The inequality and poverty problem in Brazil

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University of Waterloo
Department of Economics
Econ 383: Economic Development for Fragile Countries
The inequality and poverty problem in Brazil
Zuoyu Zhao
Nafeez Fatima
November 27, 2012

The inequality and poverty problem in Brazil
Brazil is the largest economic entity in the Latin America with the fifth largest geographical area in the world and a population of 196.7 million (in 2011). Brazil has achieved a significant economy growth in recent years, but the wealth is unevenly distributed among the various regions and ranks of society, resulting in an inequality problem which is inconsistent with the country’s economy scale. These problems have deep historical roots and had been ignored for a very long period of time. In this paper, the general situation of inequality and poverty as well as the causes are introduced and the inequality & poverty data for Brazil are explored and analyzed. The change of inequality status in recent years is measured in terms of Gini coefficient, size distribution of income, Lorenz curve and Kuznets curve. The status of poverty is measured by the concepts of headcount, the headcount ratio and the normalized poverty gap. The collected data shows that the levels of income inequality and poverty of Brazil have fallen since 2001. The positive factors that improve the income redistribution, such as the good performance of economy, globalization and demographic bonus are discussed. The policy supports, including the improvement of education, minimum wage, social security and assistance, are specially addressed. However, the wealth is still concentrated among a minority and serious social problems remain a trouble for the country. The economy growth is hindered and social problems of stability and justice still persist. To realize the radical change of the problem, essential reforms regarding to urban, land, tax and finance need to be implemented. And surely there are certain challenges ahead....
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