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Brazil's view on
global economic and environmental governance

Dilma Rousseff, president, Brazil

From "The G20 Mexico Summit 2012: The Quest for Growth and Stability,"
edited by John Kirton and Madeline Koch, published by Newsdesk Media Group and the G20 Research Group, 2012
To download a low-resolution pdf, click here.

There is a path possible from economic growth to social inclusion, income distribution and environmental preservation

We Brazilians are very proud to be one of the so-called emerging nations; nations that actually have maintained notable economic growth for the past number of years. According to the International Monetary Fund (IMF), we BRICS countries – Brazil, Russia, India, China and South Africa – are responsible for 56 per cent of the world's economic growth. We have also achieved macroeconomic stability. Not only have we brought inflation under control, but all variables measuring the country's fiscal robustness have also improved markedly. Above all, Brazil, once a country with massive public debt and a ratio of 60.4 per cent debt to gross domestic product (GDP) in 2002, now proudly has a debt-to-GDP ratio of 36.5 per cent. At the time my administration took office, Brazil depended on the IMF. Now our country holds a reserve of $362 billion, is one of the biggest buyers of US bonds and has settled all of its debts with the IMF. This accomplishment was extremely important for Brazil because it meant that we could finally independently determine our own economic and social policies. And we went from being a debtor nation to a creditor nation with the IMF.

But I must stress that the most important aspect of this process – the element that has most propelled us forward and that has truly fuelled the growth of the Brazilian economy – has been the first-time inclusion of 40 million Brazilians in the middle class.

Brazil has been generating an average of two million jobs annually. Consumption has been growing at a rate of more than eight per cent per year. This phenomenal rate owes itself precisely to the fact that once-impoverished Brazilians have now become active consumers. We have also democratised lending and have given millions of Brazilians access to personal bank accounts. The country has proudly built a powerful network for social protection. Brazil today is a country that, in terms of social policies, has managed to stock up an arsenal of technologies that directly address the question of inequality.

We know that we are affected by the international economy, yet we are well positioned to confront this reality. We live in a time of much preoccupation, and the crisis currently faced by the world's developed countries, most recently by the European Union, is still a harsh reality, with recession and heavy unemployment an undeniable fact.

Weighty problems

Although we recognise that the actions taken by the central banks, mainly the European Central Bank, improved the situation greatly, many threats persisted. What the central banks did was to stop the occurrence of a liquidity crisis. However, the fact that the banks only stuck to monetary policies, the concurrent fact that countries in crisis are not being targeted for their markets, plus the fact that countries with budgetary surpluses are not pursuing investment expansion policies together place a number of weighty problems upon emerging countries. Primarily, there is a kind of competition whereby the devaluation of developed countries' currencies affects and leads to significant problems for emerging countries' manufacturing industries, as is the case in Brazil. Nonetheless, Brazil is in a condition to tackle this problem because it has a solid and healthy banking system.

But these policies alone – fiscal consolidation plus expansion policies by those countries able to apply such – will not contribute to renewed growth or prosperity. Moreover, we face a serious problem, which is the price of petroleum while there is decreased demand from developed countries, which will also impede renewed growth.

This year Brazil is in a much better position than it was last year. In 2011, we were forced to rearrange our macroeconomic policy. Now we are poised for more notable growth than what we were able to accomplish last year.

Given our country's history, it is clear that simply tackling recession, unemployment and job insecurity does not constitute a systematic solution to overcome the crisis. Together with sound fiscal policies, it is critical to recover investment and drive consumption in order to spur growth to pre-crisis levels. Brazil has 20 years of experience in this area. For 20 years, we applied non-stop policies of fiscal consolidation – better yet, of radical fiscal adjustment. And we faced extreme difficulties in overcoming stagnation, low growth and a lack of social policies – to the extent that a huge problem for us was once the sanitation policies in large Brazilian metropolises because we were simply unable to finance sanitation systems and unable to use public funds to improve the ageing sanitation systems in place.

This process has changed today because Brazil now focuses on its domestic market and then subsequently looks to the international market. We do not consider protectionism correct, nor do we believe it leads to competitive growth for the country. To the contrary, what is clear is that we must ensure and capitalise on the development of our large, continental country, with its 190 million inhabitants, its rich pre-salt reserves, its mining resources, its agricultural sector that needs to be productive and use advanced technology, and the industrial sector that, despite its suffering, we are striving to make more extensive and complex. The industrial sector will survive – this I guarantee – and will become one of the pillars of Brazilian growth.

We attach [importance] to the Rio+20 United Nations Conference on Sustainable Development. The Rio+20 summit will study, discuss and work on a new development paradigm for upcoming years. In addition to the Conference of the Parties (COP17) to the United Nations Framework Convention on Climate Change, which took place in Durban and whose commitment periods we seek to pursue throughout this year, we will actively engage in Rio+20 and in the biodiversity conference in India [in October 2012]. Rio+20 will focus not only on the climate, but also on biodiversity. And the question is: what is sustainable diversity for the coming decade – and for this century?

Brazil and the UN are in agreement that the crux of this conference can be summarised as follows: we can indeed grow, include, preserve and protect. In other words, we must focus on social equality. The importance of this matter grows ever stronger as the consequences of the crises facing developed countries, and even many developing countries, continue to increase social inequality throughout the world. Therefore, we raise the question of reducing inequality and expanding social inclusion in all areas, improving opportunities across every spectrum of society. This is the truly essential question facing us at this political juncture.

In addition to decreasing social inequalities, there is also the question of the right to growth and the question of respecting and protecting the environment. To this end, we, as a country, are in a special position, and I recognise this with pride. We have an energy mix that is based fundamentally on renewable resources, which is not the case in the majority of countries, where the mix is based on fossil fuels or nuclear energy.

Brazil also has great biodiversity. It is one of the most biologically diverse countries in the world. This is seen as a huge growth potential for the biotechnology sector and, ultimately, for the protection of biodiversity. Concurrently, we must preserve our forests and our huge rivers. We do not want to be a country stripped of its natural resources. We hold the world's largest forest reserve – the Amazon – and we also have a huge lesser-known biomass, the Pantanal wetlands, as well as other smaller biomasses. For us, this discussion covers a crucial concern: in a world in which we must use both technology and political will to deal with growth and protection, the question is how to best ensure a world that encompasses growth, social inclusion, income distribution and environmental preservation all at the same time. This is the crux of the debate.

Unofficial translation of excerpts from a lecture made by President Dilma Rousseff to the Harvard Kennedy School of Government, Boston, 10 April 2012

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