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Petroleum royalties and regional development in Brazil: The economic growth of recipient towns

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  • Postali, Fernando Antonio Slaibe

Abstract

In 1997, Brazil approved law ner 9478, establishing new rules for sharing petroleum royalties with Brazilian municipalities. The goal of this paper is to evaluate whether royalties distributed under the new law have contributed for the development of benefited municipalities. For that the difference-in-differences estimator (diff-in-diff) is used, which compares the evolution of the economic product into the municipality affected by the new law with the unaffected ones, by exploring the new legislation as an exogenous change. The data refer to the municipal gross domestic product (GDP) growth rate before and after the event. Results are surprising, showing that royalty receivers grew less than municipalities that did not receive such resources. The difference is small but statistically significant. In general, an increase of one real in royalties per capita reduces the growth rate of the municipal product in 0.002 percentile points.

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Bibliographic Info

Article provided by Elsevier in its journal Resources Policy.

Volume (Year): 34 (2009)
Issue (Month): 4 (December)
Pages: 205-213

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Handle: RePEc:eee:jrpoli:v:34:y:2009:i:4:p:205-213

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Web page: http://www.elsevier.com/locate/inca/30467

Related research

Keywords: Royalties Difference-in-differences Petroleum rents;

References

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Citations

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Cited by:
  1. Lauro Carnicelli & Fernando Antonio Slaibe Postali, 2014. "Oil windfalls and local fiscal effort: a propensity score analysis," Working Papers, Department of Economics 2014_03, University of São Paulo (FEA-USP).
  2. Postali, Fernando Antonio Slaibe & Nishijima, Marislei, 2013. "Oil windfalls in Brazil and their long-run social impacts," Resources Policy, Elsevier, vol. 38(1), pages 94-101.
  3. José Carlos Ferreira Da Silva & Vander Mendes Lucas & Moisés De Andrade Resende Filho, 2014. "Royalties Do Petróleo E Eleições Municipais: O Caso Brasileiro," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41th Brazilian Economics Meeting] 078, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  4. repec:spa:wpaper:2014wpecon03 is not listed on IDEAS

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