KLEIN, Herbert S. & LUNA, Francisco Vidal.

Social and Economic change in Brazil, 1980-2000: the incomplete tranformation revisited. Publicada verso em portugus: Reflexes en torno a 500 aos de Histria de Brasil. Gonzles, Elda; Moreno, Alfredo & Sevilha, Rosario, org. Madrid, Editorial Atriel, 2001.

SOCIAL AND ECONOMIC CHANGE IN BRAZIL, 1980-2000: THE INCOMPLETE TRANSFORMATION REVISITED.

Herbert S. Klein Francisco Vidal Luna

Since 1940, Brazil has undergone a profound social and economic transformation, going from a predominantly rural and agricultural society to one that was primarily urban and industrialized. It has now emerged as the eight largest economy in the word (World Bank, 2000, table ). In this massive transformation there has been profound change for all members of the society. Yet for all this reformation, there still remain major divisions within the society between classes and regions in terms of access to wealth and change. Despite continual advances toward a more egalitarian society everywhere, the wealthiest classes and regions still retain a major share of the societies wealth and Brazil to this day is still the most unequal society within the modern industrial world in terms of resource distribution. According to the latest World Bank survey, no industrial or developing country ranks with Brazil in terms of unequal distribution - with a Gini Coefficient (the standard measure of unequal distribution of income) being a very high .60 in 1996 - a figure modestly exceeded by only three other countries in the world - Swaziland, The Central African Republic and Sierra Leone. Few countries rich or poor could show lower estimates of wealth holding by the poorest 10% of the population - which held less than 1% of the nations wealth - or as much as the top 20% , which held 64% of these resources - again a figure only these few African countries could reach (Word Bank Report, 2000 table 2.8). The aim of our paper is to determine if this pattern of unequal distribution is changing within Brazil as the country finally establishes universal primary education, begins to reach advanced world indices of well-being of its population, and opens and modernizes its economy. In the complex social and economic history of the past twenty years, is the gap between the richest and the poorest sectors and classes declining, does it remain constant or is it increasing? In 1980 one of us was part of a group of scholars which tried to analyze this question from the period from the 1940s to the early

1980s (Bacha & Klein, 1986). In this study, we wish to take up these same questions of incomplete change in the most recent period from 1980 to the present day, to see how much in fact has changed. We are especially interested in both regional and class distributions and whether the famous duality of Belindia still exist - a Southeastern sector with a level of life equal to Belgium and a northeast with a standard of living close to that of India. Has the gap increased, declined, or remained the same? To begin to analyze this question, we must first look at the profound changes in the Brazilian economy which has occurred in the last quarter century. The general consensus today is that the 1980s and 1990s were lost years in relation to the long term patterns of growth for Brazil. Growth was slow if not stagnant in this period, despite some very profound changes in the economy. Periods of hyper inflation were followed by those of stabilization and often recession, the economy went from one in which state enterprises dominated industrial production in a highly protected market, to an open economy in which private interests, many of them multi-nationals, dominated production. Like the other countries in Latin America, Brazil grew rapidly in the first years of the decade of the 1970s (for the basic changes over time see graphs 1). In the context of a strong expansion in the international economy and the abundance of financial resources from the first world, many countries in the so-called third world lived in a state of economic euphoria. These developing economics grew quickly, but at the cost of increasing dependence on attracting large quantities of low cost foreign capital. The result was an expanding foreign debt for most of these countries, and an unbalanced situation in their foreign accounts which in turn were financed with the entrance of more foreign capital with floating interest rates. In these years such a charge on the local economy remained at acceptable levels. But the two petroleum crises of 1973 and 1979, combined with the rise of interest rates in the United States profoundly changed this equation. By the second half of this decade, inflationary pressures in the internal market and increasing problems in funding the external debt forced the developing countries to find internal solutions to correct their growing economic imbalances. In the Brazilian case, despite these universal pressures, the government tried to further its plan of forced industrialization through import substitution, by an ambitious investment plan known as the Second National Development Plan ( or Plano Nacional de Desenvolvimento II -II-PND). The aim of this plan was to complement Brazilian industrialization by developing those sectors still dependent on imports and also eliminating the bottlenecks in the economic infrastructure. The plan envisioned a fully integrated industrial park with a strong potential for growth. The plan had a partial success, but required large inputs of capital with increasing dependence on foreign resources to finance the negative trade balances and to pay off the elevated foreign debt. In turn oil prices, especially in an importing country such as Brazil, helped to fuel inflationary pressures with prices going from around 25% per annum at the beginning of the decade to 85% per annum by 1980. In spite of the turbulence of this decade, Gross

