The role of human capital, structural change, and institutional quality on Brazil's economic growth over the last two hundred years (1822–2019)

Do human capital and institutional quality contribute to Brazil's long term real convergence/divergence process? A Markov regime-switching autoregressive approach

“…This section presents the annual data series used in the study 1 . The time frame covered is from 1822 to 2019, resulting in some missing values, which were appropriately filled following the approach of Doré and Teixeira (2023). The description and respective source of time series data used in the present study and the correlation matrix can be found in the Online Appendix (Table B1 and B4).…”

“…Our first control variable is life expectancy, a typical quantitative measure of health, which is an important factor to consider in growth models (Barro and Sala-i-Martin, 1997), especially for an EE like Brazil. Doré and Teixeira (2023) found that structural change favouring industry tends to boost Brazil's economic growth. Therefore, due to data availability, our second control variable intends to capture this impact through urbanization, since it acts as a pivotal factor fuelling industrialization and growth (Zheng and Walsh, 2019).…”

“…The two independent state-variant variables, human capital (proxy by the 'average years of schooling') and institutional quality (proxy by the 'electoral democracy index'), differently impact the catching up (or falling behind) process depending on which (block of) country(ies) Brazil is compared with. Despite the expectation that human capital would contribute to Brazil's economic growth, as evidenced by Doré and Teixeira (2023), it does not hold for the country's real convergence process. Thus, the effects of human capital on convergence seem to be more complex than initially recognized (Zhang et al, 2019).…”

“…(2020, 2023), Chhabra et al . (2023), and Doré and Teixeira (2023), although they focus on Brazil's economic growth and not on the country's real (div)convergence process. Although of high relevance, these studies miss a great deal in analysing and discussing potential explanatory factors associated with real convergence/divergence of Brazil towards other economies.…”

“…Besides assessing the real (div)convergence, our study estimates the extent to which human capital and institutional quality influence the Brazilian catching up/falling behind process towards LA6, Portugal, and the US. The relevance of these latter variables has been analysed by several recent studies, such as Campos et al (2020Campos et al ( , 2023, Chhabra et al (2023), and Doré and Teixeira (2023), although they focus on Brazil's economic growth and not on the country's real (div)convergence process. Although of high relevance, these studies miss a great deal in analysing and discussing potential explanatory factors associated with real convergence/divergence of Brazil towards other economies.…”