Principle Investigator: Dr. Danilo Spinola
Funder: Agence Française de Développement – French Development Agency (AFD)
Project oversight: Guilherme Magacho (AFD)
Duration of project: March 2025 – February 2027 (24 months)
Research Cluster Green Economy, Sustainability, and Development Economics
Background
The research is commissioned under the GEMMES programme of the Agence Française de Développement (AFD), as part of its strategic priority to support ecological transition in the Global South. In response to Brazil’s ambitious "Plano de Transformação Ecológica" (Ecological Transformation Plan) launched at COP-28, this study aims to provide macroeconomic tools for policy support. The Ministry of Finance of Brazil signed a Memorandum of Understanding with AFD in February 2025 to collaborate on modelling the macroeconomic impacts of green transition policies. This project also involves actors such as the Ministry of Development.
Industry, Foreign Commerce and Services (MDIC), IPEA, and ECLAC. Birmingham City University was selected to develop this tool due to its expertise in macroeconomic modelling, particularly through the Centre for Accountancy, Finance and Economics (CAFE).
Project aims and Objectives
The main aim is to support the Brazilian government in developing and analysing green industrial and macroeconomic policies under the Ecological Transformation Plan (PTE). The study seeks to:
- Assess long-term macroeconomic impacts of policy instruments linked to the ecological transition.
- Understand implications for employment, income distribution, public finances, and macroeconomic stability.
- Provide modelling capacity to simulate scenarios that balance environmental objectives with social inclusion and economic growth.
Project phases
The research is divided into three technical phases:
- Phase 1: A structural analysis of Brazil’s economy and the challenges of ecological transition.
- Phase 2: Development of a dynamic input-output model for Brazil to identify key productive chains for the green transition.
- Phase 3: Construction of a multisectoral Stock-Flow Consistent (SFC) model tailored to the Brazilian economy.
The modelling is developed in collaboration with AFD’s GEMMES team, using R and Julia programming languages. Data sources include national accounts, input-output tables, environmental satellite accounts, and public finance data. Results are co-produced with stakeholders in Brazil and validated through a steering committee with AFD and BCU.
Expected outcomes include:
- A set of policy simulation tools to assess the socio-economic impact of green transition policies in Brazil.
- Delivery of three key reports, one per phase of the project, with policy-relevant findings.
- Enhanced capacity within the Brazilian Ministry of Finance for ecological macroeconomic planning.
- Academic outputs such as technical papers and publications, and the potential for policy uptake in Brazil’s fiscal strategy and industrial planning.
The tools developed will support evidence-based policymaking and contribute to the global debate on just and green transitions in the Global South.
