The brazilian economy today towards a new socio economic model

The Brazilian Economy Today This page intentionally left blank The Brazilian Economy Today Towards a New Socio-Economic Model? Edited by Anthony W Pereira Professor and Director, Brazil Institute, King’s College London, UK and Lauro Mattei Universidade Federal de Santa Catarina, Brazil Selection, introduction and editorial matter © Anthony W Pereira and Lauro Mattei 2015 Remaining chapters © Contributors 2015 Foreword © Diego Sánchez-Ancochea 2015 Softcover reprint of the hardcover 1st edition 2015 978-1-137-54980-8 All rights reserved No reproduction, copy or transmission of this publication may be made without written permission No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6–10 Kirby Street, London EC1N 8TS Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988 First published 2015 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010 Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries ISBN 978-1-349-57424-7 ISBN 978-1-137-54981-5 (eBook) DOI 10.1007/978-1-137-54981-5 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data The Brazilian economy today : towards a new socio-economic model? / Anthony W Pereira, Lauro Mattei pages cm Includes bibliographical references Economic development – Brazil Brazil – Economic conditions – 1985– Brazil – Economic policy – 2003– I Pereira, Anthony W., editor II Mattei, Lauro, editor HC187.B87234 2015 330.981—dc23 2015026460 Contents List of Figures vii List of Tables and Boxes ix Foreword Diego Sánchez-Ancochea xi Notes on Contributors xiv Part I Introduction Dilemmas of Brazilian Economic Development in the Twenty-First Century Lauro Mattei and Anthony W Pereira Part II Crisis in the Global Economic Order Neoliberalism, Austerity, and Crisis Alex Callinicos The Brazilian Economy after the Global Crisis: An Assessment of the Economic Slowdown in 2011–2012 Luiz Fernando de Paula, André de Melo Modenesi, and Manoel Carlos C Pires 29 43 Part III The Brazilian Economy Today: Situation and Challenges The Economic Policies and Performance of Brazil’s Leftist Government: A Critical Analysis Fernando Ferrari Filho Brazil after the Great Recession: Searching for a Coherent Development Strategy Philip Arestis, Julimar da Silva Bichara, André Moreira Cunha and Fernando Ferrari Filho The Macroeconomic Tripod and the Workers’ Party Administration Luiz Carlos Bresser-Pereira v 77 88 121 vi Contents Part IV The Brazilian Social Situation Today Structural Changes in Brazil: Improvements and Limits Vanessa Petrelli Corrêa, Claudio Hamilton dos Santos, and Niemeyer Almeida Filho Development Patterns, Labor Market, and Social Protection: The Brazilian Experience between the Liberal Decade (1990s) and Developmentalism Decade (2000s) José Celso Cardoso Júnior and Cláudia Satie Hamasaki Social Policy against Poverty in Brazil Rosa Maria Marques Index 137 162 185 199 List of Figures 2.1 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 5.1 5.2 5.3 5.4 5.5 5.6 7.1 7.2 A world rate of profit (index: 100 = 1963) GDP real growth (%) – 2000/2012 Contribution to GDP growth (%) – T3/2003–T4/2012 Industrial output and retail sales (100 = Jan 2003) Capacity utilization rate (percentage of the industry’s total capacity) Total domestic credit (left: R$ billion; right: share of GDP) – June/2001–Dec/2012 Total credit growth rate (%) by bank ownership (12 months) – Jan/2007–Jan/2013 Selic rate (left: % per annum) and CPI monthly inflation (right: % last 12 months) – Jan/2008–Mar/2013 Top three private banks’ liquid position – Brazil: June/2008–June/2012 Exchange rate (real/dollar) – Jan/1999–Jan/2013 Trade balance (US$ million) – Jan/2001–Jan/2013 Profitability of exports and real effective exchange rate (December 2003 = 100) – Jan/2003–Jan/2013 Coefficient of manufacturing imports – I/2007–IV/2012 Primary fiscal balance as share of GDP (in months) Brazil’s gross domestic product: growth and share of the world total Merchandise exports in selected economies, 1980–2010 Productivity and investment in selected economies, 1960–2011 Evolution of the manufacturing sector in Brazil, 1950–2010 Brazil: trade balance in selected sectors, 1989–2011 (US$ billion) Business cycles synchronization between Brazil and its main trade partners, 1975–2010 Brazil: metropolitan unemployment (percentage of economically active population) Brazil: trade balance – monthly data, accumulated in 12 months (in US$ million) vii 33 45 46 49 49 54 54 56 59 60 62 63 63 66 101 102 104 105 107 109 140 142 viii 7.3 7.4 7.5 7.6 8.1 8.2 8.3 8.4 8.5 List of Figures Growth rates of volume indices: household consumption and gross fixed capital formation (GFCF) Evolution of GFCF (accumulated over four quarters) as percentage of GDP GFCF in buildings and machinery and equipment (1995 = 100) – quarterly data Gross fixed capital formation (public administration) and state enterprises’ investments (federal level) (in 1995 R$ million) Evolution and composition of total employment according to the agglutination of occupational categories between the structured and unstructured nuclei of the Brazilian labor market, Brazil: 1992–2012 Evolution of the aggregated social security coverage rates and by gender, Brazil: 1992–2012 Evolution of the functional distribution of income, participation of the wage labor income (with and without a job contract) + salaries of military and civil servants, in the GDP, and total income of the factors, Brazil: 