inclusive growth, social development and antipoverty transfers in brazil

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Inclusive growth, social development and antipoverty transfers in Brazil

Armando Barrientos, Professor and Research Director, International Research Initiative on Brazil and Africa

[email protected]

International Policy Seminar – Social development: A UK-Brazil Dialogue, London School of

Economics and Political Science, 14 November 2014

mailto:[email protected]

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The International Research Initiative on Brazil and Africa IRIBA

A three-year research programme established in January 2014 and funded by the UK

Government’s Department for International Development

Addresses two main research questions:

Is there a new Brazilian development model?

What lessons might Brazil’s success have for the economies of sub-Saharan Africa?

Phase 1 (2014) focuses on the first question; while Phase 2 (2015-2016) focuses on the

second question

Network of researchers in Universities in Brazil, the UK, the USA, Canada, Germany,

South Africa and the World Bank…. so far!

Outcomes: research papers and policy uptake, but also research networks

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Topics in Phase 1

1. Transforming Agriculture through Productivity Growth: Lessons from Brazilian

Agricultural Development

2. The Diversification of Agricultural Exports and Production from 1990-2012

3. Technological Catch-up and Indigenous Institutional Infrastructures: The Role

of EMBRAPA

4. Restructuring Brazil’s National Financial System

5. Institutions for Macro Stability: Inflation Targets and Fiscal Responsibility

6. Brazilian Anti-Corruption Legislation and its Enforcement: Potential Lessons for

Institutional Design

7. Infrastructure and its role in Brazil’s Development Process

8. Accounting for the Decline in Inequality

9. Antipoverty Transfers and Inclusive Growth in Brazil

10. The Impact of SENAI's Vocational Training Program on Employment, Wages,

and Mobility in Brazil

11. Tax, Redistribution and the Social Contract in Brazil

12. Synthesis paper: Is there a new Brazilian Development Model?

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Inclusive growth is the distinctive feature of Brazil’s recent performance

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Main findings from Phase 1

Brazil’s impressive development progress is grounded on a strong social and political consensus

on the need to tackle poverty and inequality, through a stable economy and inclusive growth.

Brazil developed a comprehensive and effective set of institutions to manage the economy

providing both stability and the fiscal space to support innovative social policies.

More effective institutions helped raise the productivity of agriculture, enabling Brazil to

become a major exporter. Long-term government investment in agricultural research provided a

crucial boost.

A combination of labour market (minimum wage) and social policies (social pensions and

human development income guarantees) have ensured the benefits of economic growth reach

the poorest Brazilians.

Despite significant progress, Brazil still faces big challenges. Investment in infrastructure has

proved insufficient and the effects form the global economic slowdown is resulting in

considerable stress on the social contract.

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Antipoverty transfers and inclusive growth 1

Bolsa Família (BF) is the flagship social assistance programme, but Previdência Social Rural (PSR)

and Beneficio de Prestação Continuada (BPC) are also important

Note: PSR is Previdência Social Rural; RMV is Renda Mensal Vitalícia a non-contributory pension programme replaced by the Benefício de Prestação

Continuada or BPC in 1996. BF is Bolsa Família. The Figure shows the stock of transfers in December of each year, except for 2013 which reports

the numbers in the last month available. Data Source: IPEA and MDS data available online at http://www.ipeadata.gov.br/ and

http://www.mds.gov.br/relcrys/bpc/indice.htm

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1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

mill

lion

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Brazil: Antipoverty transfers (millions)

PSR BPC BF

http://www.ipeadata.gov.br/

http://www.mds.gov.br/relcrys/bpc/indice.htm

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Bolsa Família’s focus on human development and its ‘productivism’ have strengthened its

contribution to inclusive growth

Impact on human development

Impact evaluation data [de Brauw, Gilligan et al 2012] show impacts

along a range of household variables: children’s nutrition; school

attendance [4pps, especially for girls and in the Northeast]; delayed

entry into the labour market by 1 year

Impact on poverty and inequality

BF accounts for 2pp of the 1999-2009 reduction in headcount poverty from 26% to 14%; and

1.6pp of a reduction in extreme poverty from 9.9% to 4.8%) [Soares et al 2010].

BF and BPC account for one third a 10% decline in the Gini 2000-2009.

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Impact on outcomes

Transfers raise, and stabilize, household income among poorest households

Transfers lead to improvements in household productive capacity, especially human

development among children

Impact on the distribution of these outcomes across municipalities

IRIBA research shows that Bolsa Família outcomes on girls’ school attendance across

metropolitan municipalities are larger for the municipalities with the lowest school

attendance rates

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Conclusions

The 1988 Constitution led to the emergence of social assistance in Brazil as a means to address

exclusion. Three main strategies: incorporating less advantaged workers in social insurance on

favourable conditions; transfers to older people in poor households; and human development

income guarantees to households in extreme poverty

Over time, all three strategies developed an institutional basis and grew in coverage, but Bolsa

Família becomes the flagship programme

Why have antipoverty transfers in Brazil have contributed to inclusive growth?

…because of a strong focus on human capital and a productivist orientation

How?

by facilitating an improvement in (mean) outcomes of lower income groups

by improving the distribution of outcomes across municipalities (Bolsa Família)

Issues for the UK: The contribution of effective social policies is essential to secure inclusive

growth; social investment is complementary to growth and human development; social

contracts are sustained by a concern for the least advantaged

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Check our website for regular updates at

www.brazil4africa.org

Twitter:

#Brazil4Africa

Video briefings:

http://bit.ly/IRIBAvideos

http://www.brazil4africa.org/

https://twitter.com/hashtag/Brazil4Africa

http://bit.ly/IRIBAvideos

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The distribution of girls’ schooling outcomes across municipalities?

School attendance outcomes

associated with BF positive and

significant up to the 0.5 quantile;

effect is small for a municipality

at the global maximum 8pp

increase in BF incidence needed

for a 1pp increase in school

attendance rate

Figure 4. The distribution of Bolsa Familia effects on school attendance rates of girls 6-15

years old across quantiles of a panel of municipalities 2003-2009

Source: Authors’ quantile regression panel data and OLS regressions. For quantile regressions, point

estimates and bootstrapped confidence intervals at 90% and 95% are included. All specifications

include all regressors, including per capita income, adult school level, employment structure,

household head characteristics, other individual characteristics, dwelling characteristics,

geographical area, as well as unobservable accounting characteristics. The sample size is 1,911 self-

representative municipal observations given by 7 observations for each of 273 self-representative

municipalities.

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0 .1 .2 .3 .4 .5 .6 .7 .8 .9 1Quantiles

OLS

inclusive growth, social development and antipoverty transfers in brazil

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