Claudio Ferraz, PUC-Rio – Københavns Universitet

Claudio Ferraz, PUC-Rio

"Political Power and Long-Run Development: Evidence from Brazil's Regime Transitions"

Abstract

This paper examines the effects of changes in political power on long-run economic development. We document a reversal of political fortunes for local elites in Brazil. Localities that were more politically concentrated prior to Brazil's 20 year dictatorship end up with more political competition, more schooling and higher income per capita after the transition to democracy. We show that the political power reversal was induced by economic policies and political decisions during Brazil's dictatorship that fostered economic and political competition and changed the identity of local elites inducing more economic development.

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