THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Brazil

Ranked 52nd of 149

At a glance

Ranks

52 nd on the Legatum
Prosperity Index™

44th
90th
74th
81st
81st
89th
36th
52nd
28th

SUB-INDEX RANKINGS

In the Prosperity Sub-Index rankings, Brazil performs best on Natural Environment and Personal Freedom and scores lowest on the Business Environment sub-index.

Visit our Rankings table to see how Brazil compares to other countries.

Prosperity Gap

The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's expected Prosperity Index ranking.

Brazil’s prosperity is about the level expected given its wealth and has been for the past decade. However, that overall delivery is static masks growing deficits in Health and the Business Environment.

Note:
In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. If a country falls below the curve, then we can say that compared to all other countries, it is under-delivering prosperity for its citizens. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens. Learn more about the Prosperity Gap here.

Alternatively, have a look at the Prosperity Gap view on our Rankings table for a full list of countries and to see how each of them are performing on the various sub-indices.

Commentary

With Dilma Rousseff, Brazil’s first female president, removed from office and half of the members of the National Congress under investigation as part of a corruption scandal, it comes hardly as a surprise that Brazil has fallen 22 ranks in the Governance sub-index since 2012. This decline can be illustrated by a rapidly declining confidence in the national government and in the honesty of elections. Compared to the world average, the Brazilian government is perceived by its citizens as having low levels of transparency and high levels of corruption.

Governance score in Brazil, the world, and Latin America according to the 2016 Prosperity Index.
In four years Brazil’s Governance score has dropped 22 ranks from performing well above the world and regional averages to falling significantly behind. This contrasts with the general trend in Latin America which has experienced an overall increase in the Governance sub-index since 2012.

Contrastingly, the democracy level in Brazil continues to rank just outside the global top 50 on the Prosperity Index. However, the paradox of social choice, according to some scholars, is that we do not always choose what is best for us. Therefore, unless education and political transparency improve it will be difficult for democracy to have any real effective results in Brazil. Yet, the crisis may lead Brazilians to reassess what they expect from their government and produce a real change in the political path.

Growth has been sluggish in Brazil alongside a ballooning deficit, falling oil prices, and structural inefficiencies. The Prosperity Index records that Brazil’s trailing 5-year growth dropped by 2.42 percentage points from 3.26% to 0.18%. This slow growth rate is amongst the lowest in Latin America and, unsurprisingly, has contributed to Brazil having dropped ten ranks in the Economic Quality sub-index since 2013. This has seen Brazil drop out of the top 30 in this sub-index. Additionally, Brazil’s economy is export oriented, yet export quality has dropped since 2007 and export diversification is struggling to keep up with global advances. This suggests that shifting Brazil’s economy into higher value added activities in both industry and services would be beneficial, rather than relying too heavily on primary commodities.

The current crisis has created a climate of insecurity which can be observed in sliding Social Capital, Safety & Security, and Business Environment ranks. Business Environment is now Brazil’s weakest sub-index, ranking 90th in 2016. Despite a relative improvement in the ease of starting a new business in Brazil, peoples’ perceptions of the business environment have declined by 12% since 2007, demonstrating that new legislation is not enough to instill faith in the system. Being one of the biggest developing economies in the world, Brazil should be any entrepreneur’s dream. Yet corruption, a complicated bureaucracy, and an expensive currency due to earlier economic success mean that Brazil’s score in the Business Environment sub-index falls below the regional average and well behind that of its economic counterparts such as Colombia, Mexico, Chile, and Peru. However, with the 2014 World Cup and 2016 Olympic Games there has been evidence of the government waking up to desperately try and improve infrastructure, such as by cutting tax on several major projects, which may lead to a more conducive business environment- and rising prosperity - in the long run.


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Data

How to read this graph:
When comparing multiple countries on a spider chart, data points that appear
further away from the center represent a better performance to the points that are closer to the center.

Special Analysis

Special Analysis

OVERALL

Despite rising real prosperity, Brazil has fallen by three ranks over the past decade. In has some notable areas of success, having consistently been ranked among the top ten non-OECD countries in the Personal Freedom sub-index. This achievement combined with a 54% reduction in relative poverty since 2007 and its social assistance program ‘Bolsa Familia’, designed to combat inequality, suggest that Brazil possesses the core building blocks for building an effective democracy once the crisis has passed.

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Areas of Success
Areas of Success

Brazil has shown tremendous success in terms of its environmental prosperity since 2007, constantly being ranked in the world top 30. Notably successful areas in the Natural Environment sub-index have been improving access to drinking water and in reducing air pollution exposure above World Health Organization levels to zero. However, rapid urban growth in the country risks putting an increasing strain on resources, having already led to water shortages in the south east. Deforestation in Brazil has dropped remarkably over the last decade and its percentage of terrestrial protected areas has remained stable. Finally, it has amongst the best pesticide regulation and marine protected areas in the world. Environmental laws in Brazil are rigorous and of high standard; implementation and regulation needs to be as equally effective.

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Areas of Little Change
Areas of Little Change

An area of consistently little change in Brazil has been in education. In the Education sub-index, Brazil is performing on a par with the regional average. However, although enrolment rates are high in Latin America, quality of schooling remains persistently low and performance weak compared to countries of similar development such as Mauritius and Malaysia. This is particularly reflected in Brazil’s results in the Education sub-index. It has the lowest satisfaction with educational quality on the continent and the quality of education has been stagnating since 2007. Conversely, education inequality is improving as well as the perception that children are learning in society. It is vital for Brazil to enhance its quality of education. If not, children will continue to enter the labour market with a substantial disadvantage relative to their peers across the world, impacting human development and economic growth in the country.

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Areas of Improvement
Areas of Improvement

Safety & Security is an area in need of significant improvement in Brazil. Although it has been improving marginally over the last decade, this sub-index continues to lag behind the world average and is undermining Brazil’s human development. High homicide rates are a particularly prominent problem, Brazil being significantly above both the world and regional averages in this variable. In 2015 alone Brazil reached a new peak of 58,000 deaths caused by violence, being one of the countries to have the highest death rate per 100,000 during peace time. The police force is one of the least valued institutions in Brazil and Brazilians have low levels of institutional trust. After murder, killings by on- or off-duty police are now in second place and in Brazil fewer than 10% of homicide cases are solved. The government needs to give due attention to this epidemic (as described by the WHO), to ensure that violence ceases to become part of a Brazil’s daily life and a hindrance to its prosperity.