Abstract
Abstract This article considers the relationship between growth and infrastructure spending in the Brazilian context and the nature and causes of infrastructural underinvestment. The paper begins by considering the relationship between infrastructural investment and economic growth on both a national and regional basis. Next, focusing on the critical urban transportation sector, the paper gauges the infrastructural shortfall facing Brazil and the policies designed to overcome it. Given the obvious importance of infrastructure, why has investment not been higher? In the final section we argue that a central reason for this lies in regulatory design and implementation.
Highlights
The recovery in fortunes of the Brazilian economy since the middle of the 1990s encompasses a number of positive dimensions
The analysis focuses on the reversal of this policy in the late 20th and early 21st century and the decision to grant the private sector, through concession contracts and Public Private Partnerships, a major role in the development of new infrastructural projects and the takeover of existing assets
Hirschman (1958) argued that infrastructural investments are very lumpy in nature and unless there is an acute shortage of capacity, investments tend to be postponed until a crisis situation is reached where political justification for large amounts of investments will be acceptable to society
Summary
The recovery in fortunes of the Brazilian economy since the middle of the 1990s encompasses a number of positive dimensions. Since 2007, the authorities have been attempting to engineer a step change in the scale and quality of infrastructure across a range of strategic sectors This effort, labeled the Growth Acceleration Program (or PAC, to use the Portuguese acronym) envisages significantly raised investments in highways, railways, energy, air transportation, telecommunications, housing, water and sanitation. The late 20th and early 21st century and the decision to grant the private sector, through concession contracts and Public Private Partnerships, a major role in the development of new infrastructural projects and the takeover of existing assets
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