April 24, 2014
Declining expectations for Brazilian promises
For the Herald
Doubts about whether it will become superpower
As it prepares to host the World Cup for the second time in its history, Brazil elicits more doubts than enthusiasm about its economic future. When FIFA, the world football organization, announced in 2003 that Brazil would host the World Cup, Brazil was widely seen as a rising star among emerging markets. Though the largest nation in Latin America remains the overwhelming favourite to win the cup for the sixth time in its history, the odds are against Brazil fulfilling its potential to become a world economic superpower.
The first time Brazil hosted the World Cup was in 1950. At the time, the country was experiencing a period of rapid economic growth. Under the model of import-substitution policies, Brazil was industrializing rapidly. Plans to build a new capital city were underway (though Brasilia was actually built between 1956 and 1960). Though it is estimated that more than half of the 52 million inhabitants lived in poverty-with only 34 percent living in urban areas-the rapid industrialization resulted in an urban explosion. Migration from rural areas and the better living conditions-including better access to health, education, lower infant mortality and longer life expectancy-produced a population explosion. By 1960, Brazil had more than 72 million people, with more than half of them living in urban areas. As it is well known, Brazil lost the 1950 World Cup in the final game against Uruguay-the Maracanazo. That defeat remains as the most humiliating moment in the nation’s successful football history.
More than the Maracanazo, the real defeat story of those years was Brazil’s inability to become the first Latin American nation to become industrialized. The pressure generated by the rapid population growth rendered the industrialization efforts insufficient. The country developed, but not fast enough to meet the needs of the fast growing population. Eventually, the import-substitution economic model failed and the country underwent a period of economic and political crisis that lasted throughout the 1980s. A decade after the restoration of democracy in 1985, Brazil once again was headed in the right direction. Under the leadership of president Fernando H. Cardoso, Brazil once again attracted the world attention. Grouped together with Russia, India, Russia and China in the BRICs, the group of the largest emerging economies in the world, Brazil generated high expectations about its economic and political future. In 2002, with the election of president Lula, a former labour union leader who was born in poverty and became a national leader during the struggle to restore democracy, Brazil seemed ready to take on the role of regional and world leader. The campaign to bring the World Cup and the Olympic games to Brazil championed by the Lula administration was intended as a indication that Brazil was ready to assume the rights and responsibilities of a world leader.
Just a few months before the opening game of the World Cup, many people doubt that Brazil will live up to the high expectations it set for itself. Preparations for the most important Football event in the world are behind schedule. Several of the infrastructure projects initially announced by the government will not be completed-some will have been abandoned altogether. Though Brazilians still expect to organize the most memorable world cup ever, the event will not be the confirmation that Brazil is ready to enter the select club of world leaders.
In addition, the Brazilian economy is slowing down. After seven percent growth in 2010, the economy has grown by a meager annual average of two percent since. Though the population living under poverty has declined from more than 30 percent in 2005 to less than 20 percent in 2012, the slowing economy offers a less optimistic outlook for the coming years. Inflation (six percent in 2014) and the persistent high levels of inequality represent additional hurdles for a country that has struggled to remain on the path of economic growth and social inclusion.
Politically, the government of leftwing President Dilma Rousseff has also ran into problems. Street protests in 2013 highlighted the growing discontent in urban areas with the lavish spending in world cup preparations and the insufficient spending in social and poverty alleviation programmes. Though President Rousseff’s approval has improved since the protests-and she remains favourite to win re-election in October-the political shake up of last year highlighted the fragile nature of the social and political stability in one of the world most unequal countries.
The world will be paying close attention to Brazil in 2014. Just as football fans everywhere make their bets on Brazil’s favoritism to become the next world champion, observers ponder the country’s chances for economic growth. Though winning the cup will not be easy, it will be even more difficult to implement reforms to foster competition, improve government spending efficiency, combat corruption and improve productivity. The fact that the prospects for Brazil’s economic growth are so low might be in itself an opportunity for Brazil to surprise the world in 2014. Though winning the world cup will make Brazilians happy, restoring economic growth would be even better, both for Brazil and for the rest of Latin America.