Content  

1.  INTRODUCTION  2

2.  SOCIAL INEQUALITY, POVERTY AND ECONOMIC GROWTH  2

3.  HISTORICAL AND CULTURAL CONTEXT OF SOCIAL INEQUALITIES IN BRAZIL  3

3.1.  The Colonial Past  3

3.2.  Industrialization and Welfare Policies  3

4.  HOW COULD BRAZIL REDUCE ITS INEQUALITIES?  4

4.1.  Impacts of Economic Growth and Lower Inflation Rates  4

4.2.  Impacts of Cash Transfers  4

4.2.1.  Achievements of Bolsa Família  5

4.2.2.  Criticizing Bolsa Família  5

5.  CONCLUSION  6

6.  REFERENCES  7

6.   7

6.   7

6.   7

1   

1   

1. Introduction  

Social   equality   is   essential   for   every   country,   not   only   as   an   end   itself,   but   also   as   tool   for   promoting   economic   growth   (Skidmore,   2004).   Brazil   is   one   of   the   most   unequal   countries   in  

the   world,   with   a   Gini   Index   of   0.567   in   2005   (CIA,   2010).   Although   this   is   still   high   and   leaves   Brazil  the  10 ^th  most  unequal  country  out  of  134,  the  inequalities  are  improving  significantly   (in  1998  the  Index  was  0.607).  This  essay  will  focus  on  two  questions:  What  has  caused  the   striking   inequalities   in   Brazil?   Why   did   these   inequalities   improve   in   the   recent   years?     2. Social   Inequality,   Poverty   and   Economic   Growth  

It   is   crucial   to   understand   the   relationship   between   poverty,   inequality   and   growth.   The   high   inequalities   in   Brazil   mean   that   -   without   change   in   inequality   -   Brazil   would   need   even   higher   growth   than   China   to   achieve   the   same   results   in   poverty   reduction.   Inequalities   implicate   the   legacy   of   social   exclusion,   as   they   constrain   the   ability   of   the   poor   to   participate  in  economic  growth,  and  also  limit  their  benefits  from  growth  (Ravallion,  2009).   Hence,   the   development   of   human   capital   is   constrained,   and   so   is   growth.   On   the   other   hand,   growth   alone   is   unlikely   to   reduce   poverty   sufficiently   (Thomas,   2006).   Considering   this   context,   Brazil´s   achievement   in   decreasing   its   inequality   is   especially   significant,   since   it   enabled   the   country   to   reduce   its   poverty   rates   even   with   modest   growth.   Only   considering   income   measures   provide   a   limited   picture   of   inequalities   in   Brazil.   Besides   the  significant  average  income  differences  between  regions,  most  significantly  between  the   Northeast   and   the   Southeast,   there   are   also   inequalities   between   people   with   different   age,   color,   and   gender   (Thomas,   2006).   The   data   of   inequality   improve   when   basic   public   services   like   basic   education   or   basic   health   care   are   included,   which   have   enhanced   significantly,   though   quality   is   still   an   issue.   Simultaneously,   other   aspects   would   worsen   the   real   inequality.   For   example,   poor   people   are   affected   disproportionally   by   crime   or   the   impact   of   environmental   degradation   (Thomas,   2006).   However,   monetary   distribution   remains  

important,   and   thus   the   Gini   Index   is   used   here,   providing   an   overview   of   income   inequalities   within   Brazil.    

2  

3. Historical   and   Cultural   Context   of   Social   Inequalities   in   Brazil  

There   are   some   external   reasons   influencing   Brazil´s   inequalities.   For   example,   the  income   distribution   worldwide   has   become   more   unequal   -   in   developing   as   well   as   in   developed   countries   (Skidmore,   2004).   However,   most   of   the   causes   for   its   striking   inequalities   are   embedded   in   Brazil´s   culture   and   history,   as   well   as   in   economic   and   political   aspects.   Due   to   the   limited   scope   of   the   essay   only   to   important   aspects   will   be   outlined.  

3.1. The   Colonial   Past  

The   Portuguese   merely   aimed   at   exporting   to   the   Crown   and   at   spreading   their   faith   in   Brazil.   Their   culture   was   characterized   by   anti-­‐egalitarian,   patrimonial,   and   personal   values   which   reinforced   the   power   of   the   elite   and   the   obedience   of   the   rest.   As   the   colonial   power   neglected  education,  the  first  university  on  Brazil  was  only  established  in  1932,  much  later   than  in  the  rest  of  Latin  America.  They  also  prohibited  the  printing  press,  making  it  hard  to   develop  a  free  public  opinion.  Moreover,  the  use  of  slavery  added  color  to  system  of  social   stratification   (Skidmore,   2004).   The   Portuguese   economic   mercantilist   system   included   a  

closing   of   the   economy,   as   well   as   the   ban   of   industry   with   a   strong   focus   on   mining   and   agriculture,   resulting   in   extreme   regional   inequalities.   For   example,   the   coffee   industry   in   Southeast   spoiled   the   region´s   development   (Skidmore,   2004).  

3.2. Industrialization   and   Welfare   Policies    

The   industrialization   and   welfare   policies   of   Getúlio   Vargas   (president   1930   -­‐   1945,   1950   -­‐   1954)  reinforced  inequalities,  as  for  example,  he  created  favorable  laws  for  urban  workers   who   only   constituted   a   small   fragment   of   the   whole   population,   while   rural   workers   were   excluded   from   this   social   welfare.   Opposition   was   weak   because   the   left   was   fragmented,   revolutionary   tradition   did   not   exist,   and   the   bureaucracy   facilitated   keeping   opponents   down.   The   left   was   also   weakened   by   the   general   perception   of   the   left,   and   of   anyone   favoring   equality,   as   dangerous.   The   later   funding   of   industry   was   one   main   factor   for   Brazil´s   enormous  foreign  debt,  which  in  turn  contributed  significantly  to  the  high  inflation  that  had   severe   distributive   effects   on   income   (Skidmore,   2004).    

3