Lula’s 4 pillars of Brazil’s growth and comparing it with Manmohan’s

Lula, Brazil’s President since 2002 just finished his second presidential term on Jan 1, 2011. He  gave way to his former Chief of StaffDilma Rousseff.

He is called by many as Brazil’s most famous politician. And this is some turnaround. I remember reading Economist articles around 2002 where there was a q-mark over Latin American Leadership. Hugo Chavez in Venezuela had started these qs with his policies. And then Argentina was recovering from this huge crisis of 2001 and there were so many changes in leadership in that time. And Lula had no great track record to begin with, so people had almost taken for granted that Brazil would just decline or be a country of tomorrow.

But Lula’s term was anything but that. Brazil made major inroads in Global Economy Prospects. It is part of BRIC club, hosting both Olympics and World Cup Football etc.

Mohamed El-Erian of PIMCO has this article on Lula’s Presidential term. 

After winning a hotly contested presidential election in 2002, Lula overcame tremendous domestic and international skepticism to guide his country to a development breakout phase. As a result, he left the presidential palace last weekend with Brazil in a position to sustain high economic growth for many years, strengthen an already robust financial situation, and better meet the aspirations of the poorest segments of its society.

He inherited a country that was on the verge of economic implosion and default. Growth was languishing, international reserves evaporating, investors fleeing, and hyperinflation threatening. Markets for Brazilian sovereign debt were pricing an imminent and disorderly default.

He says Lula had four pillars:

First, and from his first day in office, Lula recognized that there were no inherent contradictions among financial stability, economic growth and improved social conditions. His approach was to explicitly embrace all three within a well- defined multiyear framework and maintain appropriate flexibility with regard to sequencing and mid-course adjustments.

Second, he understood the imperative of clear and timely communication. He was open about the serious challenges facing Brazil and the sacrifices required. And he didn’t hesitate to reiterate his vision for how Brazil would overcome these challenges.

Third, after clearly setting the strategic economic vision, he delegated implementation to a carefully chosen set of technocrats. He intentionally didn’t rely on experienced policy makers, choosing instead new faces that quickly became credible economic spokesmen both within and outside Brazil.

Finally, he understood the importance of institutional integrity and clear accountability. This was most evident in his respect for the operational autonomy of the central bank. It was also crucial to promoting broad respect for fiscal responsibility.

His successful term has a rub-on effect on just Brazil but for emerging economies in general:

Both current and future generations of Brazilians will remember their popular president for far exceeding even the most optimistic expectations about what Brazil could achieve in terms of economic, financial and social progress. Thanks to its domestic strength, today Brazil also plays an increasingly influential role on the international stage, particularly when it comes to trade and reform of the multilateral system.

Yet Lula’s global legacy may be even larger, coming from the impact that his successful pillars could — and should — have on the thinking of many current and aspiring politicians in other countries. If this were to materialize, Lula’s presidency will end up benefiting many more hundreds of millions of people around the world.

In all what a turnaround in perceptions for Lula.

On reading this, my attention immediately shifted to India’s Prime Minister Manmohan Singh. The parallels could not be missed.

  1. Compared to Lula who began with q-marks and ended on a high, MS started on a high and his second term (may be his last as well) is full of q-marks. People have questioned the pace of reforms and PM not intervening when his Ministers were involved in the scams. It is a complete turnaround for India’s PM as well though in a different direction.
  2. Lula took over Brazil at difficult times and turned around the economic and political situation in Brazil’s favor. MS and his team took over at much better times. India was beginning to shine (though the previous party – NDA – lost based on India shining campaign) and things looked much better for India. The NDA govt. had ushered the most important infrastructure project of road development which helped MS and his govt. later.
  3. Unlike Lula’s old-fashioned 4 – pillars for Brazil growth, MS and his government have just believed in talking. India’s 9% growth has been much hyped and seen as a birth right. The govt. forgot that 9% was a result of previous reforms and positive expectations of private sector. Infact 4 pillars of MS government have been inflation, talking, fiscal deficits and corruption/social waste.
  4. It was also interesting to know about Lula’s two programs 
    • Fome Zero (Portuguese for Zero Starvation) is a Brazilian government program introduced by Lula  in 2003 with the objective to eradicate hunger and extreme poverty in Brazil.
    • Bolsa Família, roughly translated as “Family Stipend” or “Family Grant” or more precisely as “Family Allowance” in English, is a part of the Brazilian governmental welfare program Fome Zero.

Much similar to India’s NREGA and other social development programs.  But Brazil’s programs have received much better reviews compared to India. The improvement in Governance has led to success in social dev. program in Brazil vs the opposite in India.

 

Interesting comparisons.

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4 Responses to “Lula’s 4 pillars of Brazil’s growth and comparing it with Manmohan’s”

  1. Anantha Nageswaran Says:

    The Four Pillars of the UPA government – very good stuff, Amol.

  2. The Gold Standard » Warnings sprout Says:

    […] sceptical voices are that of Omkar Goswamy, Shankar Acharya and Amol Agrawal of ‘Mostly Economics’ and Niranjan Rajadhyaksha, to name few. Tags: Amol Agrawal, […]

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    […] is ok to brand all this for simplification but mostly just becomes a hype. Take BRIC. Brazil is perhaps the only one in the Bric club which does not have much problems. Russia is still recovering from the global […]

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    […] Lula of Brazil also started at the same time amidst very little expectations but by 2010 (after two terms) he seems to have done a fab job for […]

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