Revisiting a place‐based policy: Transformations in Northeast Brazil

Despite being the second most populated region in Brazil, the Northeast has persistently accounted for a small share of national income. A well‐known attempt to develop the region was made in 1959 with the creation of SUDENE, a big push type of place‐based policy resulting in an intensification of industrial investments. Historical data sets are used to make comparable input–output tables at a 31 sector level for 1959 and 1980, and input–output analysis is applied to appraise transformations. Developments in the following decades are also discussed. The main focus is on changes in the interdependence among sectors in the region, the sectors' dependency on the rest of Brazil, and the sectors' contributions to the regional economy in terms of value added. From the first decades, the main finding is an unintended trade‐off between production growth and employment performance. Over the 1990s and turn of the century, although the economy diversified, dependence on inputs from the rest of Brazil also increased. Also, manufacturing sectors continued to be less capable of generating value added. Given persistent regional inequalities, levelling up attempts require a more encompassing approach including investing in human capital and addressing differential access to power.