Why Nations Fail

Party began to take over more and more local
governments. By 1988 it controlled the governments in
thirty-six municipalities, including large cities such as São
Paulo and Porto Alegre. In 1989, in the first free
presidential elections since the military coup, Lula won 16
percent of the vote in the first round as the party’s
candidate. In the runoff race with Fernando Collor, he won
44 percent.
In taking over many local governments, something that
accelerated in the 1990s, the Workers’ Party began to
enter into a symbiotic relationship with many local social
movements. In Porto Alegre the first Workers’ Party
administration 
after 
1988 
introduced 
“participatory

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budgeting,” which was a mechanism for bringing ordinary
citizens into the formulation of the spending priorities of the
city. It created a system that has become a world model for
local government accountability and responsiveness, and it
went along with huge improvements in public service
provision and the quality of life in the city. The successful
governance structure of the party at the local level mapped
into greater political mobilization and success at the
national level. Though Lula was defeated by Fernando
Henrique Cardoso in the presidential elections of 1994 and
1998, he was elected president of Brazil in 2002. The
Workers’ Party has been in power ever since.
The formation of a broad coalition in Brazil as a result of
the coming together of diverse social movements and
organized labor has had a remarkable impact on the
Brazilian economy. Since 1990 economic growth has been
rapid, with the proportion of the population in poverty falling
from 45 percent to 30 percent in 2006. Inequality, which
rose rapidly under the military, has fallen sharply,