus on efficiency, not political control.
Institutional predictability is the soil in which productivity flourishes. Without it, investment declines and innovation dies in its cradle.
4. State reform: less machinery, more service
The Brazilian government is expensive, slow and inefficient. To change this, we need to:
- Reduce privileges and unproductive structures;
- Focus on essential functions: security, justice, basic infrastructure and basic education;
- Transfer responsibilities to the private sector whenever possible.
Productivity also depends on how the State consumes resources. A lean and functional State frees up space for the dynamism of society.
5. Valuing merit and innovation
There is no productivity without incentives for merit. We must abandon the logic of protectionism, subsidies and political favoritism. Instead, we must:
- Stimulate business competition;
- Facilitate the environment for startups and small businesses;
- Reward those who invest in technology, education and productivity.
Public policies must create freedom, not dependence.
Conclusion
Brazil has talent, resources and potential. What it lacks, however, is the environment. Productivity will not grow by decree — but it can flourish if the country chooses to break with the statist mentality and embrace merit, freedom and responsibility.
The liberal agenda is not an ideological whim. It is the only viable alternative to transform effort into results, work into wealth, and freedom into lasting prosperity.
📚 Read also:
- 👉 What is productivity and why does it matter?
- 👉 Brazil works hard and produces little: a portrait of stagnation
- 👉 Structural bottlenecks: education, infrastructure and bureaucracy
- 👉 The role of the State in low productivity
- 👉 Why productivity matters for Brazil's future
- 👉 The consequences of low productivity
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