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Local economic growth in Brazil: a spatial analysis for São Paulo municipalities

Alexandre Sartoris, Danilo Igliori

[julho 2007]

Abstract: This paper empirically investigates growth determinants of municipalities in the State of Sao Paulo, Brazil. Sao Paulo has the largest population (about 40 million, close to the whole Argentine population) and the highest GDP among the 27 Brazilian states (about 30% of the national GDP). Sao Paulo has a complex and diversified urban hierarchy with its municipalities ranging from large cities to small towns and villages. The industrial structure is also varied as the state hosts important agricultural activities, manufacturing and hightechnology sectors. In addition, we see high living standards in some areas, but considerable poverty levels in others. Following Glaeser et al (1995)*, thepurpose of our empirical models is to evaluate the relationship between local economic growth and its social, economic and geographical determinants (such as employment, education, public policies, crime, location, etc.). The paper extends Glaeser et al methodology by taking into account a variety of potential spatial effects through a number of standard and more recent spatialeconometric methods.