Economic Growth Regime and Demographic Trends in a Dynamic Interaction: a regulationnist analysis of the Brazilian case

The paper analyses the macro-dynamic interaction between demographic trends and capital accumulation in Brazil, for the period 1995-2012, to detect its short term impacts on Macroeconomic performance and its long-run effects on social and economic development. The effects of this interaction are crucial because they affect business decisions and investment, then the pace of growth and generation of employment and income. However, the financialization of the Brazilian economy imposes structural and endogenous limits to the opportunities generated by the demographic transition. However, the analysis found empirical evidences that do not support the conventional argument, derived from neoclassical economics, that Brazil would have insufficiency of domestic savings. The main problem concerns the dominance of unproductive allocation of corporate and household savings, stimulated by a financialization process based on high interest income. As a result, the rates of productive investment are very low and thus, the rates of aggregate savings also remain very low. On the other hand, in this macroeconomic environment, characterized by high interest rates and predominance of rentier income accumulation, the life cycle theory of consumption is unable to explain the main stylized facts of the development experience of Brazil.