Grfico 1: Variao do PIB do Brasil, 1948-1995 e Relao entre PIB de Sudeste e Nordeste em anos selecionados, 1948/1995
V ao P B ari I 15 R ao N / S el E E 40

10

30

20

10

-5 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998

Re la o SE/NE

PIB m dia m ov e l de 3 a nos

National Product grew at an impressive average of 8.6% per annum. Income per capital went from around $500 Us dollars in 1970 to over $2,000 by the end of the decade.

But the world economic crisis of the decade of the 1980s, which led to ever rising interest rates, had a negative impact on all the developing economies, especially that of Brazil, and especially after the Mexican crisis of 1982. Now all of these countries experienced the so-called Crisis of the Foreign Debt. The solution to the crisis, pushed by the IMF, and adopted in most countries, was to promote recessive economic policies to combat inflation, balance public accounts and promote positive international trade balances in order to generate the resources needed to service the foreign debt. The developing countries now changed from being importers of capital to exports of capital. In Brasil there was also an attempt to implant strong recessive measures, with a policy of monetary restriction, a rise in internal interest rates, control of state expenditures and a deep cut in salaries. The results were contradictory. On one hand, they provoked a strong recession, which began in 1981 with a fall of 4.3% in the GNP. The profound depression led to a restriction in demand and the government investments under the II PND increased the productive capacity of the country so that the negative balance in commercial trade was slowly eliminated so that by 1983 there was a positive trade balance. The inflation, however, now reached the extreme rate of

184% in 1984, nor was the government capable of balancing the state budget despite increasing taxes and cutting current spending and public investments. Much of this bourgeoning debt was caused by the interest payment on the debt due to the necessity to pay ever higher interest rates both to attract capital and to counter inflationary pressures. The public deficit grew principally from these loans rather than the usual costs of government operations. A runaway inflation, and increasing internal debt occurred in the context of the re-democratization of the country, with the first civil election in years being held in 1984. The elected government finally took office in March of 1985 after 21 years of military government. Such a government was forced to meet the pent up demands for social change, and it was politically impossible to maintain for more time the recessive economic policies, especially in relation to the restrictions on salaries. During the period of the military regimes the country had grown, a complex industrial park had been established and the State had become the principal player in the national economy, primarily through its state enterprises. But by the end of this period the economic situation was critical, with the economy burdened by both a large internal and external debt and on the point of entering hyper-inflation. The nation was experiencing ever greater unemployment, declining salaries, increased worsening of income distribution and unbalanced growth in the differing regions of the country. For many years there has existed a debate with respect to the character of inflation in Brazil, whether it was tied to demand or supply issues or to structural problems of the economy itself. In the early 1980s it was argued that there was an inertia to Brazilian inflation fed by a generalized indexation of prices. Given the inefficiency of traditional instruments and policies to control the growing inflationary crisis - which reached 13% per month - the Sarney government decided to try a new heterodox (or non-recessionary) plan which froze prices at current levels but which met worker demands for increases in real salaries. The so-called Plano Cruzado initially was therefore quite successful. In the manner in which it was implanted it provided an important re-distributive component which increased popular income and resulted in increased internal consumption and led to a rapid growth of the economy. But the lack of new capital flows, the high costs of repayment of the foreign debt and the new pressures of expanding consumption in the closed Brazilian market eventually led to new inflationary pressures along with a major deterioration in the external trade balance. At the beginning of 1987, confronted with these external difficulties and the closure of international financial markets to the countries of Latin America, Brazil was forced to declare a moratorium on the repayment of the international debt. But in spite of the profound economic crisis which marked the last years of the Sarney government, this period had the lowest unemployment rate for any period from 1980-1999 and the national economy grew at an average rate of 4.4%, per annum quite a different story from the first half of the decade when the economy stagnated. Although it was generally thought that the entire decade of the 1980s was an economic

