Location, Concentration, and Performance of Economic Activity in Brazil

Lall, Somik V. ; Funderburg, Richard ; Yepes, Tito

World Bank, Washington, DC

关键词: ABATEMENT;    ACCOUNTING;    AGRICULTURAL PRODUCTION;    CAPITAL FORMATION;    CONSTRUCTION;   

DOI  :  10.1596/1813-9450-3268
RP-ID  :  WPS3268

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

What are the prospects for economicdevelopment in lagging sub-national regions? What are theroles of public infrastructure investments and fiscalincentives in influencing the location and performance ofindustrial activity? To examine these questions, the authorsestimate a spatial profit function for industrial activityin Brazil that explicitly incorporates infrastructureimprovements and fiscal incentives in the cost structure ofindividual firms. The authors use firm level data from the2001 annual industrial survey along with spatiallydisaggregated regional data and find that there areconsiderable cost savings from being located in areas withrelatively lower transport costs to reach large markets. Incomparison, fiscal incentives, such as tax expenditures,have modest effects in terms of influencing firm levelcosts. Although the results suggest that firms benefit frombeing in locations with good access to markets, the authorsdo not suggest that improving interregional connectivitywould necessarily assist lagging regions. In the short run,improving interregional connectivity implicitly reduces anatural tariff barrier so firms currently serving largemarkets and benefiting from economies of scale can moreeasily expand into new markets in competition with localproducers. Therefore, producers in the leading regions cancrowd out local producers, which would be detrimental forlocal production and employment in the lagging region.