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The Role of Non-Moving Factors of Production in Brazilian Regional Disparities

Author

Listed:
  • Alexandre Rands

    (Datamétrica Consultoria, Pesquisa e Telemarketing)

Abstract

It is common to think that any regional inequality implies in regional inefficiency. Nevertheless, it is possible such inequalities arise even under an efficient allocation of resources. In these cases, policies can actually worsen resources allocation. This paper clarifies these concepts and shows that the existence of non-moving factors of production, such as non-market led economic infrastructure spatial distribution and natural resources can lead to optimal regional inequality. Some empirical evidence indicates that such sources of regional disparities play a relevant role on regional inequalities in Brazil. Therefore, public policies to reduce them can raise inefficiency within the country and reduce social welfare, if they do not take into account such problem.

Suggested Citation

  • Alexandre Rands, 2008. "The Role of Non-Moving Factors of Production in Brazilian Regional Disparities," Working Papers 19, Datamétrica Consultoria Econômica, revised 2008.
    • Handle: RePEc:dtm:wpaper:19
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