Jennifer Oh

History 388

Professor David Ludden

December 10, 2004

Poverty in Brazil


The term “third world” does not come into existence until the 1950s.  It refers to a group of nations which were formerly colonized but now independent from foreign powers.  With the dissipation of the Communist, “second world”, the term “third world” has been replaced with North-South geopolitical distinctions, but whatever the label, the category of “third world” remains sensible today because of the unique shared experiences of these former colonies and the common legacy which many of them have been forced to deal with in the task of nation-building following decolonization.  The legacy of colonialism has proven hard to escape in many of these nations.  They face social, political, and economic obstacles to development which did not exist for industrialized nations.  Most importantly for the purposes of my argument, I will focus on the economic legacy of colonialism in the country of Brazil, and how that has affected the process of economic development in post-colonial Brazil.  Then I will briefly analyze the face of poverty in Brazil and finally, consider one policy program which has met with some success in some of Brazil’s more rural areas. 

The economic legacy of colonialism in Brazil is like many others in the third world.  The economies of colonized countries were developed to support the colonial power’s needs.  Their first encounter with modernism and technology was by way of extraction of their resources.  Since the economies of the colonies are dependent on the needs of their colonizers, many made a sudden shift from subsistence to export crops.  But surplus of export crops, like coffee, cannot be transferred for food needed to survive.  This produced famine situations in many countries, as in Brazil.  Even after its independence, Brazil was stuck with the colonial trade paradigm, depending on cash crops for the main source of revenue.  Its economy was severely misdeveloped as well as underdeveloped.  The colonial economy in Brazil remains deeply embedded throughout the twentieth century.  After a period of provisional government following independence between 1930 and 1937, a New State (Estado Novo) was established under the leadership of Vargas and remained in place until 1945.  His aim was to create a strong centralized state with a strong national army.  On the economic side, his objective was to centralize and industrialize.  His plan to break with the old required adopting import-substitution industrialization, measures designed to protect the domestic middle-class so that Brazil could eventually enter the global market.  It is best described as a form of state-guided capitalism.  In the next couple decades to follow, after the end of World War II, it became more difficult to justify and prop up a dictatorship in the new world order.  In this international climate, Vargas agrees to step aside and calls for parties in the next elections.  But this change is superficial and the populist authoritarian model of government continues.  On the surface, while formal democratic institutions are given more attention, the economy begins to show signs of strain.  Facing much criticism, in 1954, Vargas commits suicide.  None of his successors can keep it together.  Kubitschek, one of his successors, projects a positive image that progress is being made and the economy is growing.  However, the public does not buy this and there is a genuine concern about economic breakdown and workers are frustrated.  In 1964, a military coup against the civilian government restores authoritarian rule to Brazil.  The government recommits to economic development and modernization.  They undertake a large-scale development project which costs a lot of money.  In the late 1970s, Brazil starts to borrow heavily to fund these projects, including loans from commercial banks.  Unable to pay back the interest, the economy slows down.  The military government decides to bring democracy back to displace the blame and allows elections. 

Brazil’s transition to democracy is not a smooth one.  Solving the economic crisis in Brazil proves to be a huge challenge.  Exports are pushed but default on loan payments creates an insurmountable national debt crisis.  Wealth continues to be concentrated in the hands of wealthy landowners, a practice continued from the period of colonialism, when client-patron relationships governed local community politics.  As a result of this deeply entrenched colonial practice, Brazil has one of the largest inequality rates in the world, with a ratio of 30.  In 1992, Franco chooses Cardoso as the Minister of Economics and he commits Brazil fully to structural adjustment policies (SAP), moving away from the ISI model of economic development.  Brazil opens its doors for trade, embarks on a model of fiscal austerity by cutting spending heavily, and tries to privatize some of its factories and oil companies in order to attract foreign investment.  The consequence of these tough economic reforms is that it creates many ‘losers’, particularly within the working class.  The initial advantages of wealthy land-owning elites is entrenched in Brazil’s economy, and inequality proves to be Brazil’s most serious challenge.  The inability of Cardoso to create a mechanism by which to distribute economic growth evenly is something that the new administration must face.

An extensive report on the status of poverty in Brazil was released by the World Bank in March of 2001.  The central message of the report is that Brazil has achieved much progress in its social indicators, especially health and education and achieved significant progress in the reduction of income poverty in the past couple decades.  Overall, policy reforms seem to be on the right track and life for those living in poverty in Brazil has improved considerably.  However, those results need to be taken with a grain of salt.  Poverty still remains unacceptably high for a country with Brazil’s average income levels.  This is telling of the high degree of inequality in income distribution among Brazil’s inhabitants.  The poorest people are concentrated in the Northeast region and in the smaller urban and rural areas.  Another message of the report is a hopeful one: with targeted policy-making and action to back up those policies, Brazil could potentially achieve many further improvements in social indicators, including its objective of reducing the rate of income poverty by 50% by the year 2015.  This, however, will require a strong commitment on the part of the government to carry out the necessary reforms.

