Regional Convergence in Brazil

Abreha, Kaleb; Ornelas, Rafael; Zaourak, Gabriel

Regional Convergence in Brazil

Autores

Abreha, Kaleb

Ornelas, Rafael

Zaourak, Gabriel

Editor

Washington, DC: World Bank

Descripción

This paper examines whether labor productivity converged across Brazil’s states (“departments”) between 2002 and 2018. The results show strong evidence of unconditional convergence in which states with lower levels of initial labor productivity experienced substantially faster labor productivity growth. The convergence rate was faster over 2002–10 compared to 2010–18 period and particularly strong in agriculture, extractives, and manufacturing. These findings of the regional convergence are robust to controlling for state and industry fixed effects, states’ initial poverty rates, human capital, tax collection per capita, and infrastructure. Given the high disparity in labor productivity across Brazil’s states, such regional convergence has the potential to raise aggregate productivity and per capita income.