and social loss, the country did grow in this second half of the decade and did improve many social indices. It also was a period of democratic consolidation which led to the Constitution of 1988. The first half of the 1990s however produced another profound crisis in both the political and economic life of the country, but also some rather fundamental changes in direction. The Collor government for the first time brought a neo-liberal position into power in Brasilia. While the moral discourse of the new government hid one of Brazils most corrupt administrations, and the government adopted one of the more economically irrational and authoritarian plans to stop inflation, it did seriously implant the idea of a fundamental change in the national political economy. Collors anti inflationary measures were profoundly recessive (the GNP falling by 4.2% in 1990), with quite negative social consequences in terms of rising unemployment and falling salaries, which accompanied the decline of government investment. Despite all their authoritarian confiscations these policies were incapable of controlling the inflationary processes. Inflation was halted for only a few months and then returned to its highest levels ever, reaching more than 20% per month by the end of 1990. At the same time, with little serious discussion or preparation, the economy was opened to the international market. Nor was the government interested in reducing the shock to the national economy of this brusk opening up to foreign manufactures. The Brazilian economy, which would reach one of the highest levels of industrial integration among the emerging economies, had a major state component within it, which included tariff protection and actual production by state owned industrial enterprises. The economy was closed, with a low coefficient of importation, and a technology which was adopted to this level of growth. The complexity and the success of this process of state intervention, whose origins go back to the 1940s, created forces opposed to the neo-liberal program of opening up of the economy, the privatization of state enterprises and an overall reduction of the role of the state in the economy. To justify this neo-liberal program, critiques of the Brazilian state model pointed to the experience of the Asian Tigers. But the history of these countries was different. They began with much less complex industrial structures, had higher levels of business concentration, more modern technologies and early integration into international markets. Moreover their process of growth showed few facets of a liberal policy as the great entrepreneurial groups were powerfully supported by the State, not through participation in production as in Brazil, but in the coordination of the process of industrial growth and international competition. In spite of the resistence of the traditional industrial forces, the process of globalization continued even after the impeachment of President Collor. But the first issue of importance faced by the new government was the crisis of inflation. In October of 1992, hen the new government was named, prices were increasing at 25% per month. In 1993, the future President of Brazil, Fernando Henrique Cardoso was named as Finance Minister and he carried out a new plan of stabilization, the fourth since the

Plan Cruzado of 1986. This new plan, called the Plano Real (Real Plan), finally succeeded in controlling inflation. Taking advantage of a favorable world economy and benefitting from the experience of the failed previous plans, the Real Plan attempted an innovation from previous stabilization plans. Indexation was ended after a period of common price variation and adjustment, and inflation continued to de-accelerate even without government control of prices. The major opening of the economy and the overvaluing of the national money, which served to anchor the program. were fundamental in the initial success of the plan. Even a devaluation of over 50% of the national currency in 1999 did not change the price stability and the year 2000 ended with an annual inflation rate of just 5%; a result not obtained in more than fifty years. The Real Plan furthered the liberal economic model begun by the Collor government. There were major reforms of the State, including the deregulation of the economy, the privatization of the state industrial companies, changes in the relations of labor and new rules for social security. Protection for national industry was removed and these industries had to compete on the international market to survive. National producers were obliged to modernize to survive such competition. The results were immediate: a part of the economy was in fact modernized, but another part of the productive sector simply disappeared in the face of international competition especially in a period when the national currency was over-values and thus favorable to imports. There also occurred a change in ownership of industry with the increasing participation of multi-nationals in local production and also a greater dependency on external inputs (components, capital goods and technology). Unemployment increased and the economy stagnated. for industrial production. The defenders of the plan called it a process of creative destruction. But there were strong critics of these various programs, especially to the to the over-valuation of the national currency (see Sayad, 2000, Batista, Jr. 2000, Tavares, 1999). The need to attract foreign capital necessary to finance these imbalances led to artificially high interest rates being maintained for several years, all of which created additional pressures on the international commercial balance of the country. These high interest rates both augmented the external debt and promoted the growth of the internal debt as well. The level of economic activity stagnated, unemployment increased and the social crisis became more acute. The success of this policy, at high social costs, needed time to have positive effects and a favorable international climate, with the arrival of abundant foreign capital at low interest rates. But the Asian crisis (1997) and the later Russian one (1988) showed the risks of this policy. The reaction of the government to the Asian cris was to accelerate reforms, a major fiscal adjustments and high interest rates to attract speculative foreign capital to protect the foreign reserves. Real interest rates rose to over 30% per annum. But the Russian crisis showed the impossibility of continuing this program. There was a flight of national capital, an explosive loss of reserves, and only the aid of the IMF and a devaluation of 50% avoided a greater crisis. The government was forced to abandon the anchor of the over-valued exchange rate, the most debated part of the Real Plan. Critics had suggested, from the beginning of the Plan, the

