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The Economic Impact of State Splitting in Brazil

Author

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  • Lima Ricardo Carvalho de Andrade

    (Catholic University of Brasília, Department of Economics, Brasília, Brazil)

Abstract

The Brazilian state of Tocantins was splinted from the state of Goiás in 1988. This was the most recent first-tier subnational border reform in Brazil and involved an area that corresponds to 7.6% of the whole national territory. Using the synthetic control method, this paper estimates that the split increased the per capita GDP of the affected region by an average of 8.26%, and the positive effect persisted over the years. Additionally, we show that the Tocantins benefited more from the border reform than Goiás, and the increase of fiscal capacity of affected subnational governments may partially explain the positive effects of splitting.

Suggested Citation

  • Lima Ricardo Carvalho de Andrade, 2021. "The Economic Impact of State Splitting in Brazil," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(1), pages 417-432, January.
    • Handle: RePEc:bpj:bejeap:v:21:y:2021:i:1:p:417-432:n:5
    DOI: 10.1515/bejeap-2020-0187
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    References listed on IDEAS

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