Table of Contents

Assessment and Recommendations
I. The Search for a New Development Path
-An important actor in the global economy...
-A history of inward-oriented development
-The erosion of growth fundamentals in the 1980s
-The 1990s: A different approach to stabilisation and an outward orientation
-The impact of the Real Plan went beyond stabilisation
-Fiscal and external imbalances again put stabilisation under pressure
-The 1999 exchange rate crisis forced adjustment onto a new path
-At the turn of the century, Brazil also reached a turning point
II. Reforms for Medium-Term Fiscal Sustainability
-Fiscal and administrative decentralisation has deep roots in Brazil
-Fiscal federal arrangements have produced budgetary rigidity and tax distortions
-Stabilisation depends on discipline in fiscal federal relations
-Pressure to reform the tax system is mounting
-Refomrs of the pension system are critical for fiscal adjustment
III. Development of Financial Markets
-There is still scope for financial intermediation to grow
-The wider financial sector is underdeveloped
-Weak corporate governance has held back capital market development
IV. Reforms to Enhance Corporate Competitiveness
-Resilient specialisation in the Brazilian economy
-Trade and industrial policies
-Privatisation and regulatory reform
-Competition policy and the regulatory environment
V. Squaring Long-Term Growth with Sectoral and Social Dimensions
-Reform in the agricultural sector
-Competitiveness in the agri-food sector
-Agrarian reform policies
-The challenge of economic growth for energy and environment
-The social dimension: human capital and inequality