necessity of a controlled de-valuation of the real, fearing that an international crisis could provoke a flight of national reserves and force the government into an uncontrolled devaluation in the middle of an external crisis. In fact, the government was forced to adopt an uncontrolled devaluation. The magnitude of the crisis which occurred and its risks for other emerging economics explains the rapid and effective intervention and aid of the IMF. The devaluation of January 1999 was crucial in effecting a recovery of the national economy and resulted in the return to positive growth rates after several years of stagnation. The opening up of the national economy did lead to a modernization of national industry, but its competitive capacity depended on a devaluation of the national currency. The recuperation of the competitive power permitted a gradual reduction of the internal interest rates. Given these falling rates and a reasonable exchange rate, the economy once again began to grow, investments increased, and the trade balance moved toward equilibrium. The new perspectives of growth, the continued stability of prices, and the balancing of government accounts, created a favorable climate for foreign investment. Foreign capital was attracted into new productive investments, or bought already producing units through privatization or the purchase of private nationally owned enterprises. Foreign capital increased its relative participation both in the productive as well as financial sectors. The social consequences of these policies of the 1990s were twofold. On the one hand the Plan Real resulted in an immediate gain in the buying power of the majority of the population through the elimination of inflation. The breaking of the inflationary cycle of the Real plan was immediate in terms of the popular classes, allowing them to increase their consumption of basic goods from food to simple consumer durables (Lavinas:1998). Thus for the poorest groups in the society, health and standard of living improved greatly with the end of inflation in both the short and long terms. But at the same time, employment, which initially grew considerably, later passed through a period of stagnation and even decline, causing unemployment to increase greatly resulting in the expansion of the informal market with its low productivity and poor paying jobs and reducing the importance of the formal and more productive employment sector. Thus depending on how one evaluates these developments, one can also argue that the decade of the 1990s was also a lost decade in terms economic growth, at least in the short term. Like the decade of the 1980s, growth was low and irregular. In 10 years from 1970 to 1979 the economy grew by more than 100%. In the 20 years between 1981 and 2000 the growth was only 50%, while the population grew at 42%. On the other hand the country did change profoundly in this period. Not only was it democratized, but the economy was also changed in its basic structure. Import substitution was abandoned, the industrial park modernized and the economy was opened up to world currents in a profound way. The government role in production was replaced by multi-national corporations, and in the private sector as well as important

groups of national entrepreneurs could not survive the intense competition of the international market which required heavy capital investments to modernize. The overvaluation of the Real represented an additional factor in the loss of competitive capacity of these national groups (see graph 2). Surviving industries became far more productive but formal employment as a ratio of total employment declined

As these profound changes were occurring in the industrial sector, agriculture was also passing though a truly revolutionary period in these last twenty years. This sector was modernized in this period to such an extent that by the end of the 1980s it no longer depended on government subsidies (Dias & Amaral, in Baumann 1999). At the same time there was a major expansion of the agricultural frontier, incorporating a large part of the Center-West region into a capitalist agriculture. The occupation of this area occurred because of technical innovations which permitted its exploitation at the same time as the productivity of the land was preserved. This boom in modern agriculture in the Center-West attracted a large population movement from the older settled regions and created one of the richest agricultural areas in the country, resulting in a whole new regional dynamic within Brazil. It is our aim here to fully evaluate the complex economic changes which occurred since 1980 and evaluate their impact on society, even though we are still at the very

earliest stages of a very profound period of change. To begin with, there is little question that the so-called globalization and privatization processes , however beneficial in the long run, were accomplished at the at the cost of jobs for Brazilian

