Oil and Budgets: Brazilian sub-national fiscal policy by João Leal published by London School of Public Relations (2019)
Volatility in economic growth has been a constant constraint for Latin American development. While some countries have adopted fiscal policies in the last 20 years, there is still little policy space for subnational governments to promote their own economic growth. This dissertation uses the example of how two Brazilian states used their newly-acquired oil-funds. While Rio de Janeiro used its resources poorly, Espírito Santo managed to promote sound fiscal reforms and improve state capacity. Nevertheless, because of structural constraints within the Brazilian federative framework, neither state was able to sustain a high level of public investment during the Brazilian economic crisis or to promote countercyclical fiscal policy. Espírito Santo creation of the first subnational sovereign wealth fund of Latin America might be a key innovation for autonomous subnational fiscal policy.
