Anatomy of the Economic Structure of Brazilian States

A Proposed Classification to Understand Subnational Complexity.

Abstract

This paper aims to classify the Brazilian states and the Federal District according to their economic structure, understanding that their organization reflects the balance of power among the main political and economic actors of the society to which they belong. In federal contexts, where greater political decentralization endows subunits with greater political-administrative autonomy in certain policy areas, and in some cases also fiscal autonomy, the functioning of the subnational state carries more weight in the incentive structure that affects the decisions of economic actors to settle in a particular region.

In this article, it is argued that to achieve a comprehensive understanding of state functioning, it is necessary to consider the relationship between the state and the surrounding economic structure. With this perspective in mind, this exploratory work seeks to encourage dialogue between two bodies of literature: economic geography and the political economy of federalism, through the mapping and classification of the economic structure of the 26 Brazilian states and the Federal District. The proposed dimensions are: 1) Relative weight of the state in the subnational economy; 2) Strength of the private sector in the subnational economy; 3) Brazilian National Classification of Economic Activities (CNAE); 4) Type of activity that predominates in the subunit; 5) Economic profiles of each subunit; and 6) Degree of economic dispersion-centralization within each state.