DO SUDENE'S TAX INCENTIVES IMPROVE DEVELOPMENT INDICATORS?

Abstract

Reducing regional inequalities is a challenging task for public policy. Brazilian regional inequality led to the creation of Sudene, in which some municipalities in North of Espírito Santo state were included. Tax incentives on the IRPJ are the main instruments used, also to attract companies to the region. In Espírito Santo state, between 2012 and 2020, 148 claims were granted. This article analyzes the development indicators of the municipalities of Espírito Santo in the Sudene area in order to show whether development indicators are influenced by these investimens. The methodology uses means and differences between groups that had or did not have approved incentives. As a result, there is evidence that whether or not a municipality has approved projects is reason to observe differences in development indices, but in an asymmetrical in different categories (employment, health and education). It is suggested that, although it lacks improvements, the tax incentives operated by Sudene are important for regional development.