Political Risk Latin America Blog @PolRiskLatam

Brazil’s north-east: Catching up in a hurry

Posted in News and Articles, Political Risk by politicalrisklatam on May 23, 2011

by The Economist, May 19th, 2011.

The country’s poorest region is narrowing the gap with the prosperous south.

In 1983 Jornal do Brasil, a newspaper in Rio de Janeiro, sent a reporter to Brazil’s north-east to cover a drought. He found starving residents eating rats and lizards. Since then, the country has made strides. Yet the north-east remains Brazil’s poorest region: it has 28% of the country’s people but just 14% of its GDP. A fifth of the area’s adults are illiterate, twice the national rate. And it holds more than half the 16m Brazilians who live on less than 70 reais ($43) a month. For decades it has exported workers to the kitchens and construction sites of the rich cities in the south-east.

Recently, however, the north-east has become Brazil’s star economic performer. In the past decade the region’s GDP rose by 4.2% a year, compared with 3.6% for the country as a whole. Last year Pernambuco state’s economy grew by a China-like 9.3%.

Bolsa Família, Luiz Inácio Lula da Silva’s much-lauded anti-poverty scheme, has been important, says Marcelo Neri of the Fundação Getulio Vargas, a research institute. But other government policies have helped more. Three-quarters of the growth in incomes since 2003, when Lula became president, came from earnings, not handouts. In real terms the minimum wage has risen by around 60% over the same period, with the greatest benefits felt in the north-east. The institute reckons that Crediamigo, the state-owned Banco do Nordeste’s micro-credit programme, has lifted more than 1m north-easterners out of poverty. (continue reading… )


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