What can the BRICS teach us about reducing poverty?

An excellent new paper from the prolific Martin Ravallion, head of the World Bank’s research department, compares the successes in poverty reduction in three of the biggest beasts of the developing world: China, India and Brazil.

Between them, these countries are home to a bit less than half the world’s PR in China, India and Brazilpoor people, but it used to be a lot more. Each has combined market-oriented reforms with different kinds of social policy, producing different combinations of growth, inequality and poverty reduction that hold lessons for each other, and for other developing countries seeking their own paths out of poverty. Some highlights:

‘Brazil, China and India have seen falling poverty in their reform periods, but to varying degrees and for different reasons. History left China with favorable initial conditions for rapid poverty reduction through market-led economic growth; at the outset of the reform process there were ample distortions to remove and relatively low inequality in access to the opportunities so created, though inequality has risen markedly since.

By concentrating such opportunities in the hands of the better off, prior inequalities in various dimensions handicapped poverty reduction in both Brazil and India. Brazil’s recent success in complementing market-oriented reforms with progressive social policies has helped it achieve more rapid poverty reduction than India, although Brazil has been less successful in terms of economic growth.

In the wake of its steep rise in inequality, China might learn from Brazil’s success with such policies. India needs to do more to assure that poor people are able to participate in both the country’s growth process and its social policies; here there are lessons from both China and Brazil. All three countries have learned how important macroeconomic stability is to poverty reduction.’

Similarly this week’s Economist has an excellent 14 page special report on Brazil:

‘The country is enjoying probably its best moment since a group of Portuguese sailors (looking for India) washed up on its shores in 1500. Brazil has been democratic before, it has had economic growth before and it has had low inflation before. But it has never before sustained all three at the same time. If current trends hold (which is a big if), Brazil, with a population of 192m and growing fast, could be one of the world’s five biggest economies by the middle of this century, along with China, America, India and Japan.’

And long before then, if it continues on its current path, it will have become Brazil v US inequalityless unequal than the US (see graph). See here for previous blog on Brazil’s achievements on inequality.

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Comments

5 Responses to “What can the BRICS teach us about reducing poverty?”
  1. Estenieau Jean

    It is true that Brazil, China, and India has managed to reduce poverty within their respective sphere and they are the only three countries that somehow managed to move from the preconditions for take-off stage to the conditions for take-off. They acquired the name of emerging countries not because the World Bank has created a policy to bring them to a higher level but because the government of these countries, with the help of their population and system in place, decided to adopt new measures to reduce poverty.

  2. Christopher Smith

    What the BRICs are really teaching us is that there is no specific ideological path to development and sustained economic growth. China, India and Brazil are reserving the right to use multiple macro-economic tools to achieve their own objectives. As Stiglitz has suggested, manipulating globalization and your access to it is the most effective way to minimize risk while maintaining as progress as possible, whether that means letting the market grow to reduce poverty in China, or by expanding social spending in Brazil to reduce inequality. Can the IMF and World Bank ever really prescribe unfettered liberalism as a solution to under-development? I think not.

  3. Sharon N

    Thank you for this posting. I believe that the first way to ensure that there is SUSTAINABLE poverty-reduction within the BRIC nations is to develop constituencies that truly trust their governments. After this trust has been achieved, a strong civil society will have the responsibility of ensuring that poverty-reduction methods will continue within all nations. This is essential, since if citizens are aware of what their tax money (and aid funds) is being used for, then they are responsible for making sure that their governments fulfill promises that they make to their constituencies. In Brazil, where elections are widespread (unlike elections in India), perhaps the constituencies’ faith in the government also plays a large role in why this nation has been far more successful in alleviating poverty, as compared to other BRIC nations?

  4. jnorins

    I think Chris is quite right in the lesson provided to us by the B(R)ICs. Since the 1980’s the IMF and World Bank have been pushing one overarching model for development (liberalize your economies), which has not proved as effective in achieving growth as the advocates have promoted. Brazil, India and China provide examples of how governments can make globalization work for them, by finding ways to use open market access to boost their economies and recycling the monies back into the national development. I think that this purposeful focus on national development is what builds that sense of trust for governments among the citizenry that Sharon mentions. It is also quite interesting that the development strategy of Brazil suggests more equitable outcomes than the pro-liberalized market rhetoric of the US.

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