Brazil is a huge and diverse country with a long and turbulent history, and an economy that reflects it. With the seventh largest GDP in the world and a population of over 200 million, no debate about Brazil is without political or economic significance, both for its population and for the world as a whole. As such, income inequality (which is also reflected in geography, race and gender) is certainly significant and should be a major concern for those promoting the country's development; These gaps mean that poor members of society theoretically benefit less from growth, even if the figures show relative gains, an outcome that is undesirable for a variety of economic, social and ethical reasons. Brazil's development gaps, including its demonstrably high income inequality but also its deficient infrastructure and political and social problems, have deep but traceable origins in political institutions. Historically, this includes Brazil's economic focus on the extraction and export of natural resources supported by slave labor, a system that benefited a few landowners and created long-lasting racial problems. With the waves of immigrants in the 20th century and the early modern era, economic successes and failures were more political than societal as southeastern Brazil industrialized. Leaders initiated import substitution strategies that led to a protectionist and heavily industrial environment (as opposed to an agricultural past), with relatively high government involvement in the market. Over the past 20 years, the results of this past have been reflected in modern income inequality, which is high and persistent over time. Some examples include regressive public transfers like pensions for senior civil servants which constitute the main...... middle of paper ...... they will lay the foundations for closing Brazil's gaps in productivity and labor statistics development. However, the government could also consider balancing the factor inputs of its subsidized industries. Businesses must be allowed to capitalize on the abundance of labor and provide formal jobs for the Brazilian working class, rather than being incentivized to replace them with expensive capital, subsidized by the government having the highest public debt in South America. Even traditional development theories show us that this is a sustainable way to raise wages in the long term, as South Korea and Chile have shown. Although there is no guarantee that the same model will work for Brazil, it poses an interesting question about the country's development dynamics from a microeconomic perspective and suggests a path to industrialization that is not not yet fully adopted by Brazil..