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OECD Territorial Review of Brazil Was Produced by the OECD Regional Development Policy Division, Directed by Joaquim Oliveira Martins

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OECD Territorial Review of Brazil Was Produced by the OECD Regional Development Policy Division, Directed by Joaquim Oliveira Martins FOREWORD – 3 Foreword At the beginning of this new millennium, regional economies are confronting momentous changes. The globalisation of trade and economic activity is increasingly testing their ability to adapt and maintain their competitive edge. There is a tendency for income and performance gaps to widen between and within regions, and the cost of maintaining social cohesion is increasing. Rapid technological change and greater use of knowledge are offering new opportunities for local and regional development but demand further investment from enterprises, reorganisation of labour and production, more advanced skills and environmental improvements. Amid this change and turbulence, regions continue to follow very different paths. Some regions are doing well and are driving growth. Others are less successful at capturing trade and additional economic activities. Many territories with poor links to the sources of prosperity, afflicted by migration and ageing, and lagging behind with respect to infrastructure and private investment, are finding it difficult to keep up with the general trend. At the same time, central governments are no longer the sole provider of territorial policy. The vertical distribution of power between the different tiers of government needs to be reassessed, as well as the decentralisation of fiscal resources in order to better respond to the expectations of citizens and improve policy efficiency. Public authorities need to weigh up current challenges, evaluate the strategies pursued in recent years, and define new options. Responding to a need to study and spread innovative territorial development strategies and governance in a more systematic way, in 1999 the OECD created the Territorial Development Policy Committee (TDPC) as a unique forum for international exchange and debate. The TDPC has developed a number of activities, including a series of national Territorial Reviews. These studies follow a standard methodology and a common conceptual framework, allowing countries to share their experiences and disseminate information on good practices. OECD TERRITORIAL REVIEWS: BRAZIL © OECD 2013 4 – ACKNOWLEDGEMENTS Acknowledgements The OECD Secretariat would like to thank the Brazilian authorities at the national and sub-national levels for their co-operation and support during the review process. The Secretariat is particularly grateful to the European Commission Directorate General for Regional Policy (DG Regio) for its financial support. Special thanks are given to the Brazilian team from the Ministry of Planning and the Ministry of National Integration for responding to the OECD questionnaires and to the Ministry of Foreign Affairs for co-ordinating between the Secretariat and Brazilian authorities. In particular, we are grateful to Henrique Villa da Costa Ferreira and Rubem Oliveira de Paula for their commitment and support. The Secretariat is also thankful to representatives from the following institutions participating in interviews: the Ministry of Planning, Ministry of National Integration, the Center for Strategic Studies and Management (CGEE), the Ministry of Agrarian Development, the Institute for Applied Research (IPEA), Banco do Nordeste, the Ministry of Social Development and Fight against Hunger, the Ministry of Health, the Ministry of Development, Industry and Foreign Trade, the Ministry of Cities, the Permanent Working Group for the APLs (GTPAPL), the National Bank for Economic and Social Development (BNDES), the authorities of the port of SUAPE, SUDENE, the Secretariat for Planning and Administration of the state of Pernambuco (Agência CONDEPE/FIDEM), EMBRAPA Tropical Agroindustry, EMBRAPA Tropical Semi-Arid, DNOCS, the Secretariat of Planning and Administration of the state of Ceará, the Institute of Research and Economic strategy of Ceará and the Municipality of Petrolina. The OECD Territorial Review of Brazil was produced by the OECD Regional Development Policy Division, directed by Joaquim Oliveira Martins. This report was drafted by a team composed of Camila Vammalle, José-Enrique Garcilazo (regional trends and development) and Annalisa Primi, under the supervision of Claire Charbit, Deputy Head of the Regional Development Policy Division. The report was first co-ordinated by Annalisa Primi, then by Camila Vammalle. Victoria Elliott provided editorial support, Jennifer Allain, Erin Byrne and Jeanette Duboys prepared the manuscript for publication and Daniel Sanchez Serra provided statistical support. Fabrizio Barca (Director General, Ministry of Economy and Finance, Italy) and Francesco del Bianco (Acting Director General, Western Economic Diversification, Canada) shared their experiences from Italy, the European Union and Canada and provided insightful comments. Raphaël Goulet and Ramón Alejo López Sanchez from DG Regio provided continued support. Valuable comments and inputs were also received form Dorothée Allain-Dupré, José Brakarz, Bárbara Castelletti, Michael Donovan, Hamlet Gutiérrez, Soo-Jin Kim, Carlos Mussi, Annabelle Mourougane and William Tompson. OECD TERRITORIAL REVIEWS: BRAZIL © OECD 2013 TABLE OF CONTENTS – 5 Table of contents Acronyms and abbreviations .................................................................................................... 11 Assessment and recommendations ........................................................................................... 17 Chapter 1 Regional trends and development in Brazil ........................................................... 27 Introduction .............................................................................................................................. 28 Macroeconomic trends ............................................................................................................. 29 Regional development gaps in Brazil ....................................................................................... 36 Assessing the performance of Brazilian regions and links to national growth ........................ 48 Tapping growth potential in Brazil’s regions ........................................................................... 56 Key policy and governance challenges .................................................................................... 66 Notes ........................................................................................................................................ 68 Bibliography ............................................................................................................................. 69 Annex 1.A1 ............................................................................................................................... 70 Annex 1.A2 ............................................................................................................................... 73 Annex 1.A3 ............................................................................................................................... 74 Annex 1.A4 ............................................................................................................................... 75 Annex 1.A5 ............................................................................................................................... 77 Chapter 2 Combining growth and social inclusion: The contribution of regional policies .. 83 Introduction .............................................................................................................................. 84 Mapping federal policies for regional development: Actions with explicit and implicit territorial targets ....................................................................................................................... 85 The rebirth of explicit regional development policies in Brazil ............................................... 90 Public infrastructure investment: The challenge of closing the gap in lagging regions ......... 117 Social programmes, innovation and competitiveness as drivers of regional development .... 127 Conclusion .............................................................................................................................. 143 Notes ...................................................................................................................................... 144 Bibliography ........................................................................................................................... 145 Annex 2.A1 ............................................................................................................................. 147 Annex 2.A2 ............................................................................................................................. 148 Annex 2.A3 ............................................................................................................................. 150 Chapter 3 Multi-level governance for more effective regional development policies ........ 153 Introduction ............................................................................................................................ 154 How regional development policy could help Brazil harness its national strategy of growth with reduction of social and regional disparities ................................................... 155 Dealing with sub-national governments’ financial and political autonomy ........................... 159 Overcoming a multi-dimensional fragmentation of policies .................................................. 173 Creating information
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