1995–2008 Evolution of the personal distribution of the main job incomes, Brazil: 1992–2012 Percentage of poor people, with transfers and without social security transfers, Brazil: 1992–2012 151 152 153 154 167 170 172 173 175 List of Tables and Box Tables 3.1 3.2 3.3 4.1 5.1 5.2 5.3 5.4 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 Average spreads on loans to individuals and working capital (percentage points) Estimation of exports’ functions to Brazil Selected indicators of public indebtedness Brazilian macroeconomic indicators, 2003–2012 Main policies and outcomes – Brazil, 1995–2011 Brazil’s technological intensity of exports and imports, 1997–2010 First-stage estimates (determinants of bilateral total trade) Brazil: effects of trade intensity on business cycles synchronization, 1990–2010 Brazil: annual growth rates of the GDP volume indices (%) and their components Brazil: Gini Index (personal income inequality) and GDP (per capita) (US$ million, 2013 prices) Brazil: wage share in the GDP (2003–2011) – wage share in factor income (%; fourth quarter = Q4) Composition of Brazilian exports (technological intensity; – in %) Composition of Brazilian imports (in %): durable consumer goods (DG); nondurable consumer goods (NDG); capital goods (CG); intermediate goods (IG); fuels and lubricants (FG) – monthly data: December Brazilian growth rate (GDP) and demand’s components contribution Evolution of the tax load as percentage of the GDP and credit to individuals in R$ million Welfare and social security public transfers (ST) Welfare and social security public transfers (ST) – percentage of GDP Brazil: annual growth rates (in %) – family consumption, loans to individuals, minimum wage, and social transfers (STs) ix 58 64 69 78 95 106 110 111 138 139 139 142 144 144 146 148 149 150 190 Rosa Maria Marques The Bolsa Família program: description and impact The Bolsa Família program was instituted in October 2003 by means of Provisional Measure 132, converted into Law No 10,836, on the January 2004 Its implantation was the responsibility of the Ministry of Social Development and Fight Against Hunger (Ministério Desenvolvimento Social e Combate Fome – MDS), created at the beginning of Lula da Silva’s first presidential term Since its establishment, all the programs that had existed until then – the National Program of Minimal Income related to Education, Bolsa Escola (2001), the National Program of Access to Food, PNAA (2003), the National Program of Minimal Income Related to Health, Bolsa Alimentaỗóo (2001), and the Program Gas-Support (2002) – all of which created during the government of Fernando Henrique Cardoso, were closed In July 2013, Bolsa Família reached 13,773,543 families, across all 5,565 Brazilian municipalities.7 Considering that the poorer families have, on average, 4.4 members,8 this program benefited, in June 2010, 28.56 percent of the population Bolsa Família provides cash-transfer benefits to families in extreme poverty (defined as having an average monthly per capita income of less than R$70.00) and for families in poverty (defined as having an average monthly per capita income between R$70.01 and R$140.00) It consists of a basic benefit, of R$70.00, with no conditions, paid to families in extreme poverty,9 and two additional variable benefits The first variable benefit, of R$32.00, is paid for a child up to, and including, the age of 15, with a maximum cap of five benefits per family The second variable benefit, of R$38.00, is paid for a child aged 16 to 17, to a maximum of two children This means that the Bolsa Família benefit ranges from R$70.00 to R$242.00.10 The benefit is paid monthly onto a card issued by Caixa Econômica Federal.11 The variable benefits are conditional on a minimal school attendance record (of 87 percent for children aged between and 15, and 75 percent for students 16 and 17 years of age); and, in terms of health, it is conditional on the follow-up of immunizations, and growth and development for children under the age of 7; on the follow-up on health for women aged 14 to 44; compliance with antenatal care for pregnant women and for those breastfeeding, and on the follow-up of their health and that of their babies’ The estimate of the number of families living in poor and very poor (indigent) conditions is performed by the IBGE, but the information regarding each family, in each municipality, is compiled in the Unique Social Program Database, monitored by the MDS According to the Social Policy against Poverty in Brazil 191 Ministry, in March 2013, there were 25,385,573 families enrolled in the Unique Database This does not invalidate the use of statistics from other sources to monitor the quality of the information (Boyadjian, 2009) It can be highlighted that the information about the beneficiaries of Bolsa Família is in the public domain, so that any person willing to access the database administered by Caixa Econômica Federal can see, for each Brazilian municipality, the name and date of birth of the person in receipt of the benefit and his/her children.12 Also, as established by Article 23 of Law 10,836/2004, preference is given to women as the main recipients of the benefit, emphasizing the role of the mother in the family structure, even though Bolsa Família uses the concept of nuclear unity and not family unit.13 From the 25,385,573 families enrolled at the Unique Database in March 2013, 52.05 percent had a per capita family