Brazil
Brazil is the largest country in South America, located in its central and eastern parts, and one of the key countries in the developing world. Brazil is a capitalist country with a mixed economy. It is a type of economy that combines elements of a free market economy with government intervention, regulation, and aspects of a planned economy, although the core of the economy itself remains capitalist.
The reaction of Brazilian politicians to the international financial crisis seems to be reminiscent of Keynesian economic policies, particularly those associated with Big Government and the Big Bank. Continuing the idea of Minsky, government intervention and regulation through Big Government and Big Bank is needed (Wray, 2022). Brazilian economic policy is still based on the dominance of the monetary regime (that is, the inflation-targeting regime). During the crisis in 2010, BCB began to increase the Selic to keep inflation under control, and the government decided to increase the primary target surplus, and the Brazilian currency continued the process of strengthening (Haines et al., 2020). Although the Brazilian government is implementing a mixed economy, it can be determined that Keynesian economic policy remains the basis.
In general, Brazil, as a developing country, can combine different policies, but most often, the communist one dominates. Private enterprises, Brazilian and foreign, have a decisive role in the development of the country’s economy; therefore, they are considered the basis. Various sectors welcome private investment, including foreign ones (Haines et al., 2020). They were encouraged strongly by public investment and supplemented at every stage by a massive expansion of the public sector.
Canada
Canada is more capitalist than socialist. The country’s economy is classified as a mixed market economy with a robust social safety net. It means that Canada has been influenced by both socialism and capitalism. The government controls specific areas of public life in Canada. For example, libraries, the police, and the health care system do not operate in a free market. Instead, they are used as public goods, and their budget is paid for by general taxation.
Nevertheless, in Canada, the importance of a capitalist market economy is growing, which allows both small businesses and large corporations to develop. Areas such as the development of modern technologies, including, for example, the AI industry, have a favorable environment for growth, thanks to Canada’s policy. Many skilled IT workers come to Canada because of this and allow the sector to develop in Canada (Canada’s Innovation, 2019). Self-employed people maintain their competitiveness here and contribute to the country’s financial success.
In general, Canada’s tax system successfully combines the performance of two main fiscal and economic or stimulating functions. The effectiveness of tax regulation in Canada is determined by a clear understanding of the laws of the functioning of the tax system and their role at each stage of the country’s economic development. Thus, depending on the situation in the country, the government can act based on Keynesian and neoclassical theories.
The primary influence of Keynesian theories on Canadian government policy was tax regulation. For the first time, taxes acted as one of the main instruments of active state influence on economic processes. It manifested itself, first of all, in the creation of an extensive system of tax incentives. The purpose is to achieve ‘narrowly defined goals’ within the framework of the state policy of actively stimulating investment in strategic sectors of the national industry (Canada’s communications future, 2020). Over time, the upper marginal rates were reduced in personal income taxation, and there was a transition from progressive to limited-proportional tax, corresponding to neoclassical ideas.
References
Canada’s communications future: Time to act. Government of Canada. (2020). Web.
Canada’s innovation strengths and priorities. Government of Canada. (2019). Web.
Haines, A., Ferrari-Filho, F., & Neyra, H. (2020). The consequences of the international financial crisis and the Great Recession in Argentina and Brazil. Brazilian Journal of Political Economy, 40(1), 68–85. Web.
Wray, L. R. (2022). The role of Big Government. Handbook of Economic Stagnation, 287–297. Web.