Evaluation of the Brazilian regional development funds

This paper seeks to evaluate the relationship between the Brazilian regional development funds and GDP per capita growth on two spatial scales (municipalities and micro-regions) between 1999 and 2011. In addition to the multi-scalar approach, this work brings to the available literature three contributions: (i) the study of a longer period (1999–2011), compared to the previous literature; (ii) the possibility of spatial interaction between the geographical units, which has the advantage of allowing an analysis of the direct and indirect effects (spillover effects); and (iii) the consideration of heterogeneity institutionalized by the National Policy for Regional Development (PNDR) through the typology defined by this policy. The results from the non-spatial panel fixed effects models show that resources allocated to the Dynamic and Low-Income typologies have positive impact on the GDP per capita growth for both spatial scales (municipal and micro-regional levels). Moreover, when spatial dependence is allowed, the results indicate that municipalities and micro-regions in the Dynamic and Low-Income typologies show positive direct and indirect marginal effects for the regional development fund variable on the GDP per capita growth. Furthermore, this paper shows that the regional fund indirect effects (spatial spillovers) are higher than the direct effects. In this sense, the results discussed in this paper raise some policy issues. For instance, regional fund investments should at least consider that some of the effects might spill over into the neighboring municipalities. For this reason, coordinated allocation of these regional development funds could be more successful than isolated actions.