Fiscal Policy, Credit Availability and Financing of Regional Policies in Brazil: Has Lula’s Government Changed Anything?

Abstract

The relationship between regional imbalances and strengthening of the financial system is not simple though it may seem so at first sight, given that developing countries have less developed financial systems. In a national financial system as in Brazil this aspect deserves special treatment, particularly if we recognize that regional development policy cannot be studied without considering macroeconomic policy, fiscal mechanisms of public financing, the nature of fiscal federalism and the Fiscal Responsibility Law. 2 In this sense, the decentralization, the fiscal federalism as well as the autonomy of sub-national governments are crucial for articulating regional development policy in Brazil. In fact, the share of tax revenues and the autonomy of federative units are critical success factors for financing regional development. Therefore, the Constitutional Funds for regional development, created through the Constitution of 1988 in Brazil, as well as others regional development funds have an important role. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.