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LATEST NEWS UPDATES | Lessons from Brazil to get rid of poverty

Lessons from Brazil to get rid of poverty

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published Published on Mar 26, 2013   modified Modified on Mar 26, 2013
-The Economic Times


Extreme poverty afflicts more than one in five people, according to the World Bank. The institution's new president, Jim Yong Kim, speaks of the need to "bend the arc of history in order to eliminate extreme poverty and achieve shared prosperity".

At a time when his bank's resources as well as the budgetary resources of governments are limited, Brazil offers important lessons on how to eliminate extreme poverty and reduce inequality. Perhaps the biggest lesson is that real progress can be achieved in a cost-effective manner if the programmes are targeted well.

An Unlikely Success Story Brazil, my home country, is an unlikely success story. It has long been known for having one of the most unequal levels of income distribution. This changed when Lula was elected as president in 2002. He ran on the platform of boosting social and economic inclusion and fighting poverty and inequality - and to achieve that goal within a single generation.

Lula made the fight against poverty and inequality the central organising principle of his presidency. All other policies had to support this plank. There were plenty of doubters within Brazil itself. They were wrong. By the end of Lula's two-term mandate, Brazil's results were impressive. Income inequality, measured by Gini coefficient, declined from 0.553 in 2002 to 0.500 in 2011. Household per capita income increased by 27% from 2003 to 2011. Rate of unemployment reached a record low, from 9.1% in 2002 to 6.8% in 2011.

When President Dilma Roussef was elected as Lula successor, she upped the ante, planning to eliminate extreme poverty not in a generation, but in five years. Despite cynicism, the target of eliminating extreme poverty in Brazil is surprisingly close to being achieved. The reform agenda's cornerstone was a determined expansion of social protection programmes that made sure that all poor households in the country would be reached.

The two key programmes are the Bolsa Familia (a conditional cash transfer programme for the poorest families while promoting health and education) and the Brasil sem Miseria (aimed at people living in extreme poverty, with elements for their inclusion in the productive sector and access to public services). The per capita transfer is currently $ 35 a month. The two programmes now reach all Brazilians listed in the national database. Still, there are 700,000 living under the poverty line who do not receive payments because they have not been included in the registry. Brazil is a continent-sized nation, and some of the extreme poor live in isolated areas.

Most people, when they look at the development challenges, believe that poverty alleviation may be a moral obligation, but that it is not financially sustainable.

Brazil shows that this need not be so. The cost of Bolsa Familia has been extremely low. In 2012, the programme cost the Brazilian government less than 1% of its budget.

On the social front, the results are solid. Brazil has seen a marked decline in violence. A key part of the improved urban environment is that the urban poor now have a sense of destiny and direction. They welcome the government's focus on their families, especially education of kids.

The real fruits of Bolsa Familia may still be a generation away, but here you have a rigorously implemented programme that has nothing to do with the usual instant-gratification handouts that politicians all over the world specialise in.

(The writer is alternate executive director for Brazil in the World Bank Group. Views are personal)


The Economic Times, 26 March, 2013, http://economictimes.indiatimes.com/news/international-business/lessons-from-brazil-to-get-rid-of-poverty/articleshow/19206336.cms


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