Open Conference Systems, 16th SGBED & XII ESPM International Conference in Management

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Fiscal Incentives
Marcelo Ladvocat, Roberto Flores Falcão

Last modified: 2019-03-26

Abstract


The proposed panel intends to discuss the relationship between fiscal decentralization, regional disparities and economic growth within 26 Brazilian’s states and Federal District.

The papers that is going to guide the discussion, “Regional Disparities, Public Policies and Economic Growth in Brazil”, highlights the channels through which decentralization can affect inequality: human capital, vertical fiscal imbalance, population’s geographic concentration, and local taxes.

Given Brazil’s reality, a country with extreme disparities and high levels of inequality – social, economic and political – economic considerations, such as fiscal decentralization should be central to any proposal intended to improve the citizens’ living standards. Northeast and north regions continue to lag economically behind other regions. According to the data from Brazil’s statistical agency (IBGE), the south and southeast regions generate around 70% of the country’s GDP. Moreover, in Brazil only three states out of 26 hold 53% of Brazil’s GDP.

By means of an econometric model, the results of our study show that fiscal decentralization should be a fundamental redistributive instrument and was able to gradually converge living standards within different regions of Brazil.

The relevance of the topic also includes the fact that the few existing studies on Brazilian’s fiscal structure facing regional economic growth show conflicting results. Further, fiscal decentralization can lead to a more efficient provision of local public goods and services to promote a welfare state, citizen’s preferences and economic growth. However, Brazil's policymakers seem to have a different view.

Keywords


Decentralization; Fiscal incentives; Regional Disparities

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