Texto para Discussão, Instituto de Pesquisa Econômica Aplicada (IPEA) 2130
In this work, the coefficients that relate business climate, investments and productivity are estimated based upon a panel of 81 countries in the period between 2005 and 2011. Fixed effects panel regressions (which take into account omitted variables and, as a result, time invariant country idiosyncratic aspects) are used to quantify the impacts of improvements in business climate on the levels of capital stock per worker (and, therefore, on the investments). After that, the impacts of the levels of capital stock per worker on the labor productivity are also estimated. Based upon the calculated coefficients, the capital stock per worker in Brazil was estimated if the country had the business climate levels of a set of reference countries. In particular, if Brazil reached, in 2011, the Chinese business climate (measured according to the World Bank's Doing Business), an increase of about 15% in its investment levels could be achieved. Matching the Polish or Turkish business climate could increase investments in roughly 30%. Reaching the Mexican or Chilean level would cause an increase of 45% in the investment levels (roughly three times the share of the disbursements of the Brazilian Development Bank in the gross fixed capital formation in the country in 2014). The estimated coefficients indicate that an increase of 1.0% in the capital stock per worker leads to an increase of about 0.5% in the labor productivity. Although these numbers should be used cautiously, they reinforce the perception that, besides tax waivers and subsidized credit, improvements in the business climate may have a significant impact on the investment and labor productivity levels in Brazil.
business climate Doing Business investments capital stock labor productivity