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The effects of oil royalties on regional inequality in Brazil

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  • Ribeiro, Luiz Carlos de Santana
  • Santana, José Ricardo de
  • Santos, Rafaela Nascimento

Abstract

This article evaluates the impact of oil royalties on Brazil’s production structure and their effects on regional inequality. An interregional input-output model was used, encompassing the 27 Brazilian states and 26 sectors, with base year 2008. The simulation strategy assumed 75% of these funds are channelled into education and 25% into the health sector, as mandated by Law 12.858/2013. To measure the effect of royalties on regional inequality, the Gini coefficient was calculated both ex-ante and ex-post with respect to the impact analysis. The main findings indicate that interregional and intersectoral spillovers are weak; but, in the Southeast and Northeast regions, the investment of royalties in education and health could help reduce intraregional inequality.

Suggested Citation

  • Ribeiro, Luiz Carlos de Santana & Santana, José Ricardo de & Santos, Rafaela Nascimento, 2022. "The effects of oil royalties on regional inequality in Brazil," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    • Handle: RePEc:ecr:col070:48047
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    1. Guilhoto, J. J. M. & Sesso Filho, U. A., 2005. "Estimação da Matriz Insumo-Produto a Partir De Dados Preliminares das Contas Nacionais [Estimation of input-output matrix using preliminary data from national accounts]," MPRA Paper 38212, University Library of Munich, Germany.
    2. Lauro Carnicelli & Fernando Antonio Slaibe Postali, 2014. "Royalties Do Petróleo E Emprego Públiconos Municípios Brasileiros," Anais do XL Encontro Nacional de Economia [Proceedings of the 40th Brazilian Economics Meeting] 234, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    3. Celso Bissoli Sessa & Thiago Cavalcante Simonato & Edson Paulo Domingues, 2017. "O ciclo das commodities e crescimento regional desigual no Brasil: uma aplicação de equilíbrio geral computável (EGC)," Textos para Discussão Cedeplar-UFMG 551, Cedeplar, Universidade Federal de Minas Gerais.
    4. James Feyrer & Erin T. Mansur & Bruce Sacerdote, 2017. "Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution," American Economic Review, American Economic Association, vol. 107(4), pages 1313-1334, April.
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    6. Postali, Fernando Antonio Slaibe, 2009. "Petroleum royalties and regional development in Brazil: The economic growth of recipient towns," Resources Policy, Elsevier, vol. 34(4), pages 205-213, December.
    7. Tromben, Varinia & Jiménez, Juan Pablo, 2006. "Política fiscal y bonanza: impacto del aumento de los precios de los productos no renovables en América Latina y el Caribe," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
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