Essay on 32802493

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Brazil’s Enigma: Sustaining Long-Term Growth
Brazil prepares to take a new leap—to grow more and better. To make our model more robust and open in this new development cycle, we will incorporate a new word: competitiveness.1
—Dilma Rousseff
On August 15, 2012, Dilma Rousseff, the president of Brazil, unveiled a new stimulus plan, aimed at injecting up to R$133 billion (US$66 billion) into the economy by funding infrastructure improvements to roads and railroads over a 25-year period. The Brazilian economy had stagnated to a mere 2% growth per annum, despite GDP growth peaking at a remarkable 7.5% in 2010. This stagnation created concerns
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Standard & Poor’s credit analyst, Lisa Schineller, commented, “The upgrades reflect the maturation of Brazil’s institutions and policy framework, as evidenced by the easing of fiscal and external debt burdens and improved trend growth prospects.”8 By February 2008, Brazil had become the largest emerging stock market.
Furthermore, programs aimed at reducing the nation’s poverty, initiated during the Fernando
Herinque Cardoso government (1995–2002) and Luiz Inácio “Lula” da Silva government (2003–2010), appeared to be a success (see Exhibit 7). Between 2003 and 2009, over 32 million Brazilians rose to the middle class and poverty rates fell from 21% of the population to 11%.9 Unemployment dropped substantially from 12.3% in 2003 to 7.9% in 2008,10 while income inequality decreased by 6%.11
Federalized under Cardoso and expanded under Lula, Bolsa Familia was a conditional cash transfer program aimed at increasing the number of children in school. Reaching 12.4 million families by
2010, some analysts estimated that the program was responsible for one-sixth of Brazil’s poverty reduction.12 However, Brazil still suffered from substantial inequality in income distribution; in 2009,
Brazil’s top 20% of the population held 58.6% of the nation’s wealth, while the lowest 20% held only
2.9% (see Exhibit 8).13
By mid-October 2008, however, the financial crisis had reached Latin America, and Brazil was unable to escape its impact. The nation