DP14912 Political Power, Elite Control, and Long-Run Development: Evidence from Brazil

Author(s): Claudio Ferraz, Frederico Finan, Monica Martinez-Bravo
Publication Date: June 2020
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Programme Areas: Public Economics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14912

This paper analyzes how changes in the concentration of political power affect long-run development. We study Brazil's military dictatorship whose rise to power dramatically altered the distribution of power of local political elites. We document that municipalities that were more politically concentrated prior to the dictatorship in the 1960s are relatively richer in 2000, despite being poorer initially. Our evidence suggests that this reversal of fortune was the result of the military's policies aimed at undermining the power of traditional elites. These policies increased political competition locally, which ultimately led to better governance, more public goods, and higher income levels.