A Brief Summary: The Complex Causes of Poverty in Brazil


BRASILIA — Although Brazil has the largest economy in Latin America, is a member of the G20, and is also the largest producer of beef, coffee and sugarcane in the world and the second-largest soybean producer, the country continues to experience severe poverty.

Despite Brazil’s successes in consistently surpassing the United Nation’s Millennium Development Goals, as of 2012, about 7.2 million Brazilians were living in extreme poverty.

The specific causes of poverty in Brazil are vast and fully comprehending them requires a knowledge of some events in Brazilian history. Between the sixteenth and nineteenth centuries, an estimated four million African slaves were forced to immigrate to Brazil to satisfy labor demands, particularly in the agricultural and mining sectors.

This was followed by a wave of mostly white, European immigrants who arrived to satisfy labor demands and as part of the government’s desire to diversify the population. However, an unintended consequence was that immigrants clung to their own cultures, and by and large refused to assimilate into society as equals to the rest of the population.

Eventually, a racial prejudice against those in poverty was established; mainly, the idea was that the poor were poor because they chose to be that way and were personally responsible for their problems. This discrimination then helped to shape decades of the government’s public policy when it came to the issues of poverty reduction and social inequality.

Another of the causes of poverty in Brazil is the fact that the country was governed by its military from April 1964 until March 1985. This resulted from internal political struggles for power within the new administration that eroded support within the military for any of the civilian politicians. Subsequently, the Army’s Chief of Staff, Marshal Humberto Castelo Branco took over as president in 1964 and served until 1967, laying the groundwork for authoritarian rule in the process.

This led to high levels of nationalist sentiments, little willingness to participate in foreign trade and drastically increased levels of industrialization between 1968 and 1974. Annual GDP growth rates reached 12 percent, however, the vast majority of the population remained below the poverty line and continued to see lower wages every year, while the wealthy saw significant annual increases in their incomes.

Although it seemed like the country was economically prospering, behind the scenes, the wealth gap grew exponentially and public dissent of any nature was suppressed through means of torture, arbitrary arrests and censorship. This period of apparent economic growth through authoritarian rule is also what many speculate to be what provided encouragement to military officers to seize power in the neighboring countries of Uruguay, Argentina, Chile and Bolivia.

The most recent causes of poverty in Brazil are most ostensibly the 2014 FIFA World Cup and the 2016 Olympics. Listed below are these events and detail some economic impacts they caused.

  1. The 2014 FIFA World Cup

    The incentive for developing countries like Brazil to agree to host and fund athletic events like the World Cup and Olympics is that it will not only give them global publicity, but that it will also boost their economies through job creation, tourism and foreign investment, and that the long-term benefits will outweigh the short-term investment.

    However for Brazil, so far it has not appeared to turn out this way. The event cost taxpayers approximately $13 billion, $319 million of which was spent on the stadium which is located in the remote Amazonian city of Manaus, in which a total of four games were played. Today, it requires an estimated $250,000 in monthly maintenance costs and will likely never be used again.

    In addition to this, the large influx of people to a single region further increased the already high inflation rates, and in June 2014 it spiked to nearly 6.5 percent. Also, since multiple cities declared the days of the events as municipal holidays, the industrial sector suffered at the hands of this event. The total industrial output decreased by 4 percent for the month. Many experts say this loss alone counterbalances the total short-term revenue generated from the event, making it one of the ongoing causes of poverty in Brazil.

  2. The 2016 Olympics

    Though the long-term effects of the 2016 Olympic Games in Rio de Janeiro have yet to be seen, Brazil was not in an ideal position to accept the invitation in the first place. Since the deficit inflated to more than 9 percent in 2015, the government was forced to cut the $5 billion Olympic budget by 5 to 20 percent.

    Also, similarly to the World Cup, what was the Olympic Village in Rio de Janeiro is now almost completely abandoned and many of the facilities are structurally deteriorating due to a lack of maintenance.

Samuel Pessoa, director of the Center for Economic Growth at the Getulio Vargas Foundation, said that without beginning to limit spending on social security costs, pensions and certain salaries, the causes of poverty in Brazil will eventually bankrupt the government. Pessoa calculated that the economy will have contracted by up to 10 percent between 2015 and the end of 2016.

“We are looking into an Abyss,” Pessoa said. “It will be really difficult to attract investment and spur growth when the national treasury is on an explosive trajectory.”

Hunter McFerrin
Photo: Flickr


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