Brazil; a different kind of income distribution

The table below demonstrates the income distribution of Brazil. As becomes clear, this distribution demands careful attention since it is in no way comparable to that of the Netherlands. In Brazil, the richest 10% of households, possess 47% of the total national income. The middle class represents about 40% of the Brazilian population and the poorest 50% possesses 12,9% of national income.

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Socio-economic group	Average monthly household income	% of population
A1	$5,300	1%
A2	$3,400	4%
B1	$2,100	9%
B2	$1,400	13%
C	$700	34%
D	$400	32%
E	$200	7%
Total		100%

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In Brazil, economic and social status tend to vary by geography, race and gender; a legacy of the country 's history. Imposed and de facto colonial and post-colonial divisions among indigenous peoples and descendents of Portuguese settlers, African slaves and European, Middle Eastern and Asian immigrants, created persistent structures of exclusion and inequality. In the 1950s, during the military government, a strategy of import substitution prioritized rapid industrial expansion, and helped to bring about significant, sustained economic growth. Benefits, however, accrued disproportionately to the upper classes at the expense of workers and unions. By promoting urban migration, the industrialization contributed to the expansion of the favelas (urban slums) - one of Brazil 's greatest contemporary challenges - while infrastructure and social support did not expand at the same pace.

3% of Brazilians hold approximately 66% of the country 's arable land. There is an urgent need to clarify property rights —in agricultural areas, the Amazon and areas of indigenous peoples, as well as in the favelas —and there is an extreme need to extend water and sanitation, primary education and other social services, especially to rural areas in the north.

The prospects of a large internal market; Brazil´s growing middle class

In spite of the large income discrepancies, Brazil is a country with a growing consumer market. Market observers assume that up to 40% of the entire Brazilian population correspond approximately to the level of the American middle class . The fact is that the introduction of the Real in 1994 has created a stable monetary basis, which allowed also lower income strata to share in the consumption of certain product groups. Thus, for instance, currency stability allowed that some 50 million Brazilians, the so-called "Class D", could purchase some more elaborated consumer goods for the first time in many years. The income of classes C, D and E is spent almost entirely. Most of the available income is used for food, transportation, housing and education. There is practically no money available for regular purchase of sophisticated consumer goods. Purchase behavior of the lower income classes is guided by day-to-day needs and impulse shopping is rare. On the other hand, purchase behavior of the richer classes A, B and partly of class C is strongly brand name and quality-oriented. This group of people likes to show off expensive luxury goods. Here, modesty is not a virtue. Mainly in larger cities, one of the favorite leisure activities is to stroll through huge shopping malls and give free rein to the consuming urge. All present there are 220 shopping malls in Brazil, with total sales of R$ 20.9 billion in 1999.

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The poorest one-fifth of Brazil's 173 million people account for only a 2.2 percent share of the national income. Brazil is second only to South Africa in a world ranking of income inequality. More than one-quarter of the population live on less than $2 a day and 13 percent live on less than $1 a day. Brazil's Northeast contains the single largest concentration of rural poverty in Latin America. Past development programs have failed to make a major dent in a region in which 49% percent of the population is classified as poor.

Challenges Ahead

Environmental deficiencies continue to afflict the country, posing health risks to a major part of the population. Less than 10 percent of wastewater is treated. Consequently, it is a major source of water pollution. And up to 40 percent of the country's solid waste – some 40,000 tons a day – isn't collected. Of the waste that is collected, only 27 percent is disposed of or treated with environmentally sound methods. In a heavily urbanized country – 82 percent of Brazilians live in cities – only 56 percent of urban dwellings are connected to a sewerage system. In the countryside, fewer than 20 percent of households have piped-in water; only 13 percent have sanitation services.

Crime is also plaguing urban Brazil. And on the structural level, Brazil's poor transportation networks and bureaucracy are notorious for raising costs for ordinary citizens as well as for businesses. In Sao Paulo, transportation costs a poor person one-fifth of his or her income, and more than 2.5 hours a day in commuting time.