The Economic Impact of State Splitting in Brazil

Lima Ricardo Carvalho de Andrade ()
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Lima Ricardo Carvalho de Andrade: Catholic University of Brasília, Department of Economics, Brasília, Brazil
Authors registered in the RePEc Author Service: Ricardo Carvalho de Andrade Lima

The B.E. Journal of Economic Analysis & Policy, 2021, vol. 21, issue 1, 417-432

Abstract: The Brazilian state of Tocantins was splinted from the state of Goiás in 1988. This was the most recent first-tier subnational border reform in Brazil and involved an area that corresponds to 7.6% of the whole national territory. Using the synthetic control method, this paper estimates that the split increased the per capita GDP of the affected region by an average of 8.26%, and the positive effect persisted over the years. Additionally, we show that the Tocantins benefited more from the border reform than Goiás, and the increase of fiscal capacity of affected subnational governments may partially explain the positive effects of splitting.

Keywords: border reforms; fiscal decentralization; secession; synthetic control (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1515/bejeap-2020-0187

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