Abstract

This work analyzes productivity and the hypothesis that capital flow does not
influence investment in the Brazilian economy. To do so, we present a productivity equation
conditioned on the rates of: investments, wage costs, and external demand. The relationship
between productivity and investment and wage rates suggests a possible simultaneity, given
the distributive nature of aggregate income between capital and labor. Therefore, estimators
that treat endogeneity in two stages are used: the Two-Stage Least Squares (MQ2E) and the
Generalized Least Moments (MMG), to increase the robustness of the results. We find that
the investment rate explains productivity, but capital flow does not determine productive investment. In addition, Brazilian investment is more susceptible to the parameters of
marginal capital efficiency, whose fall has affected Brazilian productivity since the 1980s.

JEL Classification: O11; O16; 047.