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.