Finance and Economic Development in Brazil

Abstract

Ultimately, the study aimed to determine the significance of finance to the Brazilian economy from 1981 to 2019. On account of the nature of data stationarity, the study then adopted the autoregressive distributed lag (ARDL) modelling technique which possesses the ability to produce both long-run and short-run parameter estimates. The empirical outcome of the Brazilian growth model which has been achieved is the product of conscious and purposeful reforms to address financial and other macroeconomic deficiencies and crisis in the country. Given the theoretical assumptions and the empirical evidence, it could be concluded that credit, FDI, and human development were economically significant to the economic development of Brazil in the long-run. Although trade openness, gross capital formation, and external borrowing did not significantly account for the economic development of the Brazilian economy, they transmit the appropriate theoretical influence. However, the finance variables were seen to exert negative influence on economic growth in Brazil.