income of up to R$70.00 per month; 72.93 percent up to R$140.00, and 90.74 percent had a family income per person of less than half a minimum wage To pay the benefits to the families that fulfilled the conditionalities of Bolsa Família (as mentioned previously, a total of 13,773,543), the amount spent in the month was R$2,101 million, not taking into account the resources used in the administration of the program In 2010, the expenditure in Bolsa Família reached R$13,493.3 million, the equivalent of 0.37 percent of the GDP From 2005 (when Bolsa Família was in place in all municipalities of the country) to 2010, the expense in absolute terms nearly doubled, but as a proportion of the GDP it increased by a mere 0.05 percent (ANFIP, 2011) In that year, its funding came almost totally from Contribuiỗóo para Financiamento da Seguridade Social (COFINS), a federal taxation The management of Bolsa Família is decentralized and shared by the national government, individual states and the Federal District, and municipalities Hence, the federal entities are partners in the implementation and control of Bolsa Família and in the feeding of the Unique Social Program Database (CUPS) The federal government pays the beneficiaries directly by means of its Caixa Econômica Federal bank and transfers to the municipalities the necessary resources for the management of the program The amount transferred depends on the Municipal Decentralized Management Index (IGD-M), a mechanism created by the federal government to monitor and incentivize good management.14 The regional distribution of Bolsa Família, as one would expect, is highly concentrated in the Northeast region (51.34 percent), Brazil’s poorest region, followed by the Southeast (24.73 percent), the most populated region Several studies have assessed the impact of Bolsa Família in the reduction of poverty and extreme poverty, in income inequality, in 192 Rosa Maria Marques the permanence of children in school, among others areas of performance An estimate, based on information from the National Survey by Sample of Households (PNAD), carried out by IBGE, finds that, in 2003, a year before the implementation of Bolsa Família, 12 percent of the population lived beneath the poverty line (internationally defined as PPP US$1.25 per day).15 In 2008, this rate had dropped to 4.8 percent Poverty, in turn, had decreased from 26.1 percent of the population to 14.1 percent (IPEA, 2010) With regard to income inequality, Soares et al (2010) show that a 16 percent reduction observed between 1999 and 2009 is attributable to Bolsa Família, even though the income from this benefit does not reach 0.8 percent of the total income of families The apparent contradiction of these participations can be explained by the focalization in the program, that is, by the fact that the funds are destined only to the poorest As to poverty and extreme poverty, considering the maximum per capita income from the conferral of the basic and variable benefits, these researchers have concluded, when analyzing the evolution of the drop observed since 1990, that Bolsa Família contributed to an acceleration of the fall In turn, when considering school attendance, the research of Silveira Neto (2010) points out that Bolsa Família is responsible for an overall increase of 2.2 percentage points in frequency of student attendance This impact is 2.2 percentage points in urban areas and 3.0 in rural ones In regional terms, the greatest impact is found in the Northeast (2.2 percentage points), followed by the Southeast (1.5 percentage points) In order to perceive the magnitude of these results, one must take into account that the school attendance frequency in the Southeast was already 97.3 percent, and in the Northeast, 95.7 percent Finally, regarding the conditionalities related to health and health care, even though there is no published research covering this topic, some indicators allow us to infer the betterment of health in the population in receipt of Bolsa Família This was the case for underweight children ranging from birth to four years of age (for which the indicator measures the percentage in the total number of children in the same age group), which declined from 4.8 percent in 1996, to 1.8 percent in 2006) Furthermore, the decrease in infant mortality for children under year, which persisted in a descending trajectory, was much more accentuated in the Northeast than in other regions, suggesting an improvement in feeding, in antenatal care of pregnant women and follow-up of the breastfeeding mother and baby, all of which could have influenced the performance of this indicator16 (IPEA, 2010) Social Policy against Poverty in Brazil 193 It is also necessary to observe the importance of the resources from the Bolsa Família to the poorest municipalities in the country A study performed at the very start of the implementation of this program estimated that, for instance, in Pedra Branca and in Santo Antão, municipalities in the states of Ceará and Pernambuco, respectively, both in the Northeast region, the resources transferred by Bolsa Família amounted to 43 percent and 40 percent of the local governments’ available income (their own resources plus constitutional transferences) of those municipalities (Marques, 2005) From this, one may discern that, beyond improving the situation of the families that benefit from the program, these resources are also important for improving the wider