Pro‐Poor Governance: Evidence on Incentivizing Policy Implementation in Brazil

Pro-poor policies often fail in their goals because poverty itself impairs the state’s implementation capacity and skews politicians’ incentives, producing a governance trap. An exception is Brazil’s Bolsa Família conditional cash transfer programme, which exhibits consistently better implementation in poorer municipalities with less state capacity. This study illuminates the conditions supporting this unusual pattern of pro-poor governance, defined as better implementation in poorer communities. Where local political actors receive financial rewards for improved implementation, the constraint of a high rate of poverty transforms into both an opportunity to earn significant discretionary revenue and a compelling motive in the absence of alternative revenue sources. Rather than operating as a binding constraint, implementation capacity can be rapidly built when political motivations to raise revenue are strong and implementation is labour-intensive and scalable. For Bolsa Família, municipal implementation is rewarded through the Index of Decentralized Management. Cross-sectional and panel data analysis confirm that, as the theory of pro-poor governance predicts, the municipalities performing best on this index are those with few alternative sources of revenue and the greatest scope to benefit, and that municipalities target the index components with the highest returns.