Brazil’s Inclusive Growth Dilemma

In the race to reaffirm itself as a developing global power in times of international economic and financial crisis, Brazil has invested in mechanisms to display its domestic economic growth.

brazilLast week, the United Nations Development Program in Brazil, along the Brazilian Research Institute for Applied Economics (IPEA) and the João Pinheiro Foundation (FJP) launched the Brazilian Atlas for the Municipal Human Development Index (MHDI).

Highlighting improvements achieved in the past two decades, Atlas used data from the 2010 Demographic Census and analyzed education, life expectancy and per capita income across 180 indicators for all 5,565 Brazilian municipalities.

The overall Brazilian MHDI for 2010 is 0,727, representing an 80% increase in twenty years. The education index advanced the most, representing a 128.3% rise, and the per capita income MHDI rose R$ 346.31 on average (about US$ 173.15) in the same period.

However, although 73% of the Brazilian municipalities grew above national rates – as 11% of them have their income above the national average – data suggests that income is still highly concentrated.

Moreover, the highest per capita income rate is R$ 2,043.74 (approximately US$ 1,022.00). The lowest is R$ 96,25 (about US$ 48.13); a significant difference as the highest income is 21 times larger than the lowest.

The life expectancy index contributed the most positive results of the overall MHDI.

Child mortality and fecundity rates decreased significantly. Currently, Brazilian life expectancy is between 65 and 79. These facts underscore that the population growth pyramid is starting to change, which also affects how policies are developed and executed.

All in all, the MHDI enhanced almost 50% in past two decades. However, Brazil is still widely an unequal country, despite the average difference among the poor and rich have dropped steadily.

By regions, the data shows that the South and Southeast have high MHDI; the Center west and North have medium MHDI; and the Northeast still has low MHDI.

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The almost 50 million people that were lifted from extreme poverty due to social protection policies for inclusive growth are changing the domestic scenario in Brazil. With more income, the economy is counting with a determinant factor to overcome international pressures: its domestic market.

However, there is still trouble in paradise.

Per capita income is rising, but prices are also rising steadily. Despite the positive highlighted by the released data, to understand the internal reality in this emerging giant, it is necessary to take in consideration the purchase power of the average Brazilian, and how much they spend to have services that are supposed to be provided by the government.

Brazil has one of the highest tax rates in the world, and yet it offers deeply inefficient public services. As education, life expectancy and income per capita rise, the population demographics is changing in which the average citizen ends up spending their rising salaries with even faster rising prices.

This in turn created a condition in which the population started to not only question government policies, but also to demand greater rights. To be sure, protests have occurred throughout Brazil since June, which is smartly characterized by the phrase being used by protesters: “the giant woke up.”

Tamara Santos is a communications assistant  at UNDP International Policy Centre for Inclusive Growth. She earned a BA in International Relations from La Salle University and a MA in Conflict Resolution in Divided Societies from King’s College, London. Follow her on twitter @tamara_ds. Read more articles by Tamara.