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Human development: what’s holding Brazil back?

. Dec 09, 2019
income inequality brazil development The Paraisópolis Favela to the left, next to luxury buildings. Photo: Shutterstock

The 2019 edition of the United Nations’ Human Development Report is out—and it paints a grim picture of Brazil. Between 2017 and 2018, the country advanced little when it comes to healthcare coverage, education, and income—despite a positive trend that had started in the 1990s. The results come less than a week after the OECD’s Pisa test (Program for International Student Assessment) showed stagnation over the past decade.

As it was with the Pisa scores, socioeconomic disparities may be the root of the problem.

</p> <p>The UN&#8217;s <a href="http://report.hdr.undp.org/">Human Development Index</a> is a measurement of countries&#8217; achievement of key socioeconomic indicators—running a score between 0 and 1. Over the past year, Brazil advanced a meager 0.001, to an HDI of 0.761—higher than the average for Latin America and the Caribbean (0.759), but behind nations such as Mexico. Despite being one of the top 10 largest economies in the world, Brazil ranked only 79th of 189 countries.</p> <p>As the UN warns, it would be unfair to compare a country’s performance to the previous ranking due to the likelihood of the figures being revised at a later point. So, the best way to measure progress is by analyzing the country’s own indexes over time.</p> <p>In this sense, between 1990 and 2018, Brazil’s saw increases in life expectancy at birth (an extra 9.3 years), mean years of schooling (+4.1 years), expected years of schooling (+3.2 years). Brazil’s GNI per capita increased by around 39.5 percent between 1990 and 2018, says the report.</p> <p>However,<strong> </strong>looking at data from 2015 on, Brazil’s progress seems to have flattened (or even retreated, in the case of Gross National Income per capita, one of the three HDI components), which may have been influenced by the severe economic recession of 2014–2016.</p> <div class="flourish-embed" data-src="visualisation/1070121"></div><script src="https://public.flourish.studio/resources/embed.js"></script> <h2>Human development index: Caveats</h2> <p>Since 2010, the UN has adopted the IHDI, which is essentially HDI, except discounted for inequalities. “The ‘loss’ in human development due to inequality is given by the difference between the HDI and the IHDI, and can be expressed as a percentage. As the inequality in a country increases, the loss in human development also increases,” explains the UN.</p> <p>If Brazil’s HDI for 2018 is discounted by IHDI, it falls to 0.574—a loss of 24.5 percent due to inequality in the distribution of the HDI dimension indices. In comparison, Colombia and Mexico would lose 23.1 percent and 22.5 percent respectively, while average losses for Latin America and the Caribbean are 22.3 percent.</p> <p>However, even though inequality is something of a trademark in Brazil, the Human Development Report shows that this is more of a global issue. When compared to other BRICS countries since 2000, Brazil is not the only one presenting stark differences between income growth in the bottom 40 percent of the population and the top 1 percent—which normally grow way beyond the average.</p> <p>In the Brazilian case, the bottom 40 percent grew 14 percentage points more than the average between 2000 and 2018. But the top 1 percent also saw higher growth than the average. “Since all groups cannot grow more than the average, this means that middle-income groups were squeezed with lower than average growth,” according to the report.</p> <p>The data also shows that Brazil had a significantly smaller average income growth than its peers (5% v. 361% in China, 122% in India, and 72% in Russia) since 2000, pointing to a much lower economic growth.</p> <p>Income concentration measured by the share of national income held by the top 1 percent has exponentially grown in Russia, China, and India since the 1980s, while it remained relatively stable in Brazil, close to 30 percent and still above all the BRICS peers.</p> <p>For comparison, Brazil held second spot among the most unequal economies in the world, only behind Qatar, with the <a href="https://g1.globo.com/mundo/noticia/2019/12/09/brasil-tem-segunda-maior-concentracao-de-renda-do-mundo-diz-relatorio-da-onu.ghtml">top 1 percent gathering 28.3 percent of the income</a>.&nbsp;</p> <h2>Future inequalities</h2> <p>One of the qualities of the 2019 report is the UN&#8217;s efforts to measure other kinds of inequalities that go beyond economics, such as those created by gender bias and issues that may impact people in the future, such as technological and climate changes.</p> <p>Regarding the first aspect, the Gender Development Index puts Brazil in the group of countries with high equality in HDI achievements between women and men, with a female to male ratio of 0.995, above Mexico, Colombia and the Latin America and Caribbean average. But while Brazilian women are expected to live longer and stay in school more than men, they earn significantly less, as the female GNI per capita is USD 10,432, v. USD 17,827 for men.</p> <p>When it comes to climate change, Brazil will face the challenge of improving its HDI without increasing its carbon emissions—as currently, the most developed economies are also the biggest polluters. Regarding technology, the UN believes that instead of only slashing jobs, technologies such as machine learning may help to improve productivity and shift functions—instead of clerks, there will be more storage employees, for example.

 
Natália Scalzaretto

Natália Scalzaretto has worked for companies such as Santander Brasil and Reuters, where she covered news ranging from commodities to technology. Most recently, she worked as an Editor for Trading News, the information division from the TradersClub investor community.

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