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Home Publications Blogs Beat the Press Brazil’s Per Capita Income Did Not Grow by 200 Percent Over the Past Decade

Brazil’s Per Capita Income Did Not Grow by 200 Percent Over the Past Decade

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Tuesday, 31 January 2012 05:05

By Mark Weisbrot

An article in Saturday’s New York Timesclaimed that Brazil had “tripled its per capita income over the past decade.”  In fact, Brazil’s real per capita income (per capita GDP) has grown by about 30 percent from 2001-2011.  

The article notes that “some of that increase has to do with its [Brazil’s ] overvalued currency”, but (1) even this cannot account for the vast difference between 200 percent and 30 percent, and (2) even if it all of this “growth” were due to currency appreciation, the measure used would still be wrong.  Brazilians earn and spend about 90 percent of their income in domestic currency;  the correct measure of their income growth is therefore in their own currency, adjusted for inflation. That has grown about 30 percent per capita over the decade.

Brazil would look like quite a different country today if it had really tripled its per capita income over the past ten years.

The article also presents a somewhat misleading impression of Brazil as compared with Argentina, which is common in the media, where Brazil “now flexes its economic muscle,” and “Argentina is the dean of the club of nations utterly obsessed with their decline” (an Argentine scholar quoted in the article).  Although the article notes that Argentina had a “robust recovery after defaulting on its debts,” the reader is left with the impression that Brazil has been an economic success story as compared with Argentina.

The chart below shows real per capita income in Argentina compared with Brazil (on a purchasing power parity basis).  It can be seen that, even though Brazil has greatly increased its growth rate since 2004, Argentina has pulled ahead so rapidly since in recent years that the gap has widened enormously.  Income per person is now about 40 percent higher in Argentina than in Brazil. Since income is much more unequally distributed in Brazil than Argentina, this income gap means an even wider gap for the poor and the majority of the population.

Per Capita Income: Argentina and Brazil

argentina_vs_brazil_ppp

Source: World Bank.

Comments (3)Add Comment
...
written by fuller schmidt, January 31, 2012 1:20
Even reporters at the NYT seem suspicious of facts.
the burdens of default
written by charliebaker15, January 31, 2012 1:38
The NYT cannot afford to let pesky facts get in the way of their narrative. Argentina must be held accountable for defaulting on their debt, in their view, regardless of the fact that it resulted in improvement. I am happy to see the improvement in Brazil, but NYT must always show that debts must be paid. Thus the ongoing vilification of Argentina.
That's right....
written by Zé, January 31, 2012 5:14
I'm a Brazilian and I do live 9 months in Brazil and 3 in Argentina each year from 1999 on. What you show in the graph is a tangible thing for me. And as you pointed out, the tricky word here is "per capita" (i.e., assuming a "perfect communism"), as in Brazil the Gini coefficient is in slight rise, whilst in Argentina has a constant decreasing from 2003.

What NYT do is selling a system, in which the Argentinian way of success must be either hidden or vilified. What if Greece, Portugal or any other bullied country follow the "bad" path the Argentinians took?

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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