Abstract
The aim of this study is to evaluate the impacts of this expansion on the income of people in the state’s districts and towns. Beginning with a breakdown of the main determinants of per capita income, a spatial dynamic panel model is proposed. The proportion of adults in the municipal population, the labour force utilization rate, and the average labour income were used as control variables. Furthermore, to isolate the impacts of the expansion of the sugarcane sector on per capita gross domestic product (GDP), the share of farming in municipal areas, the share of agriculture within farming in general, the share of sugarcane farming within agriculture, and a dummy for districts and towns with an operational plant were included in the model. The series cover the 645 districts and towns of São Paulo State from 2000 to 2008. The results of the system generalized method of moments (system-GMM) showed a positive relationship of spatial and temporal dependence in the real per capita GDP. And the estimated direct and indirect effects indicate that the expansion of the sugarcane sector had a positive impact on per capita GDP, both in towns where the expansion took place and in their neighbouring towns.
Highlights
Over the past ten years, there has been a significant growth in sugarcane production in Sao Paulo State, increasing from almost 2.5 million hectares in 2000 to approximately 4.5 million hectares in 2008 [1]
In Chagas et al [10], a spatial propensity score matching model was used to estimate the effect of sugarcane production on the municipal human development index (MHDI), and the results showed that the presence of the sector is not relevant when it comes to determining social conditions in regions where sugarcane is produced
The results showed that the regions which had seen an expansion in sugarcane plantations had seen a higher growth in per capita gross domestic product (GDP) than other comparable regions
Summary
Over the past ten years, there has been a significant growth in sugarcane production in Sao Paulo State, increasing from almost 2.5 million hectares in 2000 to approximately 4.5 million hectares in 2008 [1]. From 2005 to 2008 alone, the area of harvested sugar cane in the state increased by over 1.8 million hectares, with 53.0% substituting pasture land and 46.7% substituting other crops [2]. This expansion was accompanied by increased capacity of preexisting plants and/or distilleries and more new units throughout the state. According to a primary data survey for this study, the number of towns with an operational industrial plant and/or distillery increased from 109 in 2000 to 143 in 2008 This rapid expansion of the sugarcane sector has raised a number of questions concerning