Macrodynamic Capacity and Financial Development: Theoretical Conception and Observations on the Brazilian Economy

We consider the concept of Macrodynamic Capacity, exploring an heterodox content whose analytical foundation is derived from a number of scholars of diverse ideological conceptions which casts light on the different ways that economies deal with the role and impact of institutional, monetary and financial development to attain some degree of effectiveness in investment, innovation, structural change and economic development. Relevant aspects of the Brazilian economy are considered. In particular, we show some empirical evidence of the banking sector’s concentration and monetary policy which explains to a large extent the prevailing interest rates and high spreads, in disfavour of productive investment and leading to the country’s poor socioeconomic performance and the absence of what we are calling macrodynamic capacity.