Brazil and the Middle-Income Trap: Its Historical Roots

Abstract

This paper evaluates the alternation between catching up periods and falling behind periods in Brazilian economic history, with data from 1870 to 2016. This alternation expresses the middle income trap. A tentative theoretical framework is presented, suggesting a two-dimensional process, with external forces (basically technological revolutions in leading countries) increasing the gap between Brazil and the leading economy, and internal forces (basically planned or unplanned internal efforts, especially industrial policies) reducing that gap. The historical origins of this long term middle income trap is discussed, with a special focus in the role of income inequality.