Economy
& Energy
No 29: December 2001-
January 2002 ISSN 1518-2932
No
29 emPortuguês
Support: MCT
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Economy
& Energy |
No
29 em Português |
Support: MCT |
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Energy and Emissions Matrix Energy
and Emissions Matrix Sectorial Emissions Commercial, Public and Other Services Argentine Crisis:
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Project: Supply of Instruments for Evaluating the Emission of the Greenhouse Effect Gases Coupled to the Energy Matrix - Final Report - Executive Summary
The Macroeconomic ScenarioThe projected GDP growth that has normally been used for energy projections has been, in most cases, wishful thinking. In the case of our study concerning the energy matrix, the limitations that, from our point of view, have hindered growth to the desired levels have been taken into account. Moreover our scenario is not a simple extrapolation of the observed trends, which would show a stagnation situation of the per capita income in Brazil, as it has been verified in the last two decades. Our scenario presents the possible growth with the modification of some factors that have hampered our development. Instead of a wishful thinking, we try to show what must be modified in order to reach a moderate growth scenario that is here presented. The Main LimitationsIn our approach, the main identified limiting factor is investment. Our methodology is based on National Accounts data where investment is identified with the gross formation of fixed capital. In other words, it has directly nothing to do (and in the last years, very little) with financial investment which in Brazil means mainly loans to the Government in order to finance previous debts or to maintain reserves. In this approach, investment (relative to the GDP) is simply the sum of the fraction not absorbed by consumption (territorial saving) and transfers from abroad of goods and real services (excludes interests and dividends) such as transport, travels and insurance, expressed also as a function of the GDP.In other words, the external financial investment absorbed by the Government and that from privatization do not increase the capital goods stock, they are not accounted for. Therefore, we start from the National Accounts basic equation where (except for the stock variation) input equals output, namely:
Imports + Production = Consumption + Investment +Exports That is, Transfers from abroad [1] can be considered as real resources transferred to the country. Since the capital stock calculated by the “Perpetual Stock Method” is the sum of past investments less its depreciation, we can consider that the limiting factor to growth is the existing capital goods stock. The projected GDP will be the product of the capital stock (K) and the productivity (v) with which it will be used. Or:
Considering only a limiting factor may seem an exaggerated simplification. In our methodology we also handle a) an occupation factor that measures the influence of conjuncture factors that could not be described by the accumulated capital stock; and b) a logistic function to fit the capital productivity. The average deviation relative to the product so obtained is 6% along the considered 50 years. The model we are using still considers other factors (endogenously adjusted) but those are fundamentally the limiting factors considered. Internal SavingThe saving tendency, or territorial saving, has had a rather regular behavior until the Real Plan. As a fraction of the GDP, it is represented (Figure 1) in current and constant values (in the available period). Our projection assumes a resuming of the internal investment capacity, which implies a larger consumption reduction for the next years. External SavingIn the
concept here adopted, the external saving (availability of external
resources) is equal to transfers from abroad, whose historical and
projected values are shown in Figure 2. Investments, also shown in Figure
2, are the sum of external and internal savings. Our assumption was that transfer from abroad to Brazil and consequently the external saving will become negative from 2003 on. There are practical reasons for that. The first one is that there is a limit to the assets of a country which, for strategic reasons, it would be interesting to keep in national hands. The limit we assumed for the national net liability (external debt + external investment stock) was 70% of the GDP or about 30% of all the country’s capital stock. The second reason is that the external investor or creditor know that a country whose external trade [2] has been about 7% of the GDP during 50 years cannot, during a reasonable time send remittances larger than 2% of the GDP that is about 20% of its external trade. Larger remittances would endanger the economic growth or drastically reduce the consumption capacity.It should be noted that in order to calculate the national net liability, it was considered a real remuneration of external investments of 3.5% annually and 5% (real) annually for external loans. These levels are bellow the presently used but much higher values would result in excessive commitment of the country’s assets. Since about 4% remuneration to investments in real terms is quite acceptable in the long run, we have preferred to adopt these values, believing that the economical practice will make corrections to exaggerated expectations in what regards remuneration rates for investments in the country. In our approach, limits to external saving are due to the limited capacity of remunerating the external capital invested here. Actually, we are assuming that practically the limits to commit the national assets have already been reached. Capital ProductivityCapital
productivity has significantly decreased in the seventies and eighties in
Brazil. The Capital/Product ratio, the inverse of capital productivity,
which was 1.4 changed in two decades to 2.6 as shown in Figure 3. Our
hypothesis is that it will stabilize in the years to follow at the level
observed at the nineties. There is now in Brazil a certain consensus about this loss of capital productivity. The capital/product ratio values differ a little in the different evaluations as a function of hypothesis on how historical investment are depreciated and other methodological aspects. However, the productivity loss verified is quite coherent. Even though this capital productivity is something expected in the evolution of the productive process, Brazil would have reached, in terms of purchase power, with a product of less than 5 thousand dollars per inhabitant, the same K/Y ratio plateau that other countries have reached when they attained a GDP/inhabitant value of 20 thousand dollars. Actions concerning the national, regional and/or sectorial economic policy, as well as productivity stimulation in the enterprises could generate significant gains in growth capacity, decreasing sacrifices in order to obtain the investment necessary to grow. Projected GrowthThe historical and projected GDP values are shown in Figure 4. The average projected growth is about 3.3% annually in the period 2000/2020. This scenario, whose growth may seem modest, assumes corrective actions for stimulating productive investment. The internal saving rate is significantly higher than the present one but compatible with the historical trend before 1994. Higher growth seems possible only with deep changes in the productive strategy, with strong gains in the investment capacity and/or in the capital productivity.
[1] It is more common, in the economy jargon, to express foreign transfer as (X-M), that is, investment would be the non-consumed part of production (Y-C) less foreign transfer. [2] We define external trade as being the sum of imports and exports divided by two.
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Graphic Edition/Edição Gráfica: |
Revised/Revisado:
Tuesday, 11 November 2008. |
Under Translation
