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Brazil Still on the Fast Track for Growth

Ihssane Loudiyi's picture

(Thanks and credits for sharing this information go to the Brazilian Secretariat of Social Communication - SECOM)

Brazil Positioned to Defeat Extreme Poverty by 2016

A new study indicates that Brazil has the historic opportunity to eradicate extreme poverty by 2016 and achieve the lowest rate of income inequality since the Brazilian Institute of Geography and Statistics (IBGE) began tracking such data in 1960. To achieve these results, the country needs to maintain the pace of social development achieved in the last five years, according to a study carried out by the Institute of Applied Economic Research (IPEA), released Tuesday, January 12, 2010 in São Paulo.

The IPEA document, entitled Poverty, inequality, and public policy (Portuguese only), shows that from 2003-2008 the national rate of extreme poverty (defined by IPEA as the proportion of the population earning one-quarter of the minimum wage or less) fell an average of 2.1% each year. Absolute poverty (the proportion of the population earning one-half of the minimum wage or less) fell an average of 3.1% each year.

If the rates of decline for the period 2003-2008 are projected forward, Brazil will reach 2016 – the year that Rio de Janeiro will host the summer Olympic Games – with social indicators close to those of developed countries, according to the IPEA President’s Communiqué. For example, the Gini index (one of the most respected international measures of income concentration) would reach 0.488 by that year, compared to 0.544 in 2008. The closer a nation’s Gini index is to 1, the greater the income inequality is in that country. Comparatively, Italy currently has a rate of 0.33, while in the United States it is 0.46, and in Germany, 0.26.

"If in 2008 the rate of absolute poverty was 28.8%, in 2016 it may reach 4%. Similarly, extreme poverty can be reduced to 0%," said Márcio Pochmann, President of the Institute of Applied Economic Research. He pointed out that eradicating poverty as a whole is a goal that not even highly developed countries can achieve.

According to Pochmann, one of the primary reasons Brazil has succeeded in reducing social inequality is the way the government was restructured to deal with the problem of poverty after the 1988 Constitution was enacted. "Up until 1988, the State either cared about the population for philanthropic reasons, or did not care at all. The large organizations created after the new Constitution are in line with those existing in developed countries," he said.

"Amidst limited economic growth in the 1990s, the restructuring helped to prevent social disruption," continued Pochmann, who also mentioned the decentralization of public policies (with a larger role played by municipalities) and the greater involvement of society in shaping and managing social policies as important factors for progress.

According to Pochmann, IPEA will soon release another study on this topic, analyzing the changing profile of the poor in Brazil over the past four decades.