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related pages:  Brazil: Economy ,   Pernambuco ,  Rise of purchasing power in emerging markets ,  Economic Development

Bolsa Familia

One of Brazil government's wealth distribution programs.  This had a positive effect on sales of all sorts of commercial goods.  For example, social programs and a rise in the minimum wage had a positive impact on clothing and footwear sales, in particular among low-income consumers.

Bolsa Família, roughly translated as "Family Stipend" or "Family Scholarship" in English, is a part of the Brazilian governmental welfare program Fome Zero. Bolsa Família provides financial aid to poor and indigent Brazilian families on condition that the children must attend school and be vaccinated. The program attempts to both reduce short-term poverty by direct cash transfers and fight long-term poverty by increasing human capital among the poor through conditional cash transfers.

The program is a centerpiece of President Luiz Inácio Lula da Silva's social policy, and is reputed to have played a role in his victory in the 2006 national elections . Bolsa Familia is currently the largest conditional cash transfer program in the world, though the Mexican program Oportunidades was the first nation-wide program of this kind.

 read more from wikipedia here:  http://en.wikipedia.org/wiki/Bolsa_Fam%C3%ADlia

Good effects

In 2008, when you visit the NE of Brazil, you no longer seen swarms of street kids washing windows at street corners.  This is good not only because of the positive effect of having them in school, cut also because it reduces crime in the city.  These street kids (moleque) had a reputation for forming street gangs, and for having little value for human life.  Stories abound of kids with guns shooting and joining gangs.  Although they are young, they held the citizens of Recife captive with fear (robbery, car jacking, etc).   With the kids off the streets, and into classrooms, there is a greater sense of security in town.   This is a good thing (and as we saw in Colombia, when the level of security goes up, so does the level of economic development and investment). 

The other side effect is less homeless people lining the streets of Recife, which should help with tourism (improving the image of the city to foreigners). 

Potential negative effects

Labor becomes more expensive:

I've heard of stories where its getting difficult to find people to work in the NE of Brazil, because they make enough money from handouts, and if the job doesn't pay enough, then they choose to not work.  I'm not sure if this is true, but I've heard that its leading to inflation due to the increased rates that must be paid, and the effect that its having on the supply / demand of wages.  This is probably good for workers, but how will it effect export competitiveness of companies?   wait and see...

Bolsa Familia & economic development

While the program bolsa familia is often criticised as a handout from the government to the poor, it can also be argued that this program was a critical key component of the consumer class boom from 2007 to 2008, which then led larger companies to make large bets on projects to serve the new emerging consumer classes.

One example is the regional Economic Development boom that is planned between 2008-2010 in the Brazilian NE state of Pernambuco.  As a result of rising incomes, available credit, the "Bolsa Familia" program, and of the strengthening currency (vs the weak dollar), suddenly Brazilian consumers are feeling wealthy as never before, and they are buying cars, and commercial goods like never before.   In response, you see massive developments in and around the port of Suape, such as the massive wheat mill from Bunge, or the auto distributors, oil refineries, ship building, steel mills, etc.  (see more in our coverage of Pernambuco). 

see more in our discusson:  Brazil: Economy

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