He sought to strengthen Brazil's regional leadership by forming the Union of South American Nations and re-launching Mercosur, the South American free trade zone. Lula has campaigned to win a permanent seat for Brazil on the United Nations Security Council and Brazil has won the claim to host the 2016 Summer Olympics and the 2014 World Cup. [Read here for more on the Olympics and the World Cup.]

Whether or not President-elect Rousseff follows the bold international diplomacy course set by Lula, the country will find itself directly before the global spotlight during the next presidency.

Lula's Shadow in 2010

The social, economic and political circumstances surrounding Brazil's election of 2010 could scarcely be more different than they were just eight years ago when President Lula da Silva was first elected.

Not only has Brazil paid off its foreign currency-denominated debt, but it has also shifted from being a debtor to a creditor to the IMF, having recently provided it a $10 billion loan.

Brazil's economic growth has averaged a steady 4% in recent years despite the global economic crisis, which is fully double the country's average growth rate of the previous decade. And unemployment is at the lowest level recorded by the nation's statistical agency, IBGE.

A considerable part of Brazil's economic boom owes to favorable international economic conditions, including strong demand—particularly from Asia—for commodities such as iron ore, petroleum and soy beans that Brazil exports.

At the same time, high international liquidity has spurred heavy flows of investment to developing nations. Indeed, developing nations as a whole are enjoying the best terms on which to borrow on international capital markets in decades.

These trends have not only fueled domestic growth, but they have also offered Brazil's government the fiscal leeway to finance the expansion of antipoverty social programs and the sharp increases in the minimum wage, which has seen its value in recent years increase 50% above inflation.

Together, these factors have brought a decline in poverty in Brazil from 34% of the population in 2002, to 22.6% in 2010. And inequality has fallen sharply with 29 million Brazilians joining the middle class between 2003 and 2009. It has been remarkably swift social transformation.

Also in sharp contrast to 2002, international markets have largely greeted this election with a shrug. Even though the two leading candidates differed on policies such as the pace of debt reduction and interest rates, both were viewed by market actors as relatively "safe" and both have pledged to continue the general course of the Lula government. This perception is striking in part because of the strong negative reaction of global investors to the leftist Workers' Party earlier this decade.

Evidence of investors' confidence in the leftist party and candidate can be found in the heavy inflows of capital to Brazil in September and October 2010, which were so strong that the government took measures to prevent excessive exchange rate appreciation. For a country such as Brazil that relies on exports, currency appreciation raises the cost of the nation's goods on international markets, dampening their competitiveness. Such measures included intervention in capital markets to restrict the effects of capital inflows on the domestic economy, and a doubling of a tax on foreign purchases of bonds in Brazil, which aimed to reduce upward pressure on the country's currency.

This election was also the first presidential contest since Brazil's return to democracy in 1985 in which the name Luiz Inácio Lula da Silva was not on the ballot. Nevertheless, Lula's presence was powerfully felt in this election.

Indeed, the victory by Dilma Rousseff, his hand-picked successor, offers a powerful signal of the country's satisfaction with the status quo and with the economic course charted by the Lula government. Not only has Rousseff never held elected office, instead having long toiled behind the scenes as a technocrat, but as recently as January she was also battling lymphatic cancer.

For some analysts, the expansion of prosperity and of economic security is a principal reason why the outgoing president could hand-pick a relatively unknown technocrat to be his successor. Despite corruption scandals in his party and cabinet, Lula enjoys a colossal 80% approval rating, prompting President Obama recently to call him "the most popular politician on earth."

Throughout much of the campaign, the two top candidates—Serra and Rousseff—jockeyed fiercely to establish themselves as the one more likely to carry on the work of the Lula government.

Serra claimed an early lead in the election in large part due to the lack of name recognition by Rousseff. Polls moved sharply in her favor, however, after Rousseff officially declared her candidacy and began to campaign in earnest with Lula closely at her side. As Lula sought to transfer his enormous popularity to Rousseff, he was more than once found in breach of electoral laws for using his official position to campaign, for which he faced nominal fines.

In the final months of the election, Rousseff seemed to be on course to win a majority of votes in the first round of the election, with a clear double-digit lead over her closest rival. A late surge of support for the Green Party candidate (Marina Silva) denied Rousseff outright victory in the first round. Nonetheless, Rousseff held her lead in the October 31 run-off and won a decisive 56.05%, compared to 43.95% for José Serra.

The Changing Face of Brazilian Politics

For a country with an average income just a quarter that of the United States, and with only a recent history of democratic competition, the sophistication and seamlessness of Brazil's electoral process is nothing short of remarkable.

