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Economic Growth 
and Higher 
Education Policies 
in Brazil 


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Center for 
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March 2012 
#67 Spring 



Economics of Higher Education 
International Development 
Public Policy 


Latin America 

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Key Words: Brazil higher education, economic development 
and higher education. The relationship between economic 
growth and higher education in Brazil is discussed in this 
article. Although Brazil's higher education system is relatively 
new, it has developed rapidly. In general, however, it has not 
contributed directly to economic development yet despite 
some important counter examples. 


Pages 28-29 

Economic Growth and Higher Education Policies in Brazil: A Link? 

Simon Schwartzman 

Simon Schwartzman is president of the Instituto de Estudos do Trabalho e Sociedade in 
Rio de Janeiro, Brazil. E-mail: 

Brazil is one of the new "emerging economies." It is flexing its muscles to become a 
leading international player, and thus, it needs good university institutions capable to 
produce the scientists and engineers needed to keep the momentum. Therefore, clear 
policies are required, to improve the standards of universities and the quality of higher 
education institutions, based on a clear identification of priorities. However, contrary to 
the assumptions and expectations of external observers, Brazil does not have such a 

Brazil experienced cycles of rapid economic growth in the 1930s, after World 
War II, in the 1970s, and again after 2002. Each of these cycles can be explained by 
favorable external conditions — the revenues created by the agricultural and mining 
sectors, the influx of international investments, and the use of such resources to finance 
a growing public sector, the steady transfer of the population from the countryside to 
the urban centers, and generating a growing internal consumption market. These 
developments were also preceded by internal reorganizations of the economy, 
controlling inflation and increasing the governments' ability to raise taxes, as it 

happened in the late 1960s and more recently in the 1990s. In none of these cycles is a 
causal link found between investments in education, science, and technology and 
economic growth. On the contrary, the causality seems to be the opposite. With more 
resources, governments became more generous and willing to respond to the demands 
of an emerging middle class for more benefits, including free access to education. Thus, 
the existing network of federal universities was created during the period of economic 
expansion after the Second World War; and the current network of graduate education, 
research, and technology was set up in the late 1970s, when the "economic miracle" of 
the previous years was about to implode. 

The economic boom of the last 10 years was mostly fueled by the macroeconomic 
stability achieved in the late 1990s, the favorable winds of international trade blowing 
from China, and the ability of a small sector of the economy — mostly the agrobusiness 
and mining companies. With economic stabilization, high interest rates, and an 
overvalued currency — the country became attractive to foreign investments, generating 
more jobs and employment for the middle classes. 

The Expansion of Public Expenditure and Education 

With the economy growing at the steady rate of 4 to 5 percent a year, public 
expenditures increased to almost 40 percent of the gross domestic product, most of it 
spent on social security, the payment of civil servants, and the service of the public debt. 
The federal government benefited from the growing tax base, to distribute some 
benefits to the poor, with the conditional cash transfer programs and increases in the 
value of the minimum wage; to the civil servants, increasing their numbers, raising 

salaries and social benefits; to the rich, providing cheap subsidies and generous 
contracts for public works and services; and to political allies, through widespread 
patronage and tolerance to corruption. For the middle class, one benefit was to provide 
growing access to free higher education in public and private institutions and 
affirmative action, to respond to the demands of organized social movements. 

None of these options required a national policy for good-quality higher 
education and effective and economically relevant science and technology. Brazil 
spends today about 5 percent of gross domestic product on education, mostly through 
states and municipalities for basic and secondary schools. In spite of recent investments 
in public universities, the provisions cover about 25 percent of the enrollment. While 
some institutions and professional schools are of good quality, most of them are not; 
and there is no mechanism to stimulate quality. The assessments carried on by the 
government only affect poorly rated private institutes in medicine and law, largely in 
response to the pressures from the professional corporations. Graduate education and 
research continue to expand, mostly in the State of Sao Paulo, in selected federal 
universities and in a network of federal research institutes. It is by far the largest 
research and development and graduate education establishment in Latin America. But 
research is mostly academic, with little factors in terms of patents and applied 
technology, and is poorly connected with the country's economic and social needs. 

There are some counterexamples: Embraer, Brazil's successful airplane company, 
grew out of the Aeronautical Institute of Technology (ITA) — a technological institute 
and engineering school established by the Air Force; and at least part of the 
achievements in agriculture is explained by new varieties developed by Embrapa, 

Brazil's agricultural research agency. The National Service for Industrial Training 
(SENAI), a vocation-training agency run by the Federation of Industries, has a history of 
success in the qualification of specialized workers for the industrial sector. All, tellingly, 
are outside the realm of the Ministry of Education and the Ministry of Science and 

In short, as the Brazilian society modernized and its economy grew, higher 
education institutions also expanded in size and some of them even in quality; they 
were and are still part of the same wave. Clearly, higher education could not have 
grown without economic development, but the reverse (so far at least) is not true, 
although it may become so in the future. 

The Future 

This situation may be transforming. As the economy becomes more complex and 
sophisticated, it requires a more skilled population and more relevant research. There 
are signs that this is already happening, with new companies complaining for the lack 
of qualified engineers and mid-level technicians; and multinational corporations 
importing qualified manpower from abroad. To respond to this situation, higher 
education in Brazil will have to change its priorities from uncontrolled growth and 
access to quality and relevance — not an easy transition.