workers. It has recently been suggested that over half a million jobs were lost in privatization of the public sector - or 44% of the labor force within the 490 state enterprises studied (12/15/00 Folha de So Paulo 15 dezembro 2000, p.B11). Another large number of jobs were lost to mechanization and other productivity changes within the now internationally competitive private sector: factors which explain the increase in unemployment . In a society with an inefficient social security, this has led to a major

increase in the informal sector and the profusion of the poorest quality service jobs. Industrial employment itself actually fell from 19.2% in 1980 to 11.5% of the work force in 1999, a figure equal to what it had been in 1950. (Pochmann, 2000) All of these complex economic policies and developments are fundamental in explaining the fact that income distribution in Brazil, without question the worst in Latin America and the most unequal of any advanced industrial society has changed little in these twenty years. The top 1% still controls more resources than the bottom 50% of the population and has done so for the last half century if not before that as well (see graph 3). Well over a third of the population remains poor from 1980 to the present with only modest change over time (Rocha,2000, p.6). The Gini index of distribution shows Brazil at .60 - a level double that of most modern societies.

Not only has there been little change by class, but there has been little change by region during this period. The gap between the richest and poorest remains practicably unaltered from the first years of the 1970s when the income per capital of those living in the Northeast was just 25% of the per capita income of those living in the Southeast. It slowly narrowed in the 1980s to 33% (Oliveira e Silva & Medina, 1999) but since 1995 had been declining again and so reversing the previous trend (see graph 1 above). Another aspect which shows the disparities in the distribution of income is the

comparison of the distributive profiles within these two regions. The numbers for the poorest metropolitan regions show a worse pattern of distribution than the richest metropolitan districts, as can be seen in the Lorenz curve for the distribution of wealth in 1996 ( see graph 4).

All this lack of movement is even more evident in the failure of the land ownership to change in the rural area. From 1960 to 1985 small property owners (those owning less then 10 hectares) increased from 45% to 53% of the total farm ownership

group, but their relative share of lands only went from 2% to 3% of the cultivated land owners. Nor was there any significant movement at the top - those owning 10,000 hectares or more being less than 1% of the owners and controlling 15 to 16% of the land. There was practically no change among those owning 1,000 to 10,000 hectares as well (see table 1). Thus, as in the case of wealth in general, land in particular was surprisingly unchanged by the revolution in agriculture which has occurred in the past generation.

TABELA 1 Distribuio Percentual das Propriedades Rurais por Tamanho e Nmero de Estabelecimentos
TAMANHO DAS PROPRIEDADES (ha) Menos de 10 10 a menos de 100 100 a menos de 1000 1000 a menos de 10000 10000 e mais Total Fonte: NMERO DE ESTABELECIMENTOS 1960 1975 1980 44,9% 52,1% 50,4% 44,7% 38,0% 39,2% 9,4% 9,0% 9,5% 0,9% 0,8% 0,9% 0,1% 0,1% 100,0% 100,0% 100,0% REA 1975 1980 2,7% 2,5% 18,6% 17,7% 35,8% 34,7% 27,8% 28,6% 15,1% 16,5% 100,0% 100,0%

1985 53,0% 37,2% 8,9% 0,8% 0,1% 100,0%

1960 2,4% 19,0% 34,4% 28,6% 15,6% 100,0%

1985 2,7% 18,5% 35,0% 28,8% 15,0% 100,0%

Wood & Carvalho (1994/IPEA), tabela 9.1 p.230

While the perverse profile of income distribution in Brazil can be explained by differential access to lands, the level and quality of education, the tax structure, etc., in the short run there exists a high correlation between income distribution and changes in the rate of inflation. This relationship is caused by several factors. One the one hand, a large share of the poorest part of the population receives its income through contractual systems, such as salaries and pensions. There exists fixed norms which regulate the frequency of these adjustments. The acceleration of inflation and these delayed adjustments results in a significant loss of income to people who are on such contractual systems. Moreover the acceleration of inflation, usually provoked by factors not related to the labor market, such as oil prices, etc., caused a fall in real wages. But the government tried to avoid shortening the period of readjustments, in order not to provoke further inflation. When the adjustments were changed from a yearly to a semester basis, the rigidities of the system encouraged further inflation.

