Why is Brazil so messed up?

History matters, once again:

This paper analyzes the roots and implications of variations in de facto institutions, within a constant de jure institutional setting.  We explore the role of rent-seeking episodes in colonial Brazil as determinants of the quality of current local institutions, and argue that this variation reveals a dimension of institutional quality.  We show that municipalities with origins tracing back to the sugar-cane colonial cycle – characterized by a polarized and oligarchic socioeconomic structure – display today more inequality in the distribution of land.  Municipalities with origins tracing back to the gold colonial cycle – characterized by an overbureaucratic and heavily intervening presence of the Portuguese state – display today worse governance practices and less access to justice.  Using variables created from the rent-seeking colonial episodes as instruments to current institutions, we show that local governance and access to justice are significantly related to long-term development across Brazilian municipalities.

Here is the paper.  Hat tip to Leonardo Monasterio, who now has his own blog.

Comments

Well, I guess we gotta team up with Canada and invade Brazil

The Economist came out with a great report on Brazil recently and there are a few points I'd highlight as to why Brazil is being held back. "On average, public servants earn more than twice as much as workers in the private sector and have an easier life".

Also, "The average firm takes 2,600 hours to process its taxes, a world record. Opening a business, on average, requires 17 procedures and 152 days, putting Brazil in 115th place. Hiring people is expensive because taxes ad 60% to salaries and workplace rules are an invitation to conflict."

The Economist's data comes from the World Bank report 'Doing Business', which I highly recommend.

This point of view is not new! It blames the Portuguese for everything bad in Brazil (forgetting the good). Basically it says that, after two centuries of independence, brazilians haven't been able to recreate themselves. Two hundred years ago, Portugal was a monarchy and the social situation of the country was deplorable. Now, Portugal is a thriving democracy, integrated in the European Union. I have a theory about the type of backward looking approach that blames the Portuguese for all the evils in Brazil: Many non-Portuguese immigrants to Brazil (and their descendents) don't like the idea that such a small country was able to create such a wide zone in the world where Portuguese is spoken, and Portuguese cultural influence is strong. They can't stand that it's Portuguese and not Italian, German, etc. which has such importance. So they revert to everything they can to devalue the Portuguese - Portuguese jokes and this ongoing old theory that the Portuguese were terrible. Never mind the territorial and linguistic unity of Brazil and the outstanding cultural tolerance of the nation (which was created by the Portuguese). Since they can't stand the mention of these successes, they insist on tracing every Brazilian social and economic problem to the Portuguese, forgetting that Brazil and all of its people, including all the european immigrants and their descendants, have had ample time and resources to make Brazil a much better place. It is time to get fresh ideas and ask the real question: why haven't brazilians been able to change, to mold their destiny to the level that they want and deserve. And, please, look for other scapegoats, such as what was done - or not done - by all brazilian after their independence, when they had all the tools to forge their own destiny as they wished.

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