economic situation of the municipalities, since they present a large multiplicative income effect Lastly, given the attention the program receives in the media, it is necessary to mention that, as to the possibility of fraud within Bolsa Família, Soares and Leichsenring (2010), based on information raised by the Federal Court of Audit, estimate that only about 1.09 percent of the beneficiaries are fraudulent This information not only clarifies that the reality of the program is different than that sometimes broadcast by the greater media, but also indicates that the cost of strict control would probably be too elevated, given the reduction in fraud that would be achieved Final remarks: comparative aspects of Bolsa Família, RGPS lower bound, and the continued benefit program When comparing the institutionalism of the benefit conceded by Bolsa Família and that of the lower bound of RGPS and BPC, one realizes that they lie in rather distinct fields of social protection Bolsa Família, backed by its own law, is a program not a right, and it is not contemplated in Social Security.17 Besides it being called a program, this comprehension is seconded by the fact that the 1st article of the Provisional Measure 132 and of Law 10,836 situates Bolsa Família in the “realm of the Republic Presidency,” and also by holding explicitly that “the executive power must make compatible the number of beneficiaries of Bolsa Família programme and the existing budget endowments” (single paragraph of Article 6, p 2) This means that the granting of the benefit is conditional on the existence of resources, which is not the case for the benefits guaranteed by the General Regime of Social Previdence (RGPS) and by the Continued Benefit (BPC) Both in the RGPS and the BPC, the right to receive the benefit is given by the access criteria not the resource availability 194 Rosa Maria Marques Furthermore, as already stated, it does not include Social Security, and it constitutes a government program This means that, legally, it can be discontinued or even terminated if a new president has a different understanding as to strategies for fighting poverty That does not mean that its possible termination would be politically easy, such is the impact in terms of the population benefited and, in several cases, in terms of resources received by families on the municipal level (Marques, 2005) However, although Bolsa Família does not integrate Social Security – the Articles 203 and 204, which deal with Social Assistance, make no reference to the program – the Law No 10,836 mentions its resources It says in Article 6: “The expenses of Program Bolsa Família will be met by allocated endowments from the federal program of income transference and the Unified Enrolment as referred to in its single paragraph of Article 1, as well as from other endowments from the Federal Social Security Budget, which may be consigned to the Programme” (Law No 10,836, p 2) As mentioned previously, resources from Cofins have been allocated to fund Bolsa Família The use of this source constitutes another alteration of the original design given to Social Security in 1988, among others Although in terms of volume, the resources allocated to Bolsa Família are relatively small, in comparison with other expenses in the branches of Social Security, it deepens the current dispute between them and facilitates the discourse of deficit in the RGPS (Ugino and Marques, 2011) It is interesting to note that Bolsa Família is based on the transience of the situation of the beneficiary, that is, it is assumed that the concession of the benefit and the requirement of the conditionalities create the condition for poverty to be overcome, in other words, for an income higher than the shadows of poverty In the case of monetary benefit, the simple tranfers raise the level of family income; in the case of the conditionalities, especially those of school attendance, the hypothesis is that the children and adolescents will be better prepared to join the labor market and receive higher incomes than their parents managed This hypothesis is highly influenced by the theory of human capital, in which the attributes of the individual define his or her insertion in the labor market In that sense, overcoming poverty takes place through the children and not the parents Given the short time the program has been in existence, no research confirms or rejects such a hypothesis Either way, disregarding the eventual impact of the future insertion of Social Policy against Poverty in Brazil 195 the offspring of benefited families, the Bolsa Família program does not alter Brazil’s structural determinants of poverty Another interesting comparison between Bolsa Família and the RGPS and BPC relates to the founding idea of a guaranteed minimum income Meanwhile, in the case of RGPS and BPC, access is ultimately a matter of merit (of having worked throughout life), the component with no conditionality in the BPC, for which the benefit is directed toward the very poorest population, and may be considered as the embryo of the minimal guaranteed income, derives from citizenship This component is founded as the recognition of the right of families to some minimum income and the understanding that the state must provide the access to such a minimum Even if the low magnitude of this minimal value is considered, its simple existence might become an instrument so that, in the future the right of every citizen