But the method then used must be reversed. In the future, with continuing moderate surpluses, the state can perform the role of regular accumulation of capital, leaving to the private sector the task of allocating investment to the most profitable uses. Reform of the tax system will go far to making this transformation a reality. An important additional factor contributing to private savings in Brazil in the next years may be the expansion of pension fund activity. This area, of course, has grown quite rapidly in the recent past.
Future projections are for continued expansion.
The key issue for the economy as a whole is the extent to which such additional commitment of resources only substitutes for alternative applications rather than expands the total sum not consumed. Subsequent to the Chilean shift to a private pension system for all employees in the early 1980s, and the great success the country has had in later increasing its total savings, there has been a wide sense in Latin America of cause and effect. Almost half of total assets now emerge from the social security system. Other countries in the region obviously wanted the same result. This helps to explain the subsequent changes in social security systems in a number of countries like Argentina, Peru, Mexico, and Colombia.