OECD Territorial review of Brazil

As Brazil looks ahead, its capacity to sustain growth in the medium and long term and balance goals of competiveness and equity will largely depend on how regional policies are designed and implemented. The balancing of strong growth and social equity in recent years has been driven by a catching-up of resource-intensive regions and the implementation of social programmes based on transfers and subsidies for the most vulnerable citizens. An over-reliance on natural resources could dampen Brazil’s competitiveness in the medium and long term and will not bring progress and opportunities to all regions and the citizens living in them. Brazil’s rate of urbanisation, less intense than that of other emerging economies, can be partly attributed to the successful implementation of social policies, which to some degree contain urbanisation by inducing citizens to remain in rural and peripheral areas rather than migrating to cities.

Social policies in Brazil have been highly successful in fighting poverty and improving the lives of many disadvantaged citizens, providing them with much-needed basic public goods and services. In the future, however, these policies could be enhanced by polices targeting development in such areas and addressing critical bottlenecks for growth in the medium and long term. As this chapter shows, Brazil’s lagging regions have significant gaps in some critical areas for growth, mainly in human capital and infrastructure. Without improvement in these critical areas, opportunities for citizens living in these areas will remain limited. Moreover, social policies can potentially generate relationships of dependency among the citizens and regions receiving the transfers, with the risk that they perform below their potential. A policy that can overcome this problem, as suggested in Chapters 2 and 3, are place-based policies aimed at mobilising regions’ endogenous assets and resources, combining bottom-up and top-down approaches and ensuring that policies have coherence and complement each other in positive ways.