Even as new losses of real income led to adjustments of salaries on a trimester basis, once again inflation grew and salaries declined. The process created a non-ending spiral - more inflation, new loss of real wages, ever more frequent adjustments, and new increases in inflation. During the various monetary plans, inflation would be drastically reduced, salaries converted into the new currencies, sometimes temporarily protecting real wages, which in turn led to a betterment in the standard of living of the poorest part of the population. But inflation would quickly return at ever high rates. It was not the level of inflation itself which explained this process of wage/inflation spiral - but rather it was its acceleration which most influenced this process. If it had been a stable inflation, even at a high rate, there could have been contractual readjustments which would have defended workers again the inflation process (see graph 5) The absolute level of inflation, however, did affect the distribution patterns by other mechanisms. In the case of Brazil we are dealing with changes in prices which reached more than 50% per month, or close to 2% per day, virtually a standard level of hyperinflation. In such a situation complex processes are needed to preserve purchasing power. These require access to information and to sophisticated banking products rarely available to the poorest elements of the society. The poor, during the high run up of prices, thus paid proportionally a greater inflation tax than the rich. In a country were the minimum wage is less than $100 per month, almost all purchases are made with credit. In conditions of high inflation credit slowly dries up and finally disappears. Those most affected are the popular classes which need credit to purchase all their manufactured goods, even non durables ones. Thus inflation affects the poor by reducing their purchasing power and then by reducing and/or eliminating their access to credit. Moreover, while all classes are obviously affected, the rich are less affected in their consumption patterns than the poor. Thus the fluctuations in the national economy since 1980 have not reduced the

Tabela 2 Expectativa de Vida ao Nascer, por Regio -1930/80

1930/ 40 1940/ 50 1950/ 60 1960/ 70 1970/ 80 (A) (B) (C) (D) (E) 39,8 42,7 51,0 54,2 63,1 40,0 43,7 47,8 50,4 55,5 34,7 34,0 39,4 44,2 49,0 38,3 39,2 44,8 49,7 56,5 43,0 46,1 51,7 55,4 60,2 44,5 48,7 56,1 57,0 64,1 42,7 49,4 55,1 58,2 63,9 43,9 45,9 53,4 56,6 63,2 51,0 55,3 60,4 61,9 67,8 46,9 49,8 54,0 57,5 62,6 41,2 43,6 50,0 53,4 61,6 61% 65% 71% 77% Aumento entre as dcadas B-C C-D D-E 8,3 3,2 8,9 4,1 2,6 5,1 5,4 4,8 4,8 5,6 4,9 6,8 5,6 3,7 4,8 7,4 0,9 7,1 5,7 3,1 5,7 7,5 3,2 6,6 5,1 1,5 5,9 4,2 3,5 5,1 6,4 3,4 8,2

REGIO Amazonia Nordeste Setentrional NordesteCentral Nordeste Meridional Minas Rio de Janeiro So Paulo Paran Sul Centro-Oeste Brasil

A-B 2,9 3,7 -0,7 0,9 3,1 4,2 6,7 2,0 4,3 2,9 2,4

% da pior regio/melhor regio 68% Fonte:

Wood & Carvalho, IPEA, 1994, no.27, p. 108 tabela 4.2

distance between classes and regions. Although long term post 2000 changes induced by the opening up the national economy may lead to reductions in inequality, the short term changes which have occurred in the last twenty years have had little impact on reducing inequality in income and land ownership. Yet for all the rigidity of the income distribution figures, Brazil has undergone a profound social change in these past two decades in terms of health and education, which have dramatically transformed the society, as we will see from a more detailed study of these indices. These changes are most obviously related to such fundamental changes as increasing urbanization, education and sanitation - all of which profoundly influence these basic statistics.

Probably the most profound transformation of the population of Brazil has been the increasing advance of life expectancy for all Brazilians with a bettering of all health indices, along with the universalization of primary education, the decline of illiteracy and the decline of the poorer rural populations. From the 1940s onward these indices have been changing for the better, and there has been an even more rapid advance in these areas in the last decade of the 20th century. Life expectancy for all Brazilians went from 41 years to 68 years of age by 2000 (see table 2), with most of the change coming most recently. In the decade of the 1970s (from 1970 to 1980) Brazilians added 8 years to average life expectancy and another 6 years were added to the national average in just the five year period from 1995-2000 (CEPAL 2000, table 8). Moreover the differences between the poorest and the richest regions are declining. This difference went from being two thirds the rate of the richest region in the decade of the 1930s to over three quarters in the decade of the 1970s.