The report in 2001 estimated that Brazil had a poverty rate of 22.6%, as measured by the extreme poverty line set by the World Bank.  This amounts to 34.9 million Brazilians living in households where the per capita income is below the poverty line.  A little over half (52.5%) of the poor live in urban areas.  57% of the urban poor live in the Northeast.[1]  Overall, the poor are concentrated in the Northeast and in the rural, small, and medium sized urban areas.  Both in absolute and relative terms, poverty is highest in rural areas and within urban areas, poverty improves with urban size.[2]  Although poverty is most visible in Brazil’s large cities, like Sao Paulo, Rio de Janeiro, and Belo Horizonte, this report reveals that these areas only actually constitute 3.7% of Brazil’s poor.  Brazil’s poverty struggle remains largely a rural problem.  In addition to identifying where the poor are, this study also attempts to answer the question ‘Who are the poor?’  Even after controlling for other household characteristics, location is the strongest explanatory variable for explaining poverty.  What the study tries to show is that households with the same characteristics are more likely to be poor in poor rather than in rich areas.  Poverty in poor areas is not just related to a large number of households with characteristics related to poverty, but also linked to the low average income of the area.[3]  Other factors strongly associated with poverty include education levels, household size, and absence of urban services.[4]

Brazil is a country of both abundance and lack.  The existence of mass hunger is a fact to which too little attention has been paid.  While Brazil is the fourth largest food exporter in the world, Minister of Food Safety, Jose Graziano da Silva states “Nearly a third of the Brazilian population is in a situation of food insecurity.”[5]  Reporters Xico Sa and U. Dettmar undertook to document the geography of hunger in the semi-arid region of Brazil.  In this report, they move into the backland municipalities of Iraucuba and Caridade.  In these regions, they describe, “the local folk spend most of their time waiting for rain that rarely comes.”[6]  The harsh climate proves to be susceptible to drought and famine.  However, the recent arrival of provisions—rice, beans, sugar, flour and coffee by the Zero Hunger program give them some hope.  The Zero Hunger program, launched in January of 2003, is coordinated by Frei Betto, the liberation theologist and President’s senior advisor during the later years of military dictatorship.  As with most of President Lula’s policies, the program struggles to actually carry out its promises.  Frei Betto speaks about results that the program will deliver to Brazil, but it remains unknown whether these promises will translate into tangible benefits for the masses of people living at or below subsistence level.  But so far, there have been positive results.  The program’s first target was Guaribas, a town of 5,000 and among the country’s most impoverished.  As exemplified by the index of child mortality, since the program was instituted, the news there has been encouraging.  Many who had migrated to the cities looking for food were choosing to return to this rural community.  Of course, this accomplishment only seems to make a dent in the huge task that lies ahead.  But, its success does bode well for many other towns in Brazil which resemble it.  The program is not simply a welfare handout.  It aims to empower its residents under the guidance of state social workers.  The objective of the program is to have the impoverished people use credit card-style food cards in nearly 200 areas in the impoverished North and drought-stricken Northeast states.  Each family which is a part of the program receives 50 reais (US $18) in credit per month.  In this documentation, the reporters introduce us to fifty-seven-year-old Benedito Severino da Silva and his wife, Osmarina Ferreira da Silva, a couple with fourteen children, who received their first emergency benefit from the Zero Hunger program.  Four of their children died in their first year due to malnutrition.   Help has arrived, and Osmarina comments, “nowadays it’s easier to live”.[7]  It appears that the state has caught on to the plight of rural poverty and hunger and is doing something about delivering assistance.

From the onset, this program has taken on a moral character, with all its terminology and statement of objective steeped in philosophy and ethics.  This campaign has been described as a “community-based collective campaign”, with cooperation along many levels.  Ford Brazil, Brazil’s largest supermarket chain, has pledged its supports with over 200 tons of food.  And Companhia Vale do Rio Doce, Latin America’s largest mining firm, is providing a matching donation of one ton for every nonperishable good donated by its employers.  The policy tries to target the neediest people first.  These include landless families, indigenous communities, members of Afro-Brazilian quilombo communities, and eventually, aims to reach urban areas.  In this way, it has been faithful in responding to the report by the World Bank that raised awareness of where aid needs to be concentrated.  Although its short-term objective is to get food to these areas, its long-term objective is to promote jobs, create self-esteem, and educate the masses of impoverished people.  On the level of leadership, Lula’s devotion to the program has proven unswerving.  At his inaugural address, Lula said, “If by the end of my mandate, all Brazilians are able to have a daily breakfast, lunch and dinner, I will have accomplished by life’s mission.”[8] 

Some might say that the success of the program remains to be seen.  Some of the criticisms against the program have been voiced by the residents of one town chosen to be in the pilot version of the program.  They noted that what they really need is greater access to clean water and not food.  They also complained that they were only allowed to spend the monthly payment on foodstuffs, not on medicine, clothing, schoolbooks or other items that they might need more.  However, Graziano continues to stand behind the program, saying, “We are starting with those measures that require the smallest investment.  But this is a long-term program with more than 60 elements.”[9]  It remains to be seen whether this program will fulfill its intended goals, but it can be said in its favor that it recognizes the problem of poverty concentrated in the Northeast and rural areas and is taking steps towards combating it, not only by providing short-term aid, but by striving to equip the people in these areas with the necessary skills for self-sufficiency in the future. 












[1] See Figure 5: Extreme Poverty Rate by Region and Type of Area

[2] See Figure 6: Number of Poor by Region and Type of Area

[3] See Figure 7: Poverty Rates and Earnings by Region and Area

[4] ”Attacking Brazil’s Poverty“, A Report by the World Bank, Vol. II, March 31, 2001

[5] Norman Madarasz, “Dissecting Brazil’s Zero Hunger”, Brazzil, September 2003

[6] Madarasz (September 2003)

[7] Madarasz (September 2003)

[8] Madarasz (September 2003)

[9] Larry Rohter, “Brazil’s War on Hunger Off to a Slow Start”, New York Times, March 30, 2003