This is particularly so given that the 2010 election was just the sixth presidential contest since Brazil's 1985 transition to civilian democracy after 21 years of dictatorship. Prior to the 1964 coup d'état that ushered in two decades of military rule, moreover, Brazil had experienced just two decades of democratic politics in the nation's 500 year history—and at that, with only a limited franchise. Indeed, it was only in 1988 that voting became truly universal with the inclusion of illiterate voters in the electorate.

Today, the voting system in Brazil is nearly all electronic (exceptions are made only for the remotest areas). No names appear on the ballot, and electors type in numbers representing the specific code for each candidate. Turnout at elections is high, but voting is mandatory and the failure to vote without justification is punishable by a fine. Voter apathy or displeasure thus is channeled in ways that included the submission of blank or null ballots, or through protest votes.

In addition to the new sophistication of Brazil's elections, the very fact of Lula's presidency, leaving aside his immense popularity, marks an historic shift in Brazilian politics, which had been long dominated by elites.

Lula was born in dire poverty in the rural interior of Brazil's northeastern state of Pernambuco, one of 8 surviving children of a poor rural family. His family migrated to the industrial Southeast state of São Paulo when he was a child. Having only completed schooling to the fourth grade, Lula found work on the streets as a shoe-shine boy and eventually landed an industrial job as a lathe operator where he lost his finger in a workplace accident.

He rose in the metalworkers' union hierarchy, taking a leadership position in the labor movement as it confronted Brazil's military dictatorship in the 1970s, holding strikes and public marches demanding a return to democracy. In 1980 Lula became a founding member of the Workers' Party (Partido dos Trabalhadores, or PT), which gradually rose from a minor presence in Brazil's National Congress to be one of the largest in the legislature.

Such a rise from dire poverty to the highest office in the nation has allowed Lula to connect to the masses of poor Brazilians who have become his electoral base.

By contrast, Dilma Rousseff lacks both the compelling life story and her own broad connections to an electoral base. Born in a middle-class family of a Bulgarian immigrant, Rousseff came of age under the military dictatorship in Brazil and joined other college students in left-wing armed resistance. She was arrested and is said to have endured torture at the hands of the military during her two years of detention.

After her release, Rousseff returned to college and studied economics, and began a career in government service. Rousseff was not a member of the Worker's Party throughout her early career; indeed, she only joined the PT in 2000. Instead, she was linked to the Party of Brazilian Workers (PTB) in which she rose through the bureaucratic ranks as a skillful technocrat.

After joining the PT, Rousseff moved on to national level politics and was appointed Lula's energy minister in 2003. After a corruption scandal in 2005 forced the resignation of José Dirceu, Lula's Chief of Staff (Chefe da Casa Civil), Rousseff was appointed to that position and became the president's chief minister and close advisor.

A New Brazil

Despite the tremendous strides the country has made in recent decades, many challenges remain for the new president. Among them are still-high levels of poverty and inequality, an uneven educational system, and alarming rates of violence.

Not only do vast segments of the Brazilian population remain in conditions of deep poverty, but many have difficulty accessing the social benefits enjoyed by the more affluent, including high quality education and social services.

In the realm of education, Brazil spends approximately the same share of GDP on education as the most affluent countries, but it inverts the typical spending priority, lavishing the lion's share of spending on higher education, which is accessible to just a few, who are generally the more affluent segment of the population.

The next president will also have to confront the problem of violence and weak rule of law. With plans underway for the Olympic games in Rio de Janeiro, the city's high rates of violence—much of it at the hands of drug gangs and informal militias—have drawn international concern.

Homicide rates in Brazil are among the highest in the world, averaging 25.2 for every 100,000 people (compared to 5 for every 100,000 people in the United States). Such violence had doubled between 1980 and 2002, making homicide the leading cause of death for Brazilians age 15-44 earlier this decade.

Yet, like many things in Brazil, violence is quite unevenly distributed, and is improving for some. Whereas the largest metropolitan areas have made great strides in combating violence—the city of São Paulo has experienced a 70% drop in the homicide rate between 1999 and 2008, reaching a rate of 11.23 homicides per 100,000 people in 2009—violence has grown dramatically in smaller cities of the interior, which have seen a 37% rise in the homicide rate in the past decade.

Women and children are also frequently victimized by social violence. A study issued this year found that more than 41,000 women in Brazil were killed in acts of domestic violence between 1997 and 2007—a rate of ten per day. With more than 150 people killed each day in 2005, Brazil's murder rate has compared to some low-intensity war zones.

For many people, moreover, the police offer little security or protection from such violence, and are even perpetrators of it, often with impunity. For many of the poorest citizens, justice thus seems to be reserved for the most affluent.

As she takes over the Presidency, Rousseff thus faces a difficult challenge in quelling such high rates of violence and strengthening the rule of law. These will be crucial for the continuation of Brazil's remarkable achievements in political and economic development.