Last week I came across a story in Newsweek about a program that has helped Brazil weather the global economic crisis. According to the article, “since 2002, some 27 million Brazilians have climbed up to middle-income status, and inequality has fallen steeply. Most remarkable, the world economic crisis has not derailed this progress. While other countries slip backward, Brazil’s poverty and inequality rates are the same as they were 18 months ago.”

As a key factor, Newsweek (see the Dec. 7 issue) credits the success of Bolsa Família, a government program that provides a small monthly stipend to poor Brazilian families that keep their kids in school and vaccinated. Bolsa Família, Newsweek said, is “both effective and fiscally responsible: Brazil spends less than half of 1 percent of its GDP to aid a quarter of its 193 million people.”

After reading the article I had but one thought: brilliant!

According to the World Bank, which provides technical and financial support to Bolsa Família, the program has two important results: “helping reduce current poverty, and getting families to invest in their children, thus breaking the cycle of intergenerational transmission and reducing future poverty.”

But Bolsa Família is so much more than that.

Here we have a “newly industrialized country” trying to fully develop with a program that should be mutually irresistible to all eligible families AND the country.

Benefits to families:

• Families that would otherwise have nothing, now have access to money, which, according to the World Bank is mostly used to buy food, school supplies and clothes for the children.
• Children are given greater access to education, and more support from their families. There is a greater incentive for them to stay in school because by doing so, they’re helping their families. More education, of course, leads to higher paychecks and improved quality of life.
• Vaccinations protect not only those vaccinated from potentially deadly diseases, but also those around them. Additionally, according to the World Bank, “ill health is one of the primary causes for an individual or family’s slide into poverty.” Vaccinations allow children to attend more school and grow up to lead healthy lives, without costly medical expenses for treatment of diseases that, with vaccinations, should be eradicated.

Benefits to Brazil:

• Local economies win when families use their stipend to shop for supplies.
• A more highly educated population allows for a more skilled workforce; greater wealth; and more creativity, entrepreneurialism, invention, and innovation; all of which spur economic growth.
• A healthier population is one in which workers are able to regularly attend work and perform to their greatest ability. Additionally, healthy populations attract tourism, which benefits the economy as well.

Eradicating poverty is crucial to the development of the world. It is the entire mission of the World Bank and the purpose of the United Nations Millennium Development Goals. With Bolsa Família, Brazil is well on its way to becoming an advanced economy.

According a report from 2006 about Bolsa Família by Brazil’s Ministry of Social Development and Fight Against Hunger, the percentage of 5 to 17 year olds not attending school dropped from 12 in 1999 to 8.7 in 2004, while the percentage of people with 11 years of education or more increased from 19 in 1999 to 26.3 in 2004.

Additionally, the number of medical appointments per person rose from 1999 to 2004. As did the number of dentists and doctors per 1,000 people. On the other hand, the number of hospitalizations per people fell. Finally, child labor rates decreased from 16.6 percent in 1999 to 11.1 percent in 2004, while life expectancy at birth rose from 68.4 years to 71.7 years.

As far as innovation and competitiveness are concerned, according to a report by the Boston Consulting Group, Brazil is a rapidly developing economy, with 14 companies on the 2009 BCG 100 New Global Challengers.

Bolsa Família has been so successful that, according to the World Bank, almost 20 other countries have developed their own, similar programs. Even New York City has a version of Bolsa Família, called Opportunity NYC, which provides monetary rewards to poor students who improve scholastically, parents who take care of their kids’ health and parents who work a certain number of weekly hours to support their families. Perhaps the rest of the country could benefit from similar programs.

What do you think? Does Bolsa Família make economic sense? Is it something that other countries, including the United States, could and should invest in?

– Stephanie

December 16th, 2009 | No Comments Share |
Tags: Bolsa Familia · Brazil · competitiveness · developing countries · economy