Northeast Brazil Under The Lula Government

In this paper we seek to evaluate the President’s Lula first term policies toward Northeast. Two main hypothesis are developed. The first one is that, under Lula’s administration, Northeast benefited from a crucial change in the logic of the development model adopted in Brazil. Lula’s administration persisted on the emphasis on growth promotion fostering efficiency and competitiveness, which was started in the Collor’s term as president. However, it departed from view embodied in the previous model that efficient and internationally competitive sectors would emerge only through their submission to competition and adopted the idea that most agents can be efficient and competitive, if there are appropriate policies to promote their necessary adjustments. The second hypothesis is that the changes in the policy framework that benefit poorer regions had an impact on the relative regional per capita GDP equilibrium, so that there is no reason to expect that the higher growth observed is trend reverting in the future. Nevertheless, the main policies for the region still had a limited effect on some of the determinants of regional inequality and, therefore, they are still not enough to fully eliminate the unbalances in the long run.