The Rise of the Favela

Author's photo

The Latin American Monitor (Christian Science Monitor) has an interesting post this week about Brazil's rising "favela consumer class." RioGringa, the author, notes that around 65 percent of favela (a term for urban Brazilian slums) residents are now considered middle class. This "C" class, in Brazilian parlance, constitutes about 12 million people--about the size of Illinois or Pennsylvania, the 5th and 6th most populous states in the U.S.--and earn around $28 billion a year, which the author compares to the entire GDP of Bolivia.


Riding a tide of strong national growth and aggressive social development policy under the PT (Worker's Party), favela residents have begun to replace the image of gang-ruled no man's lands with that of a developing, even thriving heart of a Brazilian renaissance. RioGringa points to the increasing access to goods, especially durable goods, for favela residents as an indicator of a growing middle class. Over half of residents now have washing machines and 40 percent have computers. Much of this urban boom comes as a result of easier access to credit, underwritten by government programs like the Growth Acceleration Program or Bolsa Familia.

 

 

This boom in hardware and appliances is stretching an already tenuous infrastructure in many favelas. Touring several favelas in 2009, I remember being overwhelmed by the sketchy mass of cables and wires, jerry-rigged by handy residents to connect their new TVs and washers to the grid (see image). The challenge will be formalizing the tenuous (and sometimes illegal) connections between favela residents and the economy and infrastructure; this means improving access to sewage and utilities, land tenure, and public services like education, health care, and security.

 

 

 

 

 

Conditional Cash Transfers and School Attendance

Flickr user: kinderpate

The World Bank released a paper last month looking at the effects of Conditional Cash Transfer (CCT) programs on school attendance in rural Burkina Faso. As I've looked at similar programs in Latin America, and am generally a proponent of such schemes, I thought I'd share a few interesting points.

CCTs have been growing in popularity throughout the developing world and especially in Latin America--particularly Mexico and Brazil. The idea behind these schemes is to develop long-term human capacity in the form of increased nutritional, health, and educational outcomes, and to break the inter-generational cycle of poverty that afflicts implementing countries.

The "Conditional" in the CCT theoretically has a number of benefits, both for donors and recipients. For donors, many have remarked that conditionalities make cash transfers (from governments to citizens) more palatable to politicians. On the other hand, conditionalities provide a mechanism by which recipients are incentivized to do things like send their kids to school (rather than work or beg) and get medical checkups and immunization for women and young children. Some programs have additional benefits such as providing female heads of household with increased independence or providing a source of income security that allows families to access credit or purchase durable goods (Abhifit Banerjee and Esther Duflo's book Poor Economics has a great section on the difficulties poor people face in accessing credit and the benefits of income security for development).

The World Bank study isolates one particular theoretical benefit of CCTs, and asks to what extent conditional versus unconditional cash transfers really increase school attendance. The results were interesting; CCTs and UCTs (unconditional...) had similar positive impacts on enrollment for "children who are traditionally favored by parents for school participation, including boys, older children, and higher ability children." These are children that parents may "prioritize" with regards to obtaining education; parents already want to send them to school. So, cash transfers--with or without conditionalities attached--help relieve the burden (or opportunity costs) of sending these kids to school.

Where the conditional transfers excelled however, was in improving enrollment of what the authors called "marginal children"--kids who are less likely than the first group to go to school, or who go to school less often. These include girls, younger children, and children with lower abilities. For these children, cash benefits led to a statistically significant increase in enrollment of over 20 percent for girls, 37 percent for younger children, and 36 percent for low ability children, compared to the average enrollment for these groups. UCTs, on the other hand, saw either a statistically insignificant increase in enrollment, or a much smaller enrollment for these groups.

In other words, CCTs seem to excel in encouraging school attendance among the most marginalized groups of marginalized populations, and provide a pretty good bang for the buck.

