Brazil’s Real Plan is Stabilization to Growth
...try’s previously volatile economy. The state of the Brazil economy before the Real Plan was speeding downward because many other reform projects before it such as the Cruzado Plan in 1987, the Bresser Plan in 1988, the Summer Plan in 1989, and the Collor Plans in 1991 and 1992, continuously failed. (Bottom Line) None of the above economic reform plans of the last decade were able to sustain low inflation for even a year. Initial successes always gave way to new inflationary spirals that would bring down the plans and force their replacement. However, the Real Plan has been the most successful stabilization plan ever implemented in Brazil because an important feature of the Real Plan was that, after using transitional money for a few months, the government actually prohibited the use of indexing when the new money was introduced as a mechanism to support the new price stability. This did wonders for the Brazil economy because it showed declines in poverty and income inequality, it put an end to inflation and has been very rapid in regards to economic growth, and also demonstrated that macroeconomic stabilization can benefit the poor. All of this economic reform has been extremely beneficial to the people of Brazil because they have hope for the future again, and have erased all of their terrible memories of the 1980s before the Real Plan was introduced known as the “Lost decade.” (Brazzil Politics) The continued development of a freer democratic, egalitarian economy in Brazil is being continued by the new president of Brazil named Luiz Inacio Lula da Silva because he is basically using the same policies that the Cardosa administration used before him but has made some slight adjustments. He says, “His main goal is to introduce a new development model in Brazil, capable of reducing the enormous social and economic inequalities that portray a nation characterized by a pattern of high concentration of income, property, knowledge, justice, and so many other essential elements required for the full exercise of citizenship.” (Agrarian Reform) He h...