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A Different Kind of Stimulus in Brazil

Brazil’s Dilma Rousseff may have crafted a stimulus plan that even deficit hawks could get behind.

When the $66 billion plan was first announced, many were concerned that President Rousseff’s ambitious plans to stimulate Brazil’s lethargic economy would involve enlarging the government.

Instead, The Financial Times reports, President Rousseff will sell concessions to private companies to build and operate new infrastructure, effectively merging stimulus with privatization:

The measures would double the capacity of the country’s main highways, transport minister Paulo Passos said at the event.

Of the total investment, R$79.5bn would be spent within five years and the remainder over 25 years. Funding would be largely at favourable terms from the state development bank, BNDES.

The plan does have its dangers, namely the crony capitalism and corruption that tend to plague such plans in Latin America. But if executed reasonably well, it should allow Brazil to continue its economic growth and get into good shape for the next Olympics and World Cup.

America, and especially the most cash-strapped states, should be taking notes. If this program works well, there is much here to emulate.

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  • Jim.

    Government isn’t going broke because we don’t have enough toll roads. Government is going broke because of Socialism — they make giveaway promies they can’t keep.

    Solve the actual problem, guys.

  • teapartydoc

    Turnpikes in early America were private enterprises. It is difficult to privatize existing roads. One way to do it would be to hold auctions of the roads and let companies speculate on how much they can make after infrastructure improvements. If an improved road can attract more traffic, it will make more money. Standards would probably be necessary under which a road would revert back to the state or go back on the block if not kept up.

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