1. OECD Study on Regional Development in Brazil
Mario Marcel
Deputy Director
Public Governance and Territorial Development
OECD

2. Outline Conceptual Framework Key Facts Key Policies Key Challenges
Conclusions

3. Brazil is among the most decentralised countries both in revenue and spending allocations
Conceptual Framework

4. 1- OECD Territorial Reviews
Conceptual Framework
Not limited to public finance and fiscal federalism approach
(distribution of spending responsibilities, allocation of revenues, stability, etc.)
How can regional development policy help building a sustainable growth process in all regions?
17 National Reviews:
Canada (2002)
Chile (2009)
Czech Republic (2004)
Finland (2005)
France (2006)
Hungary (2001)
Italy (2001)
Japan (2005)
Korea (2001)
Luxembourg (2007)
Mexico (2003)
Norway (2007)
Poland (2008)
Portugal (2008)
Switzerland (2002, 2011)
Sweden (2010)
Slovenia (2011)

5. 3- Paradigm shift in regional policies
Conceptual Framework
Traditional Regional Policies
New Paradigm
Objectives
Balancing economic performances by temporary compensating for disparities
Tapping under-utilised regional potential for competitiveness
Strategies
Sectoral approach
Integrated development projects
Tools
Subsidies and state aid
Soft and hard infrastructures
Actors
Central government
Different levels of government
Unit of analysis
Administrative regions
Functional regions
Redistributing from leading to lagging regions
Building competitive regions bringing together actors and targeting key local assets

6. 1- Concentration of population and of GDP are above OECD levels
Key Facts
Geographic concentration index of GDP and population (TL2), 2007
Source: Calculations based on OECD Regional Database (2010) and data provided by IBGE.

7. 2- Territorial disparities have decreased but remain high
Key Facts
Territorial disparities have decreased since 1995 but remain high compared with OECD countries
In catching-up economies inequality is high and it tends to rise due to the presence of growth poles…
Territorial disparities in GDP per capita
within countries, (TL2), 2007
… Brazil is an exception…
Gini index of inequality of GDP per capita across TL2 regions,

8. 3- Most unsatisfied needs are concentrated in lagging regions
Key Facts
GDP per capita, access to health establishments and human development index, Brazilian TL2 regions
1. The Human Development Index (HDI) is a comparative measure of life expectancy, literacy, education and standards of living for countries worldwide. Note: This map is for illustrative purposes and is without prejudice to the status of or sovereignty over any territory covered by this map.
2. This map is for illustrative purposes and is without prejudice to the status of or sovereignty over any territory covered by this map.
Source: Calculations based on data provided by (1) IBGE, (2) Ministério do Planejamento, Orçamento e Gestão. Estados and (3) CEPAL/ PNUD/OIT (2008) Emprego, desenvolvimento humano e trabalho decente: a experiencia brasileira recente.

9. 4- There has been a process of convergence
Key Facts
Level and growth of GDP per capita in TL2 Brazilian regions,
A decline in disparities can be good or bad…
Shifting a policy based on disparities as a goal to one fomenting growth potential in all regions…
Source: Calculations based on data provided by IBGE.

10. 5- Catching up has been driven mainly by advances in resource-intensive regions
Key Facts
GDP per capita growth and specialisation in agriculture and mining, Brazilian TL2 regions
Note: This map is for illustrative purposes and is without prejudice to the status of or sovereignty over any territory covered by this map.
Source: Calculations based on data provided by IBGE.

11. 1- A combination of policies is necessary
Key Policies
Sustainable poverty reduction requires creating local jobs and growth
Complementarities across policies are not sufficiently exploited
Improve co-ordination of policies
Target the relevant scale
Regional development policy could reinforce the impact of social policies such as Bolsa Família

12. 2- Resources for regional development are soaring, but target mainly private firms
Key Policies
Source: Sistema de Informações Geranciais dos Fundos Constitucionais de Financiamento ( ); IRPJ e IOF-Coordenação-Geral de Estudos Econômicos-Tributários – COGET/Receita Federal; Relatório de Execução Territórios da Cidadania Matriz 2008 and Relatório de Execução Plano de Execução 2009 Territories of Citizenship.

13. Regional allocation of PAC investments
3- Public investment and BNDES funds still face difficulties reaching lagging regions
Key Policies
Regional allocation of PAC investments
( , per capita)
Regional allocation of lending by BNDES system
(2007, per capita)
Source: Relatórios Estaduais. Totals for four years,
Source: BNDES website,

14. 1- Brazil faces multilevel governance challenges
Key Challenges
Overcoming multi-dimensional fragmentation of policies
“Contracts” are the most frequently used instruments in OECD countries
Ministerial Committee for Regional Policy in Denmark; Ministries of Regional Development in Chile, Czech Republic, Poland, Slovenia or Slovak Republic
Dealing with subnational governments financial and political autonomy
COAG in Australia
Building institutional and administrative capacity at subnational level and increasing civil society participation
“Civic coalitions” in the USA
Reducing information asymmetries, improving monitoring and evaluation
KOSTRA in Norway

15. 2- Examples of existing tools for co-ordination in Brazil
Key Challenges
Laws
Fiscal Responsibility law
Co-ordinating institutions
Committee for the Management of the PAC
Convenios (agreements) and pacts
Pact to reduce mother and infant mortality
Regional development agencies
Sudene
Single Registry, national census, etc.

16. Key conditions for effective regional development
Conclusions
Give high visibility and long term commitment
Develop efficient vertical and horizontal co-ordination mechanisms
Promote place-based policies
Involve local actors