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The short-run regional effects of new investments and technological upgrade in the Brazilian automobile industry: An interregional computable general equilibrium analysis

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  • Eduardo Haddad
  • Geoffrey Hewings

Abstract

With a greater commitment to market forces in recent years, the Brazilian federal government is left with fewer options to manipulate growth in the less developed regions of the country. Thus, private investments play a key role in the process of regional development. New investments in the Brazilian automobile industry are being sought by the regions in a strong competition for incoming capital through fiscal incentives. One of the issues that concern labor unions surrounds the production technology embodied in the incoming capital, which is claimed to be accompanied by sharp reductions in employment levels. In this paper, the regional impact of the new investments in the automobile industry is evaluated through the use of an interregional computable general equilibrium model. Attention is directed to employment estimates and the impacts on regional inequality. The simulation results for the short-run show that: the employment effects of the labour-saving technology in the automobile industry are positive for the economy as a whole; and even though investments in the less developed region (the Northeast) are more beneficial to the improvement of regional imbalances in the country, in terms of efficiency, investments in the Centre-South generate higher national economic growth.

Suggested Citation

  • Eduardo Haddad & Geoffrey Hewings, 1999. "The short-run regional effects of new investments and technological upgrade in the Brazilian automobile industry: An interregional computable general equilibrium analysis," Oxford Development Studies, Taylor & Francis Journals, vol. 27(3), pages 359-383.
    • Handle: RePEc:taf:oxdevs:v:27:y:1999:i:3:p:359-383
    DOI: 10.1080/13600819908424182
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    1. Guilhoto, Joaquim J.M., 1995. "Um modelo computável de equilíbrio geral para planejamento e análise de políticas agrícolas (PAPA) na economia brasileira [A computable general equilibrium model for planning and analysis of agricu," MPRA Paper 42349, University Library of Munich, Germany.
    2. Guilhoto, Joaquim José Martins, 1986. "A model for economic planning and analysis for the brazilian economy," MPRA Paper 53944, University Library of Munich, Germany.
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    Cited by:

    1. HADDAD Eduardo & DOMINGUES Edson, 2010. "Interstate Trade and Regional Development: An Interregional CGE Approach," EcoMod2003 330700065, EcoMod.
    2. Somik V. Lall, 2009. "Territorial Development Policy : A Practitioner's Guide," World Bank Publications - Reports 12698, The World Bank Group.
    3. Anu Tokila & Mika Haapanen, 2012. "Evaluation of Deadweight Spending in Regional Enterprise Financing," Regional Studies, Taylor & Francis Journals, vol. 46(2), pages 185-201, May.
    4. Casimiro Filho, Francisco & Rocha, Marcelo Theoto & Lima, Patrícia Verônica Pinheiro Sales & Miranda, Silvia Helena G. de & Guilhoto, Joaquim José Martins, 2002. "MIBRA-USP, an interregional applied general equilibrium model for the Brazilian economy," MPRA Paper 54309, University Library of Munich, Germany.
    5. Paola Azar, 2020. "Politics as a determinant of primary school provision The case of Uruguay, 1914-1954," Documentos de Trabajo (working papers) 20-07, Instituto de Economía - IECON.
    6. Eduardo Haddad & Alexandre A. Porsse & Eduardo P. Ribeiro, 2006. "Modeling Interjurisdictional Tax Competition in a Federal System," ERSA conference papers ersa06p359, European Regional Science Association.
    7. Eduardo A. Haddad & Jesús P. Mena-Chalco, Otavio J. G. Sidone, 2015. "Scholarly Collaboration in Regional Science in Developing Countries: The Case of the Brazilian REAL Network," Working Papers, Department of Economics 2015_12, University of São Paulo (FEA-USP).
    8. Hannah Schürenberg-Frosch, 2014. "Improving Africa's Roads: Modelling Infrastructure Investment and Its Effect on Sectoral Production Behaviour," Development Policy Review, Overseas Development Institute, vol. 32(3), pages 327-353, May.
    9. Rocha, Marcelo Theoto & Guilhoto, Joaquim José Martins & Lima, Patrícia Verônica Pinheiro Sales & Casimiro Filho, Francisco & Miranda, Silvia Helena G. de, 2000. "Exchange rate versus tariff policies in Brazil: results from MIBRA-USP, an interrregional applied general equilibrium model of the Brazilian economy," MPRA Paper 54230, University Library of Munich, Germany.
    10. Carlos Bianchi & Hugo Laguna, 2020. "Firm’s innovation strategies and employment: new evidence from Uruguay," Documentos de Trabajo (working papers) 20-06, Instituto de Economía - IECON.
    11. Alexandre Porsse & Eduardo Haddad & Eduardo Ribeiro, 2005. "Economic Effects Of Regional Tax Incentives: A General Equilibrium Approach," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33rd Brazilian Economics Meeting] 124, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    12. Dafna Schwartz & Joseph Pelzman & Michael Keren, 2008. "The Ineffectiveness of Location Incentive Programs," Economic Development Quarterly, , vol. 22(2), pages 167-179, May.
    13. Alexandre Porsse & Eduardo Haddad, 2005. "Tax incentives and economic effects - a general equilibrium approach," ERSA conference papers ersa05p733, European Regional Science Association.
    14. Eduardo A. Haddad & Jesús P. Mena-Chalco & Otávio J. G. Sidone, 2017. "Scholarly Collaboration in Regional Science in Developing Countries," International Regional Science Review, , vol. 40(5), pages 500-529, September.
    15. repec:ocp:rpaper:rp-0324 is not listed on IDEAS
    16. Beckman, Jayson & Hertel, Thomas, 2009. "Why Previous Estimates of the Cost of Climate Mitigation Might Be Too Low," Conference papers 331860, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    17. Eduardo Amaral Haddad & Edson Paulo Domingues, 2003. "Interstate Trade and Regional Development: an (Integrated) Interregional CGE Approach," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31st Brazilian Economics Meeting] e32, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    18. Lei Zhang & Henry Kinnucan & Jing Gao, 2016. "The Economic Contribution of Alabama’s Automotive Industry to Its Regional Economy," Economic Development Quarterly, , vol. 30(4), pages 295-315, November.
    19. James Giesecke & John Madden, 2010. "Uncovering the Factors behind Comparative Regional Economic Performance: A Multi-regional Computable General Equilibrium (CGE) Approach," Regional Studies, Taylor & Francis Journals, vol. 44(10), pages 1329-1349.
    20. Bröcker, Johannes & Korzhenevych, Artem & Schürmann, Carsten, 2010. "Assessing spatial equity and efficiency impacts of transport infrastructure projects," Transportation Research Part B: Methodological, Elsevier, vol. 44(7), pages 795-811, August.

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