Has Macroeconomic Policy Been Pro-Poor in Brazil?

Over the last 25 years, Brazil has experienced profound economic changes. Following the international economic instability of the late 1970s and the debt crisis of the early 1980s, Brazil launched structural adjustment programmes with the intention of solving external account imbalances and controlling high inflation rates. In 1990, Brazil undertook a major break from a century-long era of import-substitution strategy (ISI) that left its economy essentially closed towards the end of the 1980s, and introduced economic reforms involving trade and capital account liberalization, the privatization of state companies, the deregulation of markets and a successful stabilization plan. These reforms have been reshaping the economy very rapidly and are giving rise to economic transformations. Table 14.1 shows, however, that the pre-reform per capita output growth rate is significantly higher than that of the post-reform period (1990–2004). The social indicators are also disappointing. Poverty is at a very high level for a middle-income country and has been reduced only very slowly, while income inequality is not only at a very high level, but has also increased over time. To the extent that structural reforms are widely understood to be conducive to growth and be pro-poor, these statistics suggest that something went wrong.