Brazil is among the most decentralised countries both in revenue and spending allocations Conceptual Framework
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)
3- Paradigm shift in regional policies Traditional Regional PoliciesNew Paradigm Objectives Balancing economic performances by temporary compensating for disparities Tapping under-utilised regional potential for competitiveness StrategiesSectoral approach Integrated development projects ToolsSubsidies and state aidSoft and hard infrastructures ActorsCentral governmentDifferent levels of government Unit of analysis Administrative regionsFunctional regions Redistributing from leading to lagging regions Building competitive regions bringing together actors and targeting key local assets Conceptual Framework
1- Concentration of population and of GDP are above OECD levels Geographic concentration index of GDP and population (TL2), 2007 Source: Calculations based on OECD Regional Database (2010) and data provided by IBGE. Key Facts
2- Territorial disparities have decreased but remain high Key Facts In catching-up economies inequality is high and it tends to rise due to the presence of growth poles… … Brazil is an exception… Territorial disparities have decreased since 1995 but remain high compared with OECD countries Territorial disparities in GDP per capita within countries, (TL2), 2007 Gini index of inequality of GDP per capita across TL2 regions, 1980-2007
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.
4- There has been a process of convergence Level and growth of GDP per capita in TL2 Brazilian regions, 1980-2007 Source: Calculations based on data provided by IBGE. Key Facts 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…
5- Catching up has been driven mainly by advances in resource-intensive regions 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. Key Facts
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
2- Resources for regional development are soaring, but target mainly private firms Key Policies Source: Sistema de Informações Geranciais dos Fundos Constitucionais de Financiamento (2000-09); 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.
3- Public investment and BNDES funds still face difficulties reaching lagging regions Key Policies Regional allocation of PAC investments (2007-2010, per capita) Source: Relatórios Estaduais. Totals for four years, 2007-10. Regional allocation of lending by BNDES system (2007, per capita) Source: BNDES website, www.bndes.gov.br.
1- Brazil faces multilevel governance 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 Key Challenges
2- Examples of existing tools for co-ordination in Brazil 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. Key Challenges
Key conditions for effective regional development Give high visibility and long term commitment Develop efficient vertical and horizontal co-ordination mechanisms Promote place-based policies Involve local actors Conclusions