Brazil's Economic Model: What Can The US Learn From It?

Eduardo Campos and Dilma

Brazil is the world's sixth largest economy, and during the past decade, an estimated 40 million Brazilians have entered the middle class. In addition, Brazil's unemployment rate, even in the current economic downturn, is an enviable 5.4%, a rate significantly lower than those found in the US or the European Union.

To put it in one sentence, Brazil is a burgeoning economic power, with a growing middle class and low unemployment. Of course, we all know about the problems that continue to plague Brazil: corruption, an underdeveloped infrastructure, a huge gap between the very rich and the very poor, violent crime, a cumbersome bureaucracy and a complicated tax code. But in spite of all of this, the country is doing quite well when compared to other capitalist democracies.

An article in the International Herald Tribune by David Rohde, entitled "The Brazilian Economic Model," examines the economic development of the port of Suape, in the state of Pernambuco. Suape is the largest port in the Southern Hemisphere. Mr. Rohde attributes the economic growth to the centrist economic policies of Pernambuco's governor, Eduardo Campos, and President Dilma Rousseff.  The author writes that both of these leaders are "trying to mix liberal and conservative economic approaches."

He goes on to discuss Dilma's support for privatization of infrastructure projects, a payroll tax cut, and various pro-business measures she has taken.  He also points out her aggressive social policies, including the expansion of the "bolsa familia," initiated under former President Lula, which offers poor families a payment if they vaccinate their children and send them to school.

He concludes with this passage:

"Ms. Rousseff and Mr. Campos have their flaws but they should be applauded for breaking free of blindly ideological approaches to economic growth. In too many countries, politicians present voters with a stark choice between sweeping austerity or state largesse.

Europeans and Americans are not used to looking to Latin America for economic guidance. Pernambuco suggests they should."

Brazil and the US have very different political, economic, and social cultures, so any effort to implement Brazil's policies wholesale in the US would probably not be very successful, but the author raises a valid point. I found his criticism of "blindly ideological approaches to economic growth" to be particularly convincing, since there can be no question that polarized political philosophies have hindered meaningful economic growth in both the US and the European Union.

Instead of looking to the past, or to European countries, it's high time for the US to carefully examine the policies that have proven to be successful in Brazil, decide which ones might be worth trying out here, and then adapt them to meet our own needs.