Independent Brazil Shrinks in 200 Years

Text about Brazil's economy in the last 200 years is part of the Frente e Verso series, which aims to discuss mistakes and successes in the country's trajectory over this period and recommend future perspectives

São Paulo

On September 7, 2022, Brazil will reach the 200th anniversary of its independence from Portugal, less, in economic terms and relative to the world, than it has been over the last two centuries.

In the first centenary, in 1922, while an impressive international exhibition was being held in Rio de Janeiro, then the federal capital, and the future was discussed in depth, the country was getting ready to grow rapidly, consolidating itself, in the 1980s, as a of the ten largest economies in the world.

The bicentennial, however, takes place in a context of stagnation that has lasted for four decades and the relative shrinkage of the country in the global economy. There is no long-term project, and the demographic conditions that drove much of the 20th century's advances are virtually exhausted.

In retrospect, it is possible to consider that the Brazilian population growth and the transition from the countryside to the cities in the last century were protagonists in the growth of GDP (Gross Domestic Product) — not the economic dynamism and productivity gains that leveraged other economies, especially the North American and, more recently, Asian.

Unlike countries that are more competitive today, Brazil in the last 200 years has been characterized by maintaining a closed economy, with very little involvement in international trade, and fundamentally patrimonialist, without great distinction between public and private businesses.

In blocking economic modernization, protectionism and patrimonialism were decisive, in the opinion of economists and historians, in maintaining Brazil as one of the countries with the highest concentration of income on the planet throughout recent history.

According to the Global Inequality Report (2022), from the Paris School of Economics, the richest 10% in Brazil capture 58.6% of the income and 80% of the accumulated wealth, well above the global average. Protected from external competition by the paltry 1.1% share of global trade flows, according to the World Trade Organization, and favored by the State through subsidies, parliamentary amendments and billionaire contracts, some strata of society continue to take possession of a good part of the national wealth..

According to the specialist in population studies José Eustáquio Diniz Alves, professor for two decades at the National School of Statistical Sciences of the IBGE (Brazilian Institute of Geography and Statistics), after independence, and for 160 years, Brazil was an emerging nation in the internationally, with strong population growth.

"Since Independence, with few episodes of setback, Brazil began to grow more than the world average. But it was between 1930 and 1980 that we took a leap in 'demoeconomic' growth, with the population increasing 3.3 times [from 37 million inhabitants to 121 million] and the GDP, 18.2 times," said Alves.

200 years ago, Brazil and most countries in the world could be considered poor. Although they remain at a similar level, they now fall into the "middle income" level. In Brazil, in the last 30 years alone, the extreme poverty rate in the population dropped from 34.3% to just over 10%, according to FGV Social.

The point is that nations much poorer than Brazil a few decades ago, such as China and India, have progressed more rapidly — hence the relative loss of Brazilian participation in the world economy. "The problem is that, from now on, with the rapid aging of the population, Brazil will have great difficulty in making a new leap, as it did in the past," said Alves. The forecast is that, in a period of 50 years, Brazil will make the transition from 7% to 28% of the elderly population (65 years and over), something that occurred in France over 200 years.

From a historical perspective, Brazil's post-Independence economic trajectory can be divided into three major periods: timid growth and decline in per capita income from 1822 to shortly after the turn of the 20th century; accelerated rates from that point through 1980; and the following four decades, to the present day, of crises and near stagnation, with the brief exception of the mid-2000s to the beginning of the last decade.

Translated by Kiratiana Freelon

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