to an income adequate for his or her needs is ensured, regardless of his or her role in the productive or social process Notes The labor market in Brazil, as in other Latin American countries, is segmented, presenting a formal market – in which all social rights are guaranteed – and an informal market, in which the worker is completely unprotected both in terms of social rights and employment rights In 2011, 44 percent of workers aged 16 or more were informal workers (IBGE, 2012) That society has undergone during the years of military dictatorship When compared to the poorest 20 percent, the ratio was 80 times bigger That is, that the beneficiaries of such policies, mainly children and adolescents, would possess capabilities qualitative different from their genitors, derived from the conditionalities of the program The expression social vulnerability refers to the consideration of characteristics of individuals as responsible for their situation Thus, one stops taking into consideration that, in capitalist society, different social and economic segments were submitted to the logic of capital accumulation If poor and very poor segments of society seem to be excluded, they integrate the industrial reserve army, enabling high exploitation rates (Marx, 1982) A pension is paid to rural workers when they reach the age of 65 for men and 60 for women For rural workers, no previous contribution to the system is required The only requirement its proof of previous labor Data available from the MDS website According to the Secretary for National Income and Citizenship from MDS In June 2013, 12,449,465 basic benefits were paid 10 In the case of families who migrated from programs that were terminated at the creation of Bolsa Família, and who would face reduction of their total benefit, Law 10,836, in its 2nd article, ensures the payment of an Extraordinary Variable Benefit, whose value is calculated on a case-by-case basis (Brasil, 2004) 196 Rosa Maria Marques 11 Unlike AUH, the total value of the benefit is handed over to the beneficiary on a monthly basis 12 There is a debate among researchers of related areas about the legitimacy of this level of transparency, since the beneficiaries of Bolsa Família are the only ones subject to this unrestricted openness to the greater public, even though the amount paid in benefits is not individualized at the dataset In my view, this system encrypts a poverty stigma, which by no means contributes to the better management of the program 13 The choice of the woman as the main beneficiary is in line with several international experiences According to paragraph 1§ of the 2nd article, it is considered “a nuclear unity, eventually enlarged to contemplate other individuals with maintain bonds of family or affinity, that forms a household group, living under the same roof and that is supported by the contribution of its members” (Brasil, 2004, p 1) 14 IGD-M is calculated based upon four factors: 1) operations, formed by the mean of quality and integrity of information in CUPS, by the updating of the database, by the information about school frequency, and information on health conditionalities; 2) adherence, expressing whether the municipality has adhered to the Unified System of Social Assistance; 3) information regarding proof of evidence about the IGD-M resources spent, which indicates if the manager has registered in SUASWEB the referred proof of expense to the Municipal Council of Social Assistance; and 4) information about the approval of expenses of IGD-M resources by the Municipal Council of Social Assistance The weight attributed to each factor, just like the minimal values required for each, as well as the incentives, among other determinants of the value transferred to the municipalities can be found in the MDS website, under http://www.mds.gov.br/bolsafamilia/gestaodescentralizada/gestaodescentralizada-municipal-igd-m 15 This unit refers to the Purchase Power Parity (PPP) of US$1.25 from the United States 16 For Brazil, the infant mortality rate dropped from 22.6 (2004) to 19 (2008) In the same period, in the Northeast, the rate went from 32.7 to 26.7 In spite of the reduction, the rates, national and regional, are still at a high level 17 Social Security is the name given by the Constitution to the public social protection It is formed by Social Previdence (which concedes benefits to cover the risk of aging, death, disablement, disease, maternity, labor accident, and requires previous contribution), Social Assistance (BPC); Health Care (constitute of the Brazilian Unified National Health System – SUS in Portuguese, no contribution necessary); and by Unemployment Benefits (given only to workers in the formal market) References Andrenacci, L and Repetto, F (2006), Universalismo, ciudadanía y Estado en la política social latinoamericana, http://www.rau.edu.uy/fcs/dts/Politicassociales/ Andrenacci_Repetto.pdf, accessed on 29th June 2011 Associaỗóo Nacional dos Auditores Fiscais da Receita Federal (2011), Análise da Seguridade Social em 2010 Brasớlia: ANFIP e Fundaỗóo ANFIP de Estudos da Seguridade Social Social Policy against Poverty in Brazil 197 Boyadjian, A C P B (2009), Os programas de transferência de renda em países específicos da América Latina e no Brasil Masters dissertation: Programa de Estudos Pós-graduados em Economia Política – Pontifícia Universidade Católica de São Paulo São Paulo: PUCRS Brasil (2004), Law 10.836/2004 Brasília: DF., http://www.planalto.gov.br/ ccivil_03/_ato2004–2006/2004/lei/l10.836.htm, accessed on 8th July 2011 Economic Commission for Latin American and Caribbean – Eclac (2000), Social Panorama of Latin America – 1999–2000 Santiago Chile —— (2009), Social Panorama of Latin America – 2009 Santiago Chile Fleury, S (1998), Políticasocial, exclusióny equidad en América Latina en los 90 Nueva Sociedad, 156: Jul/Agosto, sp, 1998, http://www.nuso.org/upload/ articulos/2698_1.pdf, accessed on 8th July 2011 Instituto Brasileiro de Economia (FGV) http://www.ibre.fgv.br, accessed on 29th June 2011 Instituto Brasileiro de Geografia e Estatística (IBGE) (2012), Síntese dos Indicadores Sociais: uma anỏlise das condiỗừes de vida da populaỗóo brasileira 2012 ftp://ftp ibge.gov.br/Indicadores_Sociais/Sintese_de_Indicadores_Sociais_2012/pdf/ ativ_pessoais_pdf.pdf, accessed on 19th July 2013 Institutos de Pesquisas Aplicadas – IPEA (2010), Objetivos de Desenvolvimento Milờnio Relatúrio Nacional de Acompanhamento Brasớlia, IPEA, marỗo, 2010 http://agencia.ipea.gov.br/images/stories/PDFs/100408_relatorioodm.pdf , accessed on 8th July 2011 Instituto Cidadania (2001), Projeto Fome Zero: uma Proposta de Seguranỗa Alimentar para o Brasil São Paulo Marques, R M (2005), A importância Bolsa Família nos municípios brasileiros, Cadernos de Estudos Desenvolvimento Social em Debate, 1, Brasília: Ministério Desenvolvimento Social e Combate Fome, Secretaria de Avaliaỗóo e Gestóo da Informaỗóo Marx, Karl (1982), O Capital São Paulo: Difel Ministério da Previdência Social (MPS) (2011), Anuário Estatístico da Previdência Social – AEPS 2011 Brasília, MPS, s.d., http://www.mpas.gov.br/arquivos/ office/1_121023–162858–947.pdf, accessed on 21st July 2013 Pochmann, M., Campos, A., Barbosa, A., et al (2004), Atlas da exclusão social, volume 3: os ricos no Brasil São Paulo: Cortez Silveira N., and da Mota, R (2010), Impacto Programa Bolsa Família sobre a frequência escola: estimativa a partir de informaỗừes da Pesquisa Nacional por amostra de domicớlio (PNAD) In IPEA Bolsa Famớlia 20032010: avanỗos e desafios Brasília: IPEA, volume Soares, S., De Souza, P H G F., Osório, R G., and Silveira, F G (2010), Os impactos benefício Programa Bolsa Família sobre a desigualdade e a pobreza In IPEA Bolsa Família 20032010: avanỗos e desafios Brasớlia: IPEA, volume Soares, S., Leichsenring, A R., (2010), Precariedade, laboral, volatilidade de renda e a cobertura Programa Bolsa Família In IPEA Bolsa Família 20032010: avanỗos e desafios Brasớlia: IPEA, volume Solano, C., B (coordinator) (2009) Proyecto: La reforma social en América Latina en la encrucijada Transferencias condicionadas de ingresos o universalización de la proteción social Fundación Carolina Grupo de Trabajo Pobreza y Políticas Sociales CLACSO, December 2009, http://pt.scribd.com/doc/56286801/ Comparacion-Programa-Jefes-y-Jefas-de-Hogar-Desocupados-Plan-Familia- 198 Rosa Maria Marques por-la-Inclusion-Social-y-Asignacion-Universal-por-Hijo-Argentina-Salta-Alva, accessed on 12th November 2011 Ugino, C K and Marques, R M (2011), As reformas previdenciárias brasileiras: o cerco proteỗóo social Textos & Contextos, Porto Alegre, v 11, 2012 World Bank (2000), World Development Report 2000/2001: attacking poverty Washington, D C.: Oxford University Press Index Arestis, Philip, 17–18, 88–117 Asian-centered economy, Brazil in, 99–112 austerity, 15, 21, 29–32, 35, 38 banking crisis, 37 banking system average spreads on loans to individuals and working capital, 58 liquid position of top private banks, 59 monetary policy, 57–9 BB (Banco Brasil), 55, 58, 81, 96, 97 BCB (Central Bank of Brazil), 47, 50–1, 53–62, 68–9, 142 exchange rate, 113 macroprudential measures, 82, 86n6, 98–9 monetary policy, 79–85, 97–9 Selic rate, 72n20 Berlusconi, Silvio, 30, 40n6 Bichara, Julimar da Silva, 17, 88–117 Bielschowsky, Ricardo, 128 Big Bank, 83, 92 Big Government, 83, 92 BNDES (Banco Nacional de Deenvolvimento Econômico e Social)), 55, 65–8, 71n14, 72n17, 81, 96–7, 126, 148, 152, 154–5, 158 Bolsa Familia, 14, 84, 196n14 beneficiaries of, 196n12–13 cash transfer program, 126–7, 146–8, 180n10 comparison with RGPS and BPC, 193–5 creation of, 196n10 description and impact of, 190–3 legitimacy of, 196n12 Lula government, 126–7 percent of GDP, 114n9 Project Zero Hunger, 186 social policy, 20, 96, 187–8 BPC (Continued Benefit), 185, 189, 193–5, 196n17 Brazil business cycles synchronization, 108–11 economic growth, 43, 52, 70–1, 138–40, 157–60 economic stabilization, 4–6 evolution of manufacturing sector, 105–6 GDP, 12, 14, 46, 138, 139, 144 Gini Index, 139 income distribution, 145–51 merchandise exports, 102 metropolitan unemployment, 140 productivity and investment, 103–4 technological intensity of exports and imports, 106 trade balance, 10, 59–65, 78, 107, 137, 142, 145, 158 see also structural changes in Brazil Brenner, Robert, 32, 34 Bresser-Pereira, Luiz Carlos, 18–19, 121–34 Brittan, Samuel, 30 business cycles synchronization, 108–11 Callinicos, Alex, 15–16, 29–42 capacity utilization rate, 49 Cardosa, Fernando Henrique, 5, 8, 77, 94 macroeconomic tripod, 122, 123 policies and outcomes, 94, 95 Cardoso, José Celso Jr., 19–20, 162–81 Carrea, Vanessa Petrelli, 19, 137–60 CEF (Caixa Econômica Federal), 20, 55, 58, 81, 96, 97, 155, 190–1 199 200 Index China, 77, 88 Brazil’s relationship with, 99–100, 106, 108, 110–11 economic growth, 17, 35, 44, 50, 64, 79, 124, 138, 1434, 145 merchandise exports, 102, 116n22 