Essays in Honor of Keith B. Griffin
Edited by James K. Boyce, Stephen Cullenberg, Prasanta K. Pattanaik and Robert Pollin
Chapter 5: The Impact of Policy Reforms on Rural Poverty in Brazil: Evidence from Three States in the 1990s
Steven M. Helfand and Edward S. Levine Introduction This chapter analyzes the puzzle of what happened to rural poverty in Brazil in the 1990s and why. The 1990s were a period of considerable policy reform and economic change. In response to the debt crisis and the exhaustion of the import substitution model, beginning in 1988 the Brazilian government rapidly liberalized trade. Throughout the 1990s the state reduced the extent and scope of its interventions and deregulated many markets. Simultaneously, the Brazilian economy struggled with hyperinflation, and the government adopted numerous stabilization plans between 1986 and 1994, when the Real Plan finally succeeded in taming inflation. Interestingly, the agricultural sector outperformed the manufacturing sector in the context of the debt crisis of the 1980s, and outperformed both manufacturing and services in the neoliberal environment of the 1990s. The positive performance of agriculture as a whole is one factor that might have led us to expect a decline in rural poverty in the 1990s. There were a number of forces however that suggested an increase in rural poverty or at least a more nuanced assessment. Firstly, agricultural growth was extremely heterogeneous across regions, crops and farm sizes (Helfand and Rezende, 2004). The Center-West for example, where extremely large farms produce many exportables, was a booming region in the 1990s. Increased demand for labor in this region might have contributed to reducing rural poverty. The South, in contrast, experienced substantial problems of competitiveness. This is a region where small and medium-sized farms produce...
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