This increase in life expectancy has been paralleled by a decline in disease and mortality within the country. The key variable of infant mortality changed quite dramatically in the last few decades. In 1980-85 mortality of children 0-1 years of age was at 64 per thousand live births. By the quinquenium of 1995-2000 it had dropped to 42 per thousand (CEPAL 2000, table 42). Though this ratio was at the high end for most Latin American countries, Brazil was no longer at the very extreme end in this

figure. Size of families have also dropped dramatically along with a systematically declining birth rate. Moreover this decline cuts across regional and class differences. In general the poorer the region and the poorer the family, the larger the total fertility rate. In 1970 the poorest quarter of the population in terms of income had a total fertility rate of 7.5, which dropped to 6.1 by 1980; while the richest quarter went from 3.3 to 2.9 children in this latter year (Wood & Carvalho 1994, , p.180, table 7.2). Thus the poorest quarter had a greater decline in this rate than the richest part of the population, and this differing rate has persisted through to the census of 2000. This decline was so general, that the differences between regions and classes are progressively declining. Moreover this pattern of declining difference is also occurring between the urban and rural areas. Illiteracy also dropped dramatically in this period, going from a rate of 65% of the adult population (15 years of age and older) in 1900 to just 20% in 1991 (see above table 2). It is estimated that this rate dropped to 12% in the 10-69 age category in 2000 and would continue to decline in the coming years (Coelho de Souza, 1999:12, tabela 5). There is also a continuing decline between regions and between the urban and rural populations as universal primary education finally begins to take hold by the last decades of the century. Moreover the urban population has been expanding greatly in this period, to the point that by the census of 20000 it was less than 20% of total national population (see graph 6). This and the major improvements in government spending for education may account for the fact that between 1976 and 1996 the average number of years of school completed went from 3.2 to 5.3 years for the urban population (which by 2000 represented 81% of the total population of Brazil). Moreover, in this period, womens average years of schooling finally passed that of men, and had reached 5.4 years to 5.2 years for males by 1996. (Ferreira & Paes de Barros 2000,

cuadros 3 &4). But it should be remembered, as the latest CEPAL projections have suggested, that Brazil still has the worst level of illiteracy in South America, estimated to be even higher rate than that of Bolivia and more than double the rate in neighboring Paraguay (CEPAL,2000, table 33). This decline is clearly due to the progressive expansion of primary education. Between 1980 and 1997 the percentage of children going to primary school rose from 80% of the relevant age group of children in the first year to 97% in the latter period. There was also a great improvement in secondary education as well, were the ratios went from 46% of the children at the relevant ages to 66% in 1997 (Word Bank, 2000, table 2.10) Nevertheless, despite the declines in illiteracy and the increase in life expectancy and the relative declines of infant mortality and other associated health statistics, Brazil itself still represents in many ways one of the more backward nations even in the region of the Americas. Many of the basic socio-economic indices still show Brasil as belonging to the far less developed nations despite the fact that it is estimated by the Word Bank to be the worlds eight largest economy (World Bank, Report2000, table 1.1). At the same time, while there appears to be a general lessening of the health and educational differences between the poorest and the richest regions, and between the richest and poorest classes, the economic variables show persistent inequality at roughly the same levels. This distribution pattern is due to a series of factors embedded in Brazilian society, but also to the relative stagnation of the Brazilian economy in the last two decades. So long as growth rates remain below population growth rates - and the current growth rate of the population revealed by the latest census is 1,6% per annum in this past decade - then the class and regional disparities will change only modestly. There is little question, that much change has occurred within Brazil and that the Belindia disparity model is less clear cut as it once was. The current social indicators are signaling a profound change in Brazilian society and a move toward a more universal norm of social indicators regardless of class and region. But income and wealth still are very powerful markers of distinction by class and region, and these last twenty years have seen little change in this extraordinarily unequal distributional pattern, despite the very profound structural changes which have occurred in the economy (Henriques, 2000).

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