productivity and investment, 103–4 class C, 8, 1289 COFINS (Contribuiỗỏo para Financiamento da Seguridade Social), 115n15, 191, 194 commodity exports, growth strategy, 9–11 Constitution (1988), 146, 147, 185–6, 188, 196n17 construction industry, growth in, 154–7 consumption, 48, 72n16, 92, 163 Brazil, 6–9, 11, 138, 143–6, 153, 156, 159 family, 138, 150 household, 34, 44, 52, 55, 67, 82–3, 151 mass, 128–9, 140–1 self-, 167, 186 countercyclical policy credit policy, 55–7 expansionary, 123, 125, 155 fiscal policy, 11–12, 15–16, 43, 71, 79, 81–5, 88, 155 Lula administration, 96, 97–8 response to financial crisis, 47–8, 50–2 Coutinho, Luciano, 126 Cruzado Plan, 127, 171 Cunha, André Moreira, 17–18, 88–117 CUPS (Unique Social Program Database), 191, 196n14 deindustrialization account deficits, 123 Dilma administration, 129, 130 Dutch disease and, 127 problem of, 9, 11, 17, 90, 93, 105, 113, 114n1 process of, 107, 112–13, 114n1, 116n22, 143 de Paula, Luiz Fernando, 16–17, 43–72 developmental decade, 20, 163, 164–5, 169, 174–6 development pattern, 162 debate about, 179n2 “developmental” decades, 163, 164–5 labor disruption in 1990s, 164–5 liberal decade, 163, 164–5 restructuring in 2000s, 164–5 see also labor market Dos Santos, Claudio Hamilton, 19, 137–60 Draghi, Mario, 32, 39 Dutch disease, 124–6, 127, 129, 131 economic growth, Brazil, 43, 52, 70–1, 138–40, 157–60 economic policies and performance, 77, 79, 84–5 Cardoso administration, 94, 95 contributors, 100, 115n16 critical analysis of leftist governments, 79–83 Lula administration, 96, 97–8 macroeconomic indicators, 78 macroeconomic stability, 83–4 recent performance, 94–9 Rousseff administration, 96, 98–9 search for coherence and robustness, 112–14 total factor productivity growth, 104, 115–16n17 economy after global crisis, 43, 70–1 capacity utilization rate, 49 coefficient of manufacturing imports, 62, 63 CPI monthly inflation, 56 exchange rate, 59–65 financial policy, 53–9 fiscal impulse, 65–7 fiscal policy, 65, 68–9 indicators of public indebtedness, 69 industrial output and retail sales, 49 monetary policy, 57–9 policy responses during contagion of crises, 44–53 process of stabilization, 4–6 profitability of exports, 62, 63 recent performance, 94–9 Selic rate, 55–6, 72n20 total credit growth rate, 54, 55 total domestic crisis, 54, 55 trade balance, 59–65, 142 Index education spending, 8, 114n9 EMU (Economic and Monetary Union), 36, 38 End This Depression Now! (Krugman), 32 estimation of exports’ functions, 64 euro crisis, 15–16, 66, 71 Eurozone, 12, 30, 36 exchange rate, after global crisis, 59–65 exports merchandise in selected economics, 102 technological intensity of, 106 FAP (Family Allowance Program), 148, 149 Ferrari-Filho, Fernando, 17–18, 77–86, 88–117 Filho, Niemeyer Almeida, 19, 137–60 financial crisis austerity and neoliberalism, 29–32 balance of payment, 46–7 countercyclical measures, 47–8 effect-contagion of, 48 exploring alternatives, 37–9 overaccumulation, profitability and financialization, 32–7 public expenditures, 52–3 world rate of profit, 33–4 see also economy after global crisis fiscal impulse, economy after global crisis, 65–7 fiscal policy, 65 consistency, 68–9 tax reductions, 81, 86n5 Fishman, Robert, 16 floating exchange rate, 5, 11, 18, 80, 95, 97, 121, 123–5, 137, 156 foreign trade structure, evolution of, 106 Friedman, Milton, 39 GDP (gross domestic product) annual growth rates, 138 Brazil, 12, 14, 138, 139, 144 contribution to GDP growth, 46 evolution of tax load, 146 fiscal balance as share of, 66 growth and share of world total, 101 201 leftist governments, 77, 78 real growth 2000–2012, 45 Germany, 30, 35-7, 103–4 GFCF (gross fixed capital formation), 151–3, 155–6 global financial crisis, 88–9, see also financial crisis Greece, 30, 37–8, 59 Greenspan, Alan, 34 Grexit, 38 gross capital formation, 104 growth strategy based on commodity exports, 9–11 based on internal consumption, 6–9 GSSS (General Social Security System), 147–9 Hanasaki, Claudio Satie, 19–20, 162–81 Harman, Chris, 32 heterodoxy development, 107 economic policies, 79, 83–4 economists, 93 neodevelopmental, 21 perspective, 107, 112–13, 115n11, 115n16 traditions, 18–19, 89–90, 112 IGD-M (Municipal Decentralized Management Index), 191, 196n14 IMF (International Monetary Fund), 5, 35–7, 41n30–1, 45, 81, 95, 97 Imports, technological intensity of, 106 income distribution labor market, 172–4, 179n6 policies and structure, 145–51 India, 77, 88, 103–4, 106, 110, 138 inflation targeting, 5, 11, 18, 50, 77, 80, 82, 84, 94–9, 121–5, 134, 137, 143, 156–7, 176 insourcing, Brazilian exports, 9–11 internal consumption, growth strategy, 6–9 Japan, 31, 35, 36, 103–4 202 Index Kaldor’s laws, 90, 93, 102 Keynesianism, 16, 19, 34 activist policy, 71 economic policies, 90–3, 113, 114n4, 114n6 Keynesian moment of crisis, 31 macroeconomics, 125–6 perspective, 32, 34, 82–3 Koo, Richard, 35 Korea, Republic of, 102 Krugman, Paul, 32, 36, 38 labor markets, 165–76, 167 balance and perspectives, 176–9 growth of informality in labor relations, 166–8 income distribution, 172–4, 179n6 poverty levels, 174–6 productivity of selected economies, 103–4 quality of jobs, 169–71 social security coverage, 170–1 stagnation of incomes, 171–2 structured nucleus of Brazilian, 167 total employment, 167 unemployment levels, 168–9 Lapavitsas, Costas, 38 Lehman Brothers, 31, 45, 48, 52, 53, 57, 58, 65–6, 84 liberal decade, 169, 171, 174–6 LSA (Law of Social Assistance), 148, 149 Lula