Tuesday, January 08, 2008

Explaining Brazil's Growth

Randy hits the nail on the head in regards to this Roger Cohen piece. Yes, Brazil has reached unprecedented levels of growth, and it looks like it will not be ephemeral (in the way the "economic miracle" of the late-1960s/early-1970s was). While I disagree with much of Cohen's overall worldview in how he phrases the question of Latin American growth, I do essentially agree that there's no time like the present for Brazil. And Randy is absolutely right that Latin America has benefitted enormously from the fact that George Bush did not stick to his pre-9/11 pledge to pay much more attention to Latin America. Everytime presidents have made such pledges, Latin America has suffered territorially, democratically, in terms of civil rights, and economically. From Colombia's loss of Panama so the U.S. could have a canal, to the murder of hundreds of thousands of people, indigenous or "leftist," from Guatemala to Argentina, to the unbearable burden of debts imposed by IMF and World Bank neoliberal demands, Latin America has suffered when the U.S. pays lots of attention to it. To some degree, the growth the continent has witnessed (which certainly has not been totally even or smooth from place to place and from sector to sector) has happened more because 9/11 sidetracked Bush, not in spite of it. And certainly, there are many other complex factors that have also contributed to this growth.

In the case of Brazil, the one thing I would add to Randy's commentary is the effect Lula's administration itself has had on the growth. Over the past 5 years, Lula has made a huge effort to invest the government's money back into Brazil in the form of social programs, infrastructural improvement, and long-term investment, something his predecessor, Fernando Henrique Cardoso, refused to do, instead agreeing to every neoliberal policies and demand that came his way, privatizing anything and everything he could (including free public universities, an effort which mercifully failed), and refusing to invest the government's money back into Brazil. Brazil's economy is doing better than it has in over 11 years. The dollar has fallen to 1.75 reais to the dollar, which is good for Brazil's consumption rates as it makes imports cheaper, which in turn is helping to level the purchasing power of Brazilians of most classes (for example, you see people of the working class and even the poor now walking around with MP3 players, having computers and DVD players in their homes, and having cell phones). Brazil's GDP grew 5% in 2007 alone, and by some indicators, Brazil's growth for 2007 was second only to China. To a large extent, I think a lot of this can be attributed to Lula's policies, which have been open to governmental investment and establishing trade relations with other members of the so-called "developing" world, such as China and African Nations, as well as Brazil's South American neighbors.

This is not to say Lula is a saint, or that there are no flaws in his policies. Certainly, the environmental front is one area where I have some genuine concern with the effects of Lula's administration. Police violence, particularly in the favelas, is only getting stronger (more at the initiation of state governors than Lula himself, but he is in stronger contact with them than the U.S. president is with governors there). And while the purchasing power of the "average" Brazilian has increased, the income-gap is still one of the largest in the world. However, there is no doubt that Brazil has done wonderfully in the last 7 years or so (as my wife said, "I know I'm a little partisan, but really, seeing how much better things are now than they were at the beginning of 2002...for the first time in my life, I feel really good about where Brazil is and where it's going"), and this can in no small part be attributed to Lula.