Keep in mind, these results obtain in Burkina Faso, a relatively small rural country in the West African Sahel. I would be interested to see a comparative look at CCTs in more urbanized countries, or geographically larger countries, for example. In addition, this study defines educational outcomes mostly in terms of enrollment and attendance; education observers in this country well know that educational outcomes rest on a variety of other factors, not the least of which include the quality of the schools and teachers or the availability of textbooks and classroom technology, for example. These elements generally lie within the supply side of the educational attainment equation, however, and it is becoming ever more apparent that CCTs at least have a strong and positive impact on the demand side of things.

Brazil to expand anti-poverty measures

Blog do Planalto

The Brazilian government announced this week that it plans to expand the program Brazil Without Poverty (Brasil sem Miseria) to provide benefits to about 2.5 million families. The program, launched in June of last year, is a key part of president Dilma Rousseff's initiative to lift millions out of poverty and builds on popular programs begun under Lula's Zero Hunger (Fome Zero) campaign.

Currently, about half of the rural Brazilian population--about 15 percent of the total population--lives in poverty, while around 16 million (eight percent) live in extreme poverty, defined as living on less than about US$44 per day. Poverty in the country is particularly concentrated in the "semi-arid" northeast of the country, where a despite decade of impressive national growth, conditional cash transfers, and other development efforts, much of the population is extremely poor. As a result, Dilma's Brazil Without Poverty program seeks to fill in the gaps left by the popular Bolsa Familia or the Program for the Acquisition of Food, a well-functioning local agriculture development program that has helped bolster the production and sustainability of local agriculture, rather than simply alleviating the ravages of poverty and hunger.

President Rousseff's goal is to reach all 16 million living in extreme poverty.

One of the ways in which this program fills in these gaps is by actively seeking and registering families who are eligible, but have not yet participated in one of several other development schemes:

Active Search (Busca Ativa) is the strategy adopted by Brasil Sem Miseria to find and register all extremely poor families that have not been located yet. Developed in the municipal level, it is implemented by social assistance mobile teams and by the increase in the transfers of Federal Government resources to city governments. Thanks to Busca Ativa, 687 thousand families previously “invisible” were included in the Cadastro Único in its first year of existence, and are already receiving the Bolsa Família and other social benefits.

The government claims it has already lifted around 22 million people out of poverty over the past decade (while it is difficult to distinguish the particular effects of various specific projects from the effects of overall robust national economic growth throughout the period, most scholars who look at Brazil's progress agree that active anti-poverty programming deserves a significant amount of credit).

While the reach and cost of Brazil's development portfolio is impressive (this new expansion will bring targeted social spending via Bolsa Familia to about US$12 billion), its biggest downfalls so far seem to be in providing the infrastructure or follow-through for recipients who receive benefits. For example, with the Bolsa Familia program, evaluators frequently find that where recipients are required to receive medical checkups (especially pregnant women and young children) the clinics that serve the area are often inaccessible and/or under equipped. And, while benefits make it easier to send children to school more regularly, the schools serving poor rural areas in Brazil are often inadequate. Finally, the sheer number of poor Brazilians--urban and rural--make coverage a real challenge; some qualified families are simply left out.

Plague strikes coffee crops in Central America

Coffee growers in Central America and southern Mexico are experiencing a widespread plague of "rust" produced by the fungus Hemileia vastatrix. In Costa Rica, authorities expect 10,000 growers to be affected in a period estimated to last two to three years. In Guatemala, where a majority of growers are small operations, the situation is much worse. Of the 270,000 hectares planted with coffee, approximately 193,000 hectares (around 70 percent) are affected by the fungus. The situation is expected to last three to five years and affect over 100,000 people.

Nils Leporowski, President of the National Coffee Association of Guatemala (ANACAFE), noted that, though the rust has affected crops throughout the region previously, climate change has created a favorable environment for the offending fungus. "In the last three years the climatic conditions have favored the propagation of the fungus, due to a combination of higher temperatures and rains."

Guatemala's Agriculture Minister Elmer Lopez says the 2012-13 coffee harvest (10/12-9/13) is expected to shrink 15 percent on the year, while the next year's harvest could lose as much as 40 percent.

Growers in the region will not benefit from an increase in prices that might be expected to accompany such declines in production, however. Coffee prices have only "limited potential" for decline this year, according to the International Coffee Organization. While Central American crops have been hit hard, Brazil and Colombia (which is recovering from its own coffee pest outbreak) are reporting bumper crops

Guatemala, Honduras, and Costa Rica have all declared states of emergency to allow government dollars to flow to affected areas. Guatemalan president Otto Perez Molina ordered about $10 million in federal funds be made available to fight the blight.

Latin Ameri--Brazil's Middle Class

The Americas Quarterly's fall issue focused on Latin America's rising middle class: "Who are Latin America's new middle classes and what effect will they have on politics, economics and business?" One article, by the World Bank's Luis Felipe López-Calva, dives into the definitions and origins of this burgeoning middle class, a phenomenon that seems to be (finally) gaining traction/acceptance/notice among among the foreign policy community.

One of the main factors behind this monumental, and welcome (if still tentative) trend is thought to be the consistently high price of raw materials produced by Latin America--Peruvian copper and gold, Brazilian soybeans, etc. But important and substantial political and policy shifts have played a huge role in translating raw wealth (Latin Americans have long exported massive amounts of raw material with profits accruing only to the region's tiny elite--coffee anyone?) into development.

Brazil, a country that accounts for nearly a third of the region's population, deserves a big portion of the credit.  That country's bolsa familia program, a consolidation (and expansion, under Lula) of several smaller conditional cash transfer (CCT) programs that began under Fernando Enrique Cardoso, has played an important part in bringing the poverty rate down from around 44 percent in 1990 to about 24 percent in 2009--nearly cutting it in half.

A close look at bolsa familia shows that this is an impressive, if mixed, program, in terms of outcomes. First, the idea behind the thing is to break the intergenerational cycle of poverty and develop long-term human capital through health care and education mandates. These mandates--for recipients--come in the form of minimum school attendance (at least 85 percent monthly attendance for kids between 6 and 15 years) and vaccinations and medical check-ups, among other things. No medical check-ups? Not attending school? No cash.

The idea behind the "conditionality" of the CCT is two-fold: First, conditionality makes cash cash transfer schemes ("handouts" to some) palatable to voters and policy makers. Second, health, nutritional, and educational conditions are thought to ease the opportunity costs poor people face when deciding whether or not to send a pregnant mom to the clinic or pull a child out of school to work, for example.

The program is huge. It reaches some 46 million individuals (around a quarter of the population). On educational measures, bolsa familia had a clear and positive (if slight) impact, resulting in a 3.6 percent lower probability of children being absent from school, and 1.6 percent lower likelihood of dropping out. At the same time, kids whose families benefit from the program were more likely to be failing school, an indication that progress doesn't come from just showing up, and an indictment on the poor quality of Brazilian schools (especially in the poor and rural northeast).

Unfortunately, the program had similar effects on healthcare attainment. Recipient families surveyed in 2010 were apparently no more likely to have their kids immunized--another indictment of Brazil's failure to provide much of its population with access to good healthcare infrastructure.

The program did better on nutritional measures, yielding significant improvements in infant nutrition (a variable with huge long-term impacts on childhood development),and a 26 percent increased chance of children under 5 years having a normal weight and height.

Not surprisingly, the program has had huge (and less conflicted) impacts on poverty. Between 2003, the year the program began in its current, robust form, and 2008, extreme poverty in Brazil fell from 12 percent to 4.8 percent. Despite the fact that the program suffers from some "leakage" (including individuals and families who should not qualify for benefits) and "exclusion" (not including some who do), over 70 percent of cash benefits reach the poorest 20 percent of the population, with around 95 percent reaching the bottom 40 percent, a subgroup that closely resembles the number of Brazilians living near or under the poverty line. Analysts believe that the program accounts for a major portion of this drop in poverty, and especially, extreme poverty.

And, as a preemptive response to the refrain that handouts lower the incentive to work, consider that labor market participation increased among recipients by an average of 2.6 percent (4.3 percent among women, compared to non-participant counterparts). Stable access to cash also makes people eligible for credit (Brazil has a robust micro-credit culture, evidenced by TVs and refrigerators in the homes of most favela-dwellers), which helps build a stronger domestic market for durable goods. One study estimated that for each real spent, the Brazilian GDP will increase by R$1.44--not a bad bang for the buck.

Latin American economies need to support the development of a robust middle class (not just a class of "not poor, but not middle class yets"), something that can survive economic downturns like we saw in 2008-09. This is good, not just for democracy ("no middle class [bourgeois], no democracy"), but for the lives of millions in the region who have long struggled under the yolk of oppressive poverty and oppressive dictatorships.

China may be good for this trend. While many have some apprehension about China's intentions (China surpassed the U.S. as South America's biggest trading partner in 2010), and worry about Latin America becoming another "China's Africa," they have also shown a willingness to invest in, and provide easy financing to moderate leftist governments working to expand spending on the poor and middle classes. At the very least, their rapid development and voracious appetite for timber, various ores, and agricultural products bodes well for continued investment. Its relationship with some governments (see for example Ortega, Daniel or Chavez, Hugo) and their combined impact on democratic and civil rights are less certain.

Not all China does in the region should make Americans hyperventilate. Yo-yo Ma's Obrigado Brazil might attest to that (Yeah yeah, I know he's American, born in France...).

Violent Crime in Nicaragua and the Northern Triangle of Central America

Most of Latin America has left behind decades of civil war, insurgencies, and dictatorships that characterized the region throughout much of the 20^th century. For the three countries that comprise the “northern triangle” of Central America—El Salvador, Guatemala, and Honduras—however, democratic governance has been accompanied by levels of violence that rival or surpass those experienced during periods of war. For those countries in the southern part of Central America (Nicaragua, Costa Rica, and Panama), violent crime rates have been among the lowest in the region for decades.

Nicaragua provides an especially compelling mystery. Made famous in the U.S. during the late 1970s and 1980s following the Sandinista revolution and the ensuing contra war, Nicaragua contains many of the structural and historical elements that would lead one to expect the same levels of violence experienced in neighboring countries to the north. In fact, Nicaragua shares a colonial history similar to that of its northern neighbors; similar poverty, employment, and literacy levels; and experience with internal armed conflict—elements often associated with chronic crime and violence.

Poverty and underdevelopment, widespread throughout Central America, are especially acute in Nicaragua. In 2005, 46 percent of Nicaraguans lived in poverty—12 percent lived on less than US$1.25 per day—and the country had devastating unemployment and employment instability.

Looking at general (non-violent, or non-life-taking) crime including theft, drug use, assault, and extortion, Nicaragua does in fact appear very similar to their peers to the north. In the 2008 Latin American Public Opinion Project (LAPOP), 16.5 percent of Nicaraguans reported being victimized by a crime; in 2010, 19.2 percent gave the same response. Compare this to Guatemala, where 17.1 percent (2008) and 23.3 percent (2010) reported being victimized; or Honduras, where 13.7 percent and 14 percent were victimized by crime in 2008 and 2010, respectively.

However, in 2012, Nicaragua had a homicide rate of 12 deaths per 100,000 citizens, only a third of Guatemala’s rate of 38 per 100,000 and far lower than Honduras’ tragic 92 per 100,000 citizens—compared to 4.2 in the U.S. and a global average of 6.9. While higher than the global average, Nicaragua’s homicide rate is far below the northern triangle average of 56.

Why then does Nicaragua have a generally high crime rate, but a low murder rate?

While Central America (and Latin America, broadly speaking) has a long history with pervasive violence, the roots of current iterations lie in periods of civil war that raged throughout the region during the late 20^th century.

Hundreds of thousands of Central Americans fled the region, many of which settled in the United States, particularly California. As migrants settled in poor neighborhoods of Los Angeles faced with limited access to work or social services, an inability to speak English, precarious economic conditions, and rampant criminality, large numbers of youth joined gangs. The most prevalent of these were the largely Salvadoran Mara Salvatrucha, or MS-13, and the ethnically mixed 18^th Street Gang, known as Barrio 18 or simply Mara 18 (M-18).

Following the end of armed conflicts in Central America, many war refugees began returning home. In 14 months after Salvadoran peace accords, 375,000 Salvadorans returned from the U.S. Beginning in the mid 1990s, the United States also began deporting undocumented immigrants en masse, particularly following enactment of the Illegal Immigrant Reform and Immigrant responsibility Act (IIRIRA) of 1996. Large numbers of these deportees—20,000 between 2000 and 2004—had criminal, drug or gang related histories. As thousands of young gang associates landed in post-conflict settings beset by rampant criminality, no social support networks, devastated infrastructure and economy, many found themselves drawn to what they knew—crime and theft. Gang membership and criminal behavior was abetted by the widespread availability of firearms left over from the civil wars.

This wave of deportees from the U.S. brought a distinct brand of gang culture, associated with a particular lifestyle, including dress and tattoos. This culture was quickly imitated and adopted by small-time gangs throughout the region, who left their neighborhood-based pandilla identity for a more fearsome and attractive mara identity. As pandillas adopted the symbolic identity of maras, they found themselves drawn into gang warfare, something that increased cohesion among the “cliques” (Spanish clikas or franchises) that happened to share the same name, even when many of their members did not even know each other. This is the story of the northern triangle.

Nicaragua experienced its own civil strife and mass migration, but ended up with very different results. Between 1978 and 1980, thousands of Nicaraguans fled the country as Sandinistas fought and eventually ousted the regime of Anastasio Somoza. Crucially, the identity and class of people who left Nicaragua was very different from the profile of those who fled El Salvador and Guatemala. In the first surge of 1978 and 1979, during the revolution, it was largely wealthy Nicaraguans fearing the socialistic makeup of the Sandinistas, who left for the United States—specifically, Miami. During the Contra war, many more poor Nicaraguans fled the war-torn countryside for nearby Costa Rica. Very few ended up in the gang-ridden barrios of Los Angeles, and thus, really did not associate with the nascent mara culture.

Migration patterns explain why a historic regional phenomenon—pandillas (gangs)—have evolved or been usurped by maras in the northern triangle countries but not in Nicaragua. Nicaraguan pandillas, while engaged in their own mostly petty criminal enterprises and inter-gang conflicts, were not drawn into the all out gang warfare that is such an important part of marero identity—and they are simply less violent.

The effects of immigration, however, do not adequately explain the qualitative difference between pandillas and maras. Government policies towards vulnerable or at-risk groups (and self-declared mareros) in post-conflict transitions and police responses to delinquency and gang activity played a decisive role in both the development of maras and their involvement with violent crime.

In the early years of the new millennium, several countries adopted a series of legislative and law enforcement reform packages widely known as mano dura, or “iron fist.” This shift towards mano dura was decisive in the northern triangle, and contributed to a qualitative change in the nature of youth gangs in the region.

El Salvador began the shift towards mano dura with its Ley anti-mara (Anti-mara law), passed in 2003 under the conservative administration of Francisco Flores Pérez. The law went into effect in July 2003, and by August of the following year, over 19,000 individuals were detained for belonging to a gang. Guatemala and Honduras, facing rampant criminality and rising homicide rates, enacted their own set of anti-gang policies in 2003: plan escoba (“plan sweep” or “operation broom-sweep”) and Cero Tolerancia (Zero Tolerance), respectively.

While the mano dura policies enacted in the northern triangle were frequently popular and in some cases delivered a brief decline in crime and violence, their net effect was to major deteriorations in crime and violence. Honduras enjoyed a brief decline in homicides in 2003 and 2004, but beginning in 2007, the country’s homicide rate rose dramatically from around 45 murders per 100,000 to approximately 92 per 100,000 just four years later—more than doubling in that period.

This trend largely holds for Honduras’ neighbors. In Guatemala, the homicide rate actually increased between 2002 and 2003, and continued to rise until it peaked at just over 46 per 100,000 in 2009; its murder rate has remained near 40 since then. El Salvador however, actually saw its “least violent” year in the past two decades in 2002 (bottoming out at 47 per 100,000), the year before Flores Pérez’ mano dura took effect.

Prisons in the northern triangle became fertile recruiting grounds for large numbers of youth males, already disaffected by poverty, lack of economic or professional opportunity, and the humiliation of being criminalized by the legal system. The qualitative “leap” came when mareros from clikas throughout the region came together in prisons, recognizing a familiar set of symbols and identity—including a history of war with the opposing mara—a nationwide and, arguably, region-wide “institution” began to develop.

The Nicaraguan government, on the other hand, has largely focused its efforts vis-à-vis youth gangs on prevention and rehabilitation. Whereas in the northern triangle, nascent maras consolidated their brand in prisons, reintegration programs built around worker training, education, and demobilization programs stifled the evolution of Nicaraguan gangs. Finally, the complete breakdown of the Somoza regime and the development of a community oriented National Police enabled the state to maintain a large presence throughout most of urban Nicaragua, further inhibiting the large-scale institutionalization of gangs.

At first glance, the rise of maras in the northern triangle seems to have coincided with a dramatic spike in violent crime in the countries where they appear, while neighboring countries in the region (i.e. Nicaragua and Costa Rica) who do not host maras have not seen the same rise in violence. Indeed, a closer look at the fearsome and hyper-violent nature of the maras themselves, added to the fact that mareros are locked in a deadly gang war in a context where involvement in drug trafficking has added enormous arms and resources to the mix would seem to support the idea that maras are directly responsible for most of the violence sweeping the region.

However, a look at the geographical distribution of violence in each country complicates the assumed role of maras in creating the widespread violence apparent in the northern triangle. The distribution of homicides in Honduras, for example, does not clearly match with the largest centers of gang activity. The occurrence of large numbers of violent deaths outside of the major gang centers of San Pedro Sula and Tegucigalpa, for instance, points to the increasing involvement of narcotics traffickers in rural coastal areas and border departments.

In Guatemala, the rural departments of Zacapa, Escuintla, Santa Rosa, and Chiquimula all have murder rates of at least 75 per 100,000. These departments—Escuintla and Santa Rosa on the Pacific coast; Jutiapa, Chiquimula, Zacapa, and Izabal on the Salvadoran or Honduran border; and Petén, a major destination for illicit air traffic—all lie on major narcotics trafficking routes.

Human rights observers (international and domestic) and NGOs working in Honduras have documented a sharp increase in killings of several vulnerable groups, including journalists, LGBT activists, union leaders, and members of peasant organizations. Their deaths shed significant doubt on the possible involvement of gangs.

A more helpful way to think of the mara phenomenon vis-à-vis violent crime would be as a parallel force—an indirect, facilitating factor in the disintegration of rule of law, rather than the direct cause.

Gangs, including maras, have a corrupting effect on the state, and their ability to function despite mass incarceration of their members is particularly overwhelming for law enforcement and judicial institutions, which has lead to a situation of widespread impunity. 

Impunity is especially rampant in the most violent rural areas of the northern triangle, spaces where the state is largely absent (in the form of institutions, social services, police, etc.), and are filled by a range of illicit actors including gangs and organized crime who have the resources and a demonstrated willingness to kill on a huge scale. Countries in the region, such as Nicaragua, that have been able avoid the mara phenomenon, and perform better in countering impunity, experience lower rates of violent crime.