Edmar Bacha GRD ’68, the former head of the Brazilian Development Bank, discussed Brazil’s recent major economic growth and the structural challenges the country currently faces to a crowd of roughly 30 professors, law students and undergraduates on Wednesday evening.
Bacha, who is currently serving as the director of the Casa das Garças Institute for Economic Policy Studies in Rio de Janeiro, explained how the country transitioned from a nation undergoing re-democratization in 1985 to one experiencing a middle-income trap beginning in 2011. During the talk, Bacha said Brazil has seen vast economic success over the last 20 years, but that its citizens still suffer from some social problems.
“The Brazilian people are very active in political problems, and there’s increasing consensus on what these problems are — high taxes, too much social security, too little investment and awful education,” Bacha said. “The problem for politicians is how to package a particular program in a politically attractive way.”
Following the country’s return to a democratic system, the gap between lower- and higher-income families has decreased, unemployment has decreased to a level of 5 percent, government debt is falling and real interest rates are the lowest in Brazil’s history, Bacha said. Though the country experienced high debt levels during the 1980s, he added, it has become a creditor abroad with a quickly rising gross domestic product.
Still, Brazil faces structural challenges such as rising inflation rates that accompany rapid GDP growth, a costly social security system and a low rate of investment — 18.7 percent of GDP, compared to the South American average of 21.7 percent, Bacha said. He added that the nation will age quickly because the rate of children born per woman has fallen significantly in the last 50 years, so it could face bankruptcy if social security is not reformed.
In addition, the quality of Brazil’s education system remains low — in 2009, Brazil ranked 63rd in the Program for International Student Assessment rankings.
“Although we have put every kid in school, the problem is that they aren’t learning anything,” Bacha said. “We haven’t been able to provide them with the skills necessary to face the labor market.”
Yale law professor and Director of the Law School’s Latin American Linkages program Daniel Markovits said he thought Bacha did a good job of breaking down complex economic concepts.
“I think it’s deceptively difficult to lay out the 20-year course of an economy in a way that [audience members] can understand,” Markovits said.
Paulo Costa ’14, a Rio de Janeiro native, said he enjoyed the lecture but would have liked to hear Bacha’s opinions on how he expects the Brazilian economy to perform in the coming years.
“He gave the audience a nice balance of all of the important things that have happened in Brazil recently,” Costa said. “He was mindful about the fact that people were interested in Brazil, but not necessarily very knowledgeable about the country.”
Bacha wrote his thesis for a Ph.D. in economics on the Brazilian and international coffee markets.