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OECD Study on Regional Development in Brazil

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Presentation on theme: "OECD Study on Regional Development in Brazil"— Presentation transcript:

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

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

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