Inclusive growth without structural transformation?
The case of Brazil
Through rapid urbanization, Brazil—previously a country where most workers were in the agricultural sector—went through a strong process of structural transformation that lasted almost four decades until economic liberalization at the beginning of the 1990s. During the same period, income inequality remained practically stable and at high levels, only falling at the end of the 1990s.
Taking a historical point of view, this paper analyses the Brazilian experience during three periods: 1950 to 1964, 1964 to 1994, and 1994 to 2011. The analysis provides evidence that an import substitution system based on tariff and non-tariff barriers to foreign products, combined with low investment in human capital, meant that the structural transformation process was not correlated with inclusive growth.