Brazil has made impressive strides in terms of economic growth since the end of its military dictatorship in 1990 and pegging of the real to the U.S. dollar in 1994. Now classified as a major newly advanced upper-middle income country, this nation of 200 million has transformed its economy to become globally competitive in the international market. Pegging its currency to the American dollar allowed it to stabilize and reduce inflation, creating a burgeoning middle class through an uptick in manufacturing, natural resources–namely, oil and coal–as well as agriculture. Since the early 1990s, Brazil has experienced ups and downs with its economy. A recession in 1998 led to the government abandoning the fixed exchange rate to the U.S. dollar. Despite this, domestic economic growth allowed Brazil to grow its economy from 2003-13 by creating a large, domestic consumer base, as 26 million individuals were lifted out of poverty as a part of an emerging middle class.
This growth has spurred Brazil to comprise part of the acronym of major developing nations, known as the “BRICs” (Brazil, Russia, India and China). Its quick rise to affluence is not without major set backs, however. Despite its status as a major industrial and agricultural powerhouse and the largest economy within Latin America, Brazil still suffers from high levels of corruption and poverty. Images of urban favelas, or slums, have been popularized in the media with films such as City of God and even blockbuster video games, including Call of Duty: Modern Warfare 2 and Max Payne 3. These slums symbolize the discrepancy between rich and poor in urban Brazil. Despite major gains in the past twenty years, it is currently ranked the 13th most unequal nation within the GINI Index.
A favela in Rio de Janeiro
Bolsa Família (Family Allowance) was instituted as a social welfare program in 2003 to assist poor Brazilian families in affording access to basic primary education, food and health care. By providing aid to poor families, parents receive these basics in return for ensuring their children attend school and have proper vaccinations. This program addresses absolute poverty, emphasizing urban areas, by reducing incentives to commit crime for basic necessities. About 10% of Brazilians live in extreme poverty. The Bolsa Família program gives families between R$15-95 per month to increase this standard of living. Thus far, 12 million families, or 44 million individuals, receive allowances from Bolsa Família. As a cornerstone of President Luiz Inácio Lula da Silva’s social welfare reform, the most important aspect of this direct cash transfer program is to reduce the absolute poverty levels, unemployment and crime rates in its major urban areas. So far, the program has been successful in reducing poverty; the World Bank, a major contributor, reported it has reduced poverty levels in half.
Federal police training in a favela
In anticipation of the 2016 Summer Olympics in Rio de Janeiro, reducing theft and petty crime rates are integral to transforming Brazil’s image as a dangerous tourist destination for Westerners. To gain a sense of how dire petty crime is in São Paulo, its largest city, police distributed pamphlets to tourists during the 2014 World Cup on how to protect themselves from armed robberies. Brazil currently has the world’s highest homicide rate, matching the death toll from the Syrian War, and muggings in urban areas are rampant. Unfortunately, the surge in crime rates is attributed to youth resorting to crime due to a lack of employment prospects, a massive drug trade, and poor policing on the federal and state levels.
Winning a Summer Olympic bid is a display of national pride, especially among newly emerged economies. It is a political statement to the world that the respective nation has “arrived” as an economic power because it is now seen as a viable candidate to afford and accommodate such an event, as well as be deemed attractive and safe enough to do so (see: China, Russia, Greece and South Korea). There is a reason why Buenos Aires, Belgrade, Istanbul, Cape Town, Bangkok and others have placed unsuccessful bids to host an event that has been proven to be a poor economic investment. Brazil’s hosting of the FIFA World Cup and Summer Olympics in 2014 and 2016 signal to the world that Brazil has arrived, tarnishing its reputation as a poverty stricken, corrupt nation akin to several of its Latin American peers. Understanding the significance of the hosting of major global sporting event is integral when correlating Bolsa Família’s linkage in reducing crime rates in wake of the Olympic games.
As of 2016, only Mexico has rivaled Brazil’s program through their own direct cash transfer program, Oportunidades (Opportunities). Similar programs are gaining traction in India, Bangladesh and Kenya. Yet, Brazil’s program remains the largest and most successful. Such cash transfer programs are growing in popularity, and are in accordance with the human security paradigm given they provide socioeconomically disadvantaged individuals access to basic necessities. This in turn makes them less of a burden to the state by reducing crime, illiteracy and poverty levels which threaten the direct security of Brazilian citizens and the state’s economic prosperity. By allocating roughly 0.5% of its total GDP, the Brazilian government can mitigate some of its worst poverty and promote economic investment by shedding its image as a dangerous tourist destination and poor economic investment.
However, one must keep in mind that throwing money at disenfranchised citizens is not a comprehensive, long-term solution, nor an appropriate political tool to buy votes. Brazilian politicians have become notorious for distributing aid to poor citizens in exchange for political support and votes. The documentary Manda Bala (“Send a Bullet”) explores the extent of this corruption, especially in the northern cities that are mired with the worst corruption, drug violence and poverty. Proper reform must start at the federal level by reducing income inequality and corruption. Cash transfer programs are short-term solutions towards eradicating extreme poverty that can be utilized properly in long-term policy reform efforts.