da Silva, Luiz Inácio, 6, 44, 77, 80, 94 development goals, 112–13 macroeconomic tripod, 122, 124, 126–30 policies and outcomes, 96, 97–8 machinery and equipment sector, investment, 153–4 macroeconomic indicators, 78 macroeconomic management, 89–94 macroeconomic matrix, 131–2, 134 macroeconomic stability, 83–4 macroeconomic tripod, 121, 133–4, 143 administrations, 122 basic policy, 180–1n12 components of, 124–6 Dilma administration, 126, 130–3 Lula administration, 126–30 triangle of impossibility, 122–6 macroprudential measures, BCB (Central Bank of Brazil), 82, 86n6, 98–9 Mantega, Guido, 126 manufacturing sector coefficient of imports, 62, 63 evolution of, 105–6 external deficit of, 106–7 Marques, Rosa Maria, 20, 185–96 MDS (Ministry of Social Development and Fight Against Hunger), 190, 196n14 Melo Modenesi, André de, 16–17, 43–72 merchandise exports, 102 Merkel, Angela, 30, 32 Mexico, 95, 100, 106–7, 187 merchandise exports, 102 productivity and investment, 103–4 Minha Casa, Minha Vida (My House, My Life), 81, 96–7, 115n14, 155–6 Mundell’s impossible trinity, 122, 125 NCM (New Consensus Macroeconomics), 77, 79, 82, 85, 90, 94, 99, 113 neodevelopmental heterodoxy, 21 neodevelopmental hybridity, 18 neoliberalism, austerity and, 29–32, 33 Neri, Marcelo, 128 Neto, Silveira, 192 Obama, Barack, 29, 36 PAC (Growth Acceleration Program), 80, 81, 115n10, 115n14, 153–5, 157, 180n12 Papandreou, George, 30 payroll taxes, 66–7 Piketty, Thomaz, 21n2 Pires, Manoel Carlos, 16–17, 43–72 Plano Brasil Maior (Greater Brazil Plan), 51, 82, 84, 96, 99 Plano Real, 4, Index PNAD (National Survey by Sample of Households), 164, 177, 192 Pochmann, Marcio, poverty, see social policy against poverty primary surplus, 5, 11, 48, 65, 72n15, 80, 83, 94, 97, 99, 121, 123–5, 133–4, 137, 143, 159 profitability of exports, 62, 63 PT (Partido dos Trabalhadores – Workers’ Party), 17, 44 public indebtedness indicators, 69 public investment, role of, 151–3 public spending, 8–9, 35, 95, 96, 158 QE (quantitative easing), 31, 35 rate of profit, 33–4 Real Plan, 56, 95, 128, 171, 180n11 Reinhart, Carmen, 35 re-primarization, 17, 105, 113, 114n1 retail sales, 44, 48, 49 RGPS (General Regime of Social Security), 185, 189, 193–5 Roberts, Michael, 32–4, 40n14 Rogoff, Kenneth, 35 Rousseff, Dilma, 13, 17, 19, 21, 79, 94, 126 development goals, 112–13 economy after global crisis, 50–1 industrial policy, 99, 115n15 macroeconomic tripod, 122, 130–3 policies and outcomes, 96, 98–9 reaction to euro crisis, 56–7 RPPPS (Retirement and Pension Payments to Public Servants), 148, 149 Sarkozy, Nicolas, 30 Selic rate (Special Clearance and Escrow System), 55–6, 69, 72n20 SIF (Severance Indemnity Fund), 148, 149 Sino-centered global economy, Brazil in, 99–112 social assistance, 8, 128, 147, 148, 189, 194, 196n14 social mobility, 174–6, 180n8 social policy against poverty 203 background and coverage, 185–8 Bolsa Familia program, 187–8, 190–3 BPC (Continued Benefit Program), 188–9 comparing RGPS (General Regime of Social Previdence), BPC and Bolsa Familia, 193–5 continued benefit program, 188–9 minimal level of minimum wage, 188–9 Project Zero Hunger, 186–7 RGPS, 185, 189, 193–5 minimal level of minimum wage, 188–9 social security, 7, 19, 21n1, 30, 51, 141, 147, 150, 163–6, 170–1, 175, 185 social spending, 21n1 social vulnerability, 187, 195n5 socioeconomic development model, 11–13 South Korea, 35, 103–4, 106 Souza, Jessé, 128 stock-market Keynesianism, 34 structural changes in Brazil, 137–8, 142, 157–60 composition of exports, 142 composition of imports, 144 construction industry, 154–7 foreign scenario, 141–5 growth drivers (demand components), 140–1 growth from 2004–2011, 138–40 growth rate and demand’s components contribution, 144 household consumption, 150, 151–3 income distribution, 145–51 machinery and equipment sector, 153–4 role of public investment, 151–3 welfare and social security public transfers, 148, 149 Summers, Lawrence, 29 synchronization, business cycles, 108–11 tax system, 117n27 evolution of tax load, 146 relief policies, 12–13, 51, 66, 72n16 tax burden, 10, 146 Taylor, John, 122 204 Index Tombini, Alexandre, 130 total factor productivity, 104, 115–16n17 trade balance Brazilian, 10, 78, 107, 137, 142, 145, 158 exchange rate and, 59–65 Unemployed Insurance, 148, 149 unemployment, 19–20, 91 Hartz IV reforms, 36 insurance, 47, 81, 98, 140, 147, 148 levels of, 168–9, 176, 177, 180n8, 188 macroeconomic indicator, 78, 79 metropolitan, 139, 140 natural rate of, 39 reduction, 12 rise, 6, 175, 185 United States, 14, 29, 79, 90, 103–4, 107, 145 Washington Consensus, 4, 17, 88, 90, 94, 95, 112, 115n16 wealth effect, 34, 72n20 Weidmann, Jens, 32 Welfare and Social Security Public Transfers (ST), 19, 138, 146, 148, 149 Workers’ Party corruption scandal, 132 election, 133 leadership, 44, 128–9, 134 PT (Partido dos Trabalhadores), 17, 44 World Bank, 5–6, 96, 104, 116n25, 186–8 world economic crisis, 11–13 ... A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data The Brazilian economy today : towards a new socio- economic model? / Anthony.. .The Brazilian Economy Today This page intentionally left blank The Brazilian Economy Today Towards a New Socio- Economic Model? Edited by Anthony W Pereira Professor and Director, Brazil... post-doctoral research in the Department of Economics at the University of São Paulo (2009) He was a visiting researcher at the Food and Agriculture Organization at Latin America and Carribean in Santiago