Economic Impact of the Expansion of Federal Universities in Brazil

There has been a strong expansion of the federal universities’ system in Brazil in this century, consisted of increased public spending. This study aims to estimate the regional economic impact of this expansion, using an Interregional Input-Output model estimated for the 558 micro-regions of the Brazilian economy, at the level of 55 sectors, for the year of 2004. Treating the expansion of public spending in federal universities as a shock on the sector of Public Education, for the period 2004 to 2010, it is noticed that the federal universities’ budget increased from US$ 5.6 billion at the beginning of the century to US$ 7.9 billion in 2010. The global results show a total effect of US$ 6 billion in GDP (0.36% of 2004 GDP), US$ 10.5 billion in gross value of production, and an increase of 430,400 employed people. It appears that the smaller micro-regional economies present the highest relative impacts of the expansion of federal spending on universities, and those micro-regions, which have a capital of a federative unit, show the largest effects in absolute. Specifically, the microrregion of Diamantina - MG is the one with the largest percentage impact. Among the existing universities, the Federal University of Rio de Janeiro (UFRJ) has the largest absolute impact. But among the new ones, it stands out the Federal University of ABC (UFABC) and the Federal University of Recôncavo da Bahia (UFRB).