Brazil’s investment-led growth in the ecological transition

For a provisional Brazilian Portuguese translation of this paper, please follow the link above.

Brazil risks becoming trapped in high debt and interest rates, low growth, recurrent cost-push inflation and rising fiscal pressure from climate-related shocks. The country can escape this vicious cycle by adopting an investment-led development strategy that capitalises on its strengths in clean energy, natural capital, agricultural capacity and critical minerals, along with its large domestic market and relative geopolitical autonomy.

This discussion paper summarises a forthcoming report on such a strategy. The authors focus on how Brazil can respond to the challenges and opportunities presented by a profound structural shift in the global economy.

Core insights

Brazil can transform its economy and generate inclusive growth by:

• Adopting a selective industrial policy and investment facilitation agenda focused on value-chain integration, regulatory clarity and strategic openness.
• Improving the quality of its regulatory structures, creating a more predictable and stable legal environment, and enhancing coordination between the public and private sectors.
• Emphasising the role of low-carbon industry, energy security, food security and related value chains.
• Crowding in private investment with catalytic public spending through, for instance, green funds focused on infrastructure and resilience.
• Treating its growth, fiscal-sustainability and climate-transition objectives as mutually reinforcing.
• Aligning its policy frameworks with one another, and with investment incentives and institutional capabilities.