Poverty Reduction in Brazil
The COVID-19 pandemic placed a lot of countries in difficult positions regarding their economies and poverty rates. Those already struggling were unable to make progress, and in some cases, poverty rates even increased due to the stress the pandemic placed on society. Brazil is just one of the many countries facing an increase in poverty today. However, five strategies exist to progress poverty reduction in Brazil.

About Poverty in Brazil

Before the pandemic, Brazil already faced difficulties in the country with many lower-class citizens facing extreme poverty. Since 2014, the poverty rate grew steadily, and by the beginning of 2020, almost 11% of the population of Brazil was living on a statistically meager amount every day. Because of the pandemic, about an estimated 13% of Brazil finds itself in poverty as of March 2021. In order to combat the rising poverty rates throughout Brazil, there are certain steps that the country can take. Here are five strategies to progress poverty reduction in Brazil after the COVID-19 pandemic.

5 Strategies to Progress Poverty Reduction in Brazil

  1. A Rise in Vaccination Rates: So far, the vaccination rates in Brazil have remained quite low in comparison to other advanced countries across the globe. Though infection rates in Brazil have not returned to their pandemic peak, cases still tend to rise after they are brought down and the country opens up again. This has proven to be hard on the economy because communities have to continuously lockdown and then reopen time and time again. With a rise in vaccination rates, however, this would no longer have to be the case. As Deloitte Insights pointed out, “Evidence from the United States, for example, shows that consumer sentiment and willingness to spend has gone up with rising vaccinations.”
  2. American Involvement Can Help: The United States is equipped with resources to aid other countries with global poverty relief. Over the past century, other efforts have proved the U.S.’s ability to deliver effective assistance. Kate Schecter wrote for New Security Beat, saying, “There have been notable successes, such as the President’s Emergency Plan for AIDS Relief, which started in 2003.” As the U.S. appears to be recovering financially from the pandemic, it could utilize aid resources to assist other countries’ recoveries as well, including Brazil’s.
  3. A Commitment to Investments Within Local Communities: In order for poverty-stricken communities within Brazil to build themselves up financially, an effort to helping communities create jobs and access to resources remains essential. “These investments can both reduce poverty and mitigate out-migration by reducing ‘push factors,’ such as lack of jobs and food scarcity which force people to leave their homes and seek basic subsistence in other countries,” wrote Schecter.
  4. Open the Economy: Brazil has some of the lowest import and export rates among countries with major economies. In 2017, it recorded a less than 30% GDP sum in terms of imports and exports. International Money Fund (IMF) states that “opening up to more trade is essential to improve competitiveness and could give a much-needed fillip to investment.”
  5. Increased COVID-19 Aid from the Government: During the initial economic blow from the pandemic, the government implemented an emergency aid program to help families in need of financial support. Consequently, poverty levels throughout the country took a dramatic decline. This positively impacted the country, but “the aid program is not sustainable and the positive trend in terms of poverty reduction is likely to reverse once the benefit ends,” based on a study from the think-tank Fundação Getúlio Vargas. A better-supported and considered aid program to mitigate the effects of the pandemic could still reduce the poverty rate with careful planning.

Looking Ahead

The recovery process is still ongoing, but as Brazil continues to improve, it can now look forward to poverty reduction throughout the country. Effectively considering and enacting policies throughout Brazil could alleviate the difficulties of the nation’s poor and reduce poverty broadly.

– Riley Prillwitz
Photo: Wikipedia Commons

Economic Development in Brazil Key to Keeping Poverty Rate Low
According to a 
report issued by the World Bank, economic development in Brazil has lifted some 29 million people out of poverty between 2003 and 2014. The level of inequality declined significantly, with the Gini coefficient (the statistical measure of distribution often used to chart wealth inequality) falling by 6.6 percentage points in the same period, from 58.1 down to 51.5.

Moreover, the poorest 40 percent of the population experienced a massive rise (an average of 7.1 percent between 2003 and 2014) in income while the whole population enjoyed a 4.4 percent income growth.

A Variety of Programs Focus on Economic Development in Brazil

Most of the credit for such economic development in Brazil goes to a massive initiative, namely a global center for poverty reduction called Mundo Sem Pobreza (World Without Poverty), which has effectively become a place where ideas and anti-poverty programs are translated into reality for the benefit of the most disadvantaged citizens.

One of the most prominent of such programs is called Bolsa Familia. In its decade of implementation, this program, which consists of a conditional cash transfer program through which parents receive a fixed monthly stipend of about $30 in exchange for sending their children to school and complying with different health checkups, has managed to reduce poverty by half in Brazil (from 9.7 percent to 4.3 percent), aiding some 50 million low-income Brazilians.

According to a study led by Paul Glewwe of the University of Minnesota and Ana Lucia Kassouf of the University of Sao Paulo in 2012, Bolsa Familia did in fact improve children’s school enrollment rates.

This program has been paired with others, such as Brasil Sem Miseria, which was designed to help millions of Brazilians escape extreme poverty, while the Brazilian government has taken very seriously cogent issues such as expanded access to education and reducing income inequality.

Brazilian Government Both a Help and a Hindrance

However, what has really lent a helping hand to the overall betterment of Brazil’s social and economic conditions was a combination of public policy (expansion of access to education and government transfers to the poor) and favorable market factors (rising wages for low-skilled workers), both of which have led to substantial declines in inequality in Brazil.

Despite the laudable results achieved through social programs and economic development in Brazil, the rate of reduction of poverty and inequality appears to have stagnated since 2015. Political instability and a problematic recession have kept Brazil in an economic stalemate.

Moreover, while President Dilma Rousseff’s successor Michel Temer promise a rigid fiscal policy, major adjustments are undermined by budget rigidities and a difficult political environment.

Indeed, less than 15 percent of expenditures in Brazil are at the discretion of the political realm. Most public spending is rigidly determined by constitutional regulations and cannot legally be reduced.

Statistics Show Recent Progress

The overall situation is not beyond repair. In fact, 2017 saw a rise in household spending by 1 percent compared to a 4.3 percent decrease in 2016. Exports rose 5.2 percent compared to 1.9 percent in 2016. Imports grew by 5 percent (they dropped by 10.2 percent in 2016), marking the first increase in four years.

Thus, constant attention to keeping the markets open and efficient alongside a careful administration of public finances are key to getting Brazil back on track towards economic development and poverty reduction.

– Luca Di Fabio
Photo: Flickr