Regional Subsidies and Industrial Prospects of Lagging Regions

Large and sustained differences in economic performance across regions of developing countries have long provided motivation for fiscal incentives designed to encourage firm entry in lagging areas. But empirical evidence in support of these policies has been weak at best. The authors undertake a dir...

Full description

Bibliographic Details
Main Authors:	Carvalho, Alexandre, Lall, Somik V., Timmins, Christopher
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	BRANCHES COMPANY CREDIT RATING CREDIT RATINGS DEVELOPMENT POLICIES DEVELOPMENT RESEARCH ECONOMIC OUTCOMES ECONOMIC PERFORMANCE ECONOMIC RESEARCH ECONOMIES OF SCALE ELECTRICAL EQUIPMENT ELECTRONICS EMPLOYMENT ENTREPRENEURS EXPANSION FIRM SIZE FIRMS FREE TRADE GDP GDP PER CAPITA GROWTH POTENTIAL INCOME INCOME TAXES INCREASING RETURNS INCREASING RETURNS TO SCALE INDUSTRIALIZATION INTEREST RATE INTEREST RATE SUBSIDIES LARGE ENTERPRISES LIVING STANDARDS MACHINERY MACROECONOMIC SHOCKS NATURAL ENDOWMENTS NETWORKS PER CAPITA INCOME PER CAPITA INCOMES POSITIVE EFFECTS PRIVATE FIRMS PRIVATE SECTOR DEVELOPMENT PRODUCT DIFFERENTIATION PUBLIC SERVICES PUBLISHING RESEARCH WORKING PAPERS SEES SIMULATION SMALL FIRMS SURVEY DATA VALIDITY WAGES
Online Access:	http://documents.worldbank.org/curated/en/2006/02/6567943/regional-subsidies-industrial-prospects-lagging-regions http://hdl.handle.net/10986/8786

id	okr-10986-8786
recordtype	oai_dc
spelling	okr-10986-87862021-04-23T14:02:40Z Regional Subsidies and Industrial Prospects of Lagging Regions Carvalho, Alexandre Lall, Somik V. Timmins, Christopher BRANCHES COMPANY CREDIT RATING CREDIT RATINGS DEVELOPMENT POLICIES DEVELOPMENT RESEARCH ECONOMIC OUTCOMES ECONOMIC PERFORMANCE ECONOMIC RESEARCH ECONOMIES OF SCALE ELECTRICAL EQUIPMENT ELECTRONICS EMPLOYMENT ENTREPRENEURS EXPANSION FIRM SIZE FIRMS FREE TRADE GDP GDP PER CAPITA GROWTH POTENTIAL INCOME INCOME TAXES INCREASING RETURNS INCREASING RETURNS TO SCALE INDUSTRIALIZATION INTEREST RATE INTEREST RATE SUBSIDIES LARGE ENTERPRISES LIVING STANDARDS MACHINERY MACROECONOMIC SHOCKS NATURAL ENDOWMENTS NETWORKS PER CAPITA INCOME PER CAPITA INCOMES POSITIVE EFFECTS PRIVATE FIRMS PRIVATE SECTOR DEVELOPMENT PRODUCT DIFFERENTIATION PUBLIC SERVICES PUBLISHING RESEARCH WORKING PAPERS SEES SIMULATION SMALL FIRMS SURVEY DATA VALIDITY WAGES Large and sustained differences in economic performance across regions of developing countries have long provided motivation for fiscal incentives designed to encourage firm entry in lagging areas. But empirical evidence in support of these policies has been weak at best. The authors undertake a direct evaluation of the most prominent fiscal incentive policy in Brazil, the Fundos Constitucionais de Financiamento (Constitutional Funds). In doing so, they exploit valuable features of the Brazilian Ministry of Labor's RAIS data set to address two important elements of firm location decisions that have the potential to bias an assessment of the funds: (1) firm "family structure" (in particular, proximity to headquarters for vertically integrated firms), and (2) unobserved spatial heterogeneity (with the potential to confound the effects of the funds). The authors find that the pull of firm headquarters is very strong relative to the constitutional funds for vertically integrated firms, but that, with nonparametric controls for time invariant spatial heterogeneity, the funds provide significant incentives for firms in many of the targeted industries. 2012-06-22T15:41:58Z 2012-06-22T15:41:58Z 2006-02 http://documents.worldbank.org/curated/en/2006/02/6567943/regional-subsidies-industrial-prospects-lagging-regions http://hdl.handle.net/10986/8786 English Policy Research Working Paper; No. 3843 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Brazil
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	BRANCHES COMPANY CREDIT RATING CREDIT RATINGS DEVELOPMENT POLICIES DEVELOPMENT RESEARCH ECONOMIC OUTCOMES ECONOMIC PERFORMANCE ECONOMIC RESEARCH ECONOMIES OF SCALE ELECTRICAL EQUIPMENT ELECTRONICS EMPLOYMENT ENTREPRENEURS EXPANSION FIRM SIZE FIRMS FREE TRADE GDP GDP PER CAPITA GROWTH POTENTIAL INCOME INCOME TAXES INCREASING RETURNS INCREASING RETURNS TO SCALE INDUSTRIALIZATION INTEREST RATE INTEREST RATE SUBSIDIES LARGE ENTERPRISES LIVING STANDARDS MACHINERY MACROECONOMIC SHOCKS NATURAL ENDOWMENTS NETWORKS PER CAPITA INCOME PER CAPITA INCOMES POSITIVE EFFECTS PRIVATE FIRMS PRIVATE SECTOR DEVELOPMENT PRODUCT DIFFERENTIATION PUBLIC SERVICES PUBLISHING RESEARCH WORKING PAPERS SEES SIMULATION SMALL FIRMS SURVEY DATA VALIDITY WAGES
spellingShingle	BRANCHES COMPANY CREDIT RATING CREDIT RATINGS DEVELOPMENT POLICIES DEVELOPMENT RESEARCH ECONOMIC OUTCOMES ECONOMIC PERFORMANCE ECONOMIC RESEARCH ECONOMIES OF SCALE ELECTRICAL EQUIPMENT ELECTRONICS EMPLOYMENT ENTREPRENEURS EXPANSION FIRM SIZE FIRMS FREE TRADE GDP GDP PER CAPITA GROWTH POTENTIAL INCOME INCOME TAXES INCREASING RETURNS INCREASING RETURNS TO SCALE INDUSTRIALIZATION INTEREST RATE INTEREST RATE SUBSIDIES LARGE ENTERPRISES LIVING STANDARDS MACHINERY MACROECONOMIC SHOCKS NATURAL ENDOWMENTS NETWORKS PER CAPITA INCOME PER CAPITA INCOMES POSITIVE EFFECTS PRIVATE FIRMS PRIVATE SECTOR DEVELOPMENT PRODUCT DIFFERENTIATION PUBLIC SERVICES PUBLISHING RESEARCH WORKING PAPERS SEES SIMULATION SMALL FIRMS SURVEY DATA VALIDITY WAGES Carvalho, Alexandre Lall, Somik V. Timmins, Christopher Regional Subsidies and Industrial Prospects of Lagging Regions
geographic_facet	Latin America & Caribbean Brazil
relation	Policy Research Working Paper; No. 3843
description	Large and sustained differences in economic performance across regions of developing countries have long provided motivation for fiscal incentives designed to encourage firm entry in lagging areas. But empirical evidence in support of these policies has been weak at best. The authors undertake a direct evaluation of the most prominent fiscal incentive policy in Brazil, the Fundos Constitucionais de Financiamento (Constitutional Funds). In doing so, they exploit valuable features of the Brazilian Ministry of Labor's RAIS data set to address two important elements of firm location decisions that have the potential to bias an assessment of the funds: (1) firm "family structure" (in particular, proximity to headquarters for vertically integrated firms), and (2) unobserved spatial heterogeneity (with the potential to confound the effects of the funds). The authors find that the pull of firm headquarters is very strong relative to the constitutional funds for vertically integrated firms, but that, with nonparametric controls for time invariant spatial heterogeneity, the funds provide significant incentives for firms in many of the targeted industries.
format	Publications & Research :: Policy Research Working Paper
author	Carvalho, Alexandre Lall, Somik V. Timmins, Christopher
author_facet	Carvalho, Alexandre Lall, Somik V. Timmins, Christopher
author_sort	Carvalho, Alexandre
title	Regional Subsidies and Industrial Prospects of Lagging Regions
title_short	Regional Subsidies and Industrial Prospects of Lagging Regions
title_full	Regional Subsidies and Industrial Prospects of Lagging Regions
title_fullStr	Regional Subsidies and Industrial Prospects of Lagging Regions
title_full_unstemmed	Regional Subsidies and Industrial Prospects of Lagging Regions
title_sort	regional subsidies and industrial prospects of lagging regions
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2006/02/6567943/regional-subsidies-industrial-prospects-lagging-regions http://hdl.handle.net/10986/8786
_version_	1764406010443726848

Regional Subsidies and Industrial Prospects of Lagging Regions

Similar Items