The author also wrote “Dilma’s Education Dilemma” in the Fall 2011 issue of AQ.

When Dilma Rousseff assumed the Brazilian presidency in January 2011, she inherited perhaps Brazil’s most challenging socioeconomic issue to date: improving its education system. In recent years, Brazil has registered low rankings in international standardized assessments of topics like writing, reading comprehension and math. When coupled with other longstanding issues like inadequate federal funding as well as insufficient human and infrastructural resources, Brazil’s system is simply not able to keep up with the economy’s growing demands—especially in the high-tech sector.

Nevertheless, my article in the Fall 2011 issue of Americas Quarterly explains the delicacy of improving system: while increasing federal spending for education, Dilma must find ways to prune the budget, reduce fiscal deficits and keep foreign investors happy. By following in the footsteps of her predecessor, Luiz Inácio Lula da Silva (Lula), Dilma will turn to state-owned resources like oil to fund education policies—and maintain or increase the level of foreign investment.

Federal efforts to address the decline in educational performance began under Lula. While education reform was also important under the Cardoso administration (1994-2002), the Lula administration sought to expand and use its oil resources in order to fund education policy rather Cardoso’s approach which had been to pursue privatization and decentralization. In response to the discovery of new Pré-Sal (pre-salt) oil reserves off of the coast of Rio de Janeiro in 2007, before two years had passed Lula created a new federal agency for the national reserves and a “social fund” within the agency. This social fund uses approximately half of Pré-Sal’s earnings to fund education policy, signaling a clear break from Cardoso’s anti-statist approach to education policy—that is, to strategically expand and use state-owned resources in order to enhance the quality of education.

Dilma has deepened Lula’s strategies. Since entering office, she has believed in the social fund’s ability to not only strengthen education policy but also eradicate poverty. Through the fund, she plans to provide more money to the states for education, while introducing new technology into classrooms such as the use of iPad tablets. She has also increased federal funding for the Bolsa Família conditional cash transfer while creating a new social program, Brasil Sem Miseria (Brazil Without Misery). The latter increases the amount of Bolsa Família’s monthly stipends while providing new vocational training programs and microcredit. Therefore, much like her predecessor, Dilma is fully committed to expanding the state’s control over oil resources in order to invest in education.

But my article asserts that achieving these aims will be challenging. As Dilma seeks to expand and use the state’s oil resources for education, foreign investors fear that she will continue to take over—and drain—not only oil but other state-owned resources as well, while neglecting to use these resources to address the public deficit. And there is certainly reason to be concerned. As this article explains, Brazil has a long history of not only increasing state ownership over oil but also prioritizing social spending over economic stability. To convince investors that this will not happen again, this year Dilma successfully mustered congressional support for a massive decrease in federal spending while resisting a rise in the minimum wage. She has also strengthened her relationship with the international business community and continues to reaffirm her government’s commitment to fiscal stabilization and economic growth.

My article explains that Brazil provides a key lesson for other oil-rich states: Don’t waste and squander oil resources; instead, use them to invest in education. Redirecting and investing state wealth into education will be vital for developing a sound workforce, eradicating poverty and increasing your competitiveness in the globalized economy.

Eduardo J. Gómez is a guest blogger to AQ Online. He is assistant professor in the department of public policy and administration at Rutgers University.