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The short-run regional effects of new investments and technological upgrade in the Brazilian automobile industry: An interregional computable general equilibrium analysis


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  • Eduardo Haddad
  • Geoffrey Hewings


With a greater commitment to market forces in recent years, the Brazilian federal government is left with fewer options to manipulate growth in the less developed regions of the country. Thus, private investments play a key role in the process of regional development. New investments in the Brazilian automobile industry are being sought by the regions in a strong competition for incoming capital through fiscal incentives. One of the issues that concern labor unions surrounds the production technology embodied in the incoming capital, which is claimed to be accompanied by sharp reductions in employment levels. In this paper, the regional impact of the new investments in the automobile industry is evaluated through the use of an interregional computable general equilibrium model. Attention is directed to employment estimates and the impacts on regional inequality. The simulation results for the short-run show that: the employment effects of the labour-saving technology in the automobile industry are positive for the economy as a whole; and even though investments in the less developed region (the Northeast) are more beneficial to the improvement of regional imbalances in the country, in terms of efficiency, investments in the Centre-South generate higher national economic growth.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Oxford Development Studies.

Volume (Year): 27 (1999)
Issue (Month): 3 ()
Pages: 359-383

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Handle: RePEc:taf:oxdevs:v:27:y:1999:i:3:p:359-383

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Cited by:
  1. Casimiro Filho, Francisco & Rocha, Marcelo Theoto & Lima, Patrícia Verônica Pinheiro Sales & Miranda, Silvia Helena G. de & Guilhoto, Joaquim José Martins, 2002. "MIBRA-USP, an interregional applied general equilibrium model for the Brazilian economy," MPRA Paper 54309, University Library of Munich, Germany.
  2. Rocha, Marcelo Theoto & Guilhoto, Joaquim José Martins & Lima, Patrícia Verônica Pinheiro Sales & Casimiro Filho, Francisco & Miranda, Silvia Helena G. de, 2000. "Exchange rate versus tariff policies in Brazil: results from MIBRA-USP, an interrregional applied general equilibrium model of the Brazilian economy," MPRA Paper 54230, University Library of Munich, Germany.
  3. Eduardo Haddad & Alexandre A. Porsse & Eduardo P. Ribeiro, 2006. "Modeling Interjurisdictional Tax Competition in a Federal System," ERSA conference papers ersa06p359, European Regional Science Association.
  4. Alexandre Porsse & Eduardo Haddad & Eduardo Ribeiro, 2005. "Economic Effects Of Regional Tax Incentives: A General Equilibrium Approach," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33th Brazilian Economics Meeting] 124, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  5. Somik V. Lall, 2009. "Territorial Development Policy : A Practitioner's Guide," World Bank Other Operational Studies 12698, The World Bank.
  6. Bröcker, Johannes & Korzhenevych, Artem & Schürmann, Carsten, 2010. "Assessing spatial equity and efficiency impacts of transport infrastructure projects," Transportation Research Part B: Methodological, Elsevier, vol. 44(7), pages 795-811, August.
  7. Alexandre Porsse & Eduardo Haddad, 2005. "Tax incentives and economic effects - a general equilibrium approach," ERSA conference papers ersa05p733, European Regional Science Association.
  8. Eduardo Amaral Haddad & Edson Paulo Domingues, 2003. "Interstate Trade and Regional Development: an (Integrated) Interregional CGE Approach," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31th Brazilian Economics Meeting] e32, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].


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