Rural credit and economic growth in Brazil

Abstract

The Rural credit was and remains essential to the financing of Brazilian’s agriculture. For the economist Joseph Schumpeter, the entrepreneur is the agent that performs innovations in the economy. However, when this agent is deprived of the means of production is necessary the credit. For the author, the role of credit is to provide the means for the entrepreneur to perform new combinations. The objective of this study was to analyze the impact of rural credit in the gross value of agricultural production in the Brazilian’s states by estimating an equation using panel data. Theestimated equation used as the dependent variable the gross value of agricultural production of the Brazilian states and as independent variables the rural credit, agricultural area harvested, the price of commodities in the international market and agribusiness exports. The tesf of Chow, Hausman and Breusch-Pagan LM indicated that the best model to be analyzed is the Fixed Effects. The tests Breusch-Pagan and Wooldridge indicated, respectively, the presence of heterocedasticity and autocorrelation. Thus, the equation was estimated using the Fixed Effects Model with eteroskedasticity correction, with correction for autocorrelation and both fixes. Equation estimated using the Fixed Effects Model with both corrections indicated that the rural credit have positive impact on gross value of agricultural production in the Brazilian states. This shows that the credit policy remains an important factor for the economic growth of the states and of country.