ABSTRACT
This paper analyses the implication of the increasing transfer of resources to external sector on the capacity of investment of the Brazilian economy. After 1983 Brazilian economy is transferring an increasing volume of resources which attained more than 5% of the GDP in the last two years, contrasting with the decade of 70 when the absorption of external saving attained about 2% of the GCP. As a consequence of this external constraint, the rate of investment has dropped from 26% of GDP in the 70’s to an estimated level of 16% in the last years. The paper, using a standard macroeconomic model, establishes the relationship between alternatives rates of transfer of resources, rate of domestic savings, and capital-output ratio with the target rate of growth of the Brazilian economy.
KEYWORDS:
Capital flows: debt crisis; balance of payments