Brazil is a huge, diverse country with a long and turbulent history and an economy that reflects it. With the world's seventh largest GDP and a population of more than 200 million, no discussion of Brazil is without political or economic significance, whether for its population or the world as a whole. As such, income inequalities (which are also reflected in geographical, racial and gender terms) are certainly important and must be a fundamental concern for those who promote the country's development; These gaps mean that poor members of society nominally gain less from growth, even though the figures show relative gains, an undesirable outcome for various economic, social, and ethical reasons. Brazil's development gaps, including its patently high income inequality, but also its poor 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 few landowners and created long-lasting racial problems. With waves of immigrants in the 20th century and the early modern era, economic successes and failures became more tied to politics than society as southeastern Brazil industrialized. Leaders initiated import substitution strategies that led to a protectionist and highly industrial environment (as opposed to an agricultural past), with a relatively high level of government involvement in the market. Over the past twenty years, the results of this past are reflected in modern income inequality which is high and persistent over time. Some examples include regressive public transfers such as pensions for senior officials which make up the bulk…middle of the paper…these will lay the foundation for closing Brazil's gap in productivity and development statistics. However, the government could also consider balancing the inputs of its subsidized industries. Businesses must be able to capitalize on the abundance of labor and provide formal employment to Brazil's working class, rather than incentivizing them to replace them with expensive capital, subsidized by the government with 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 demonstrated. While 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 towards industrialization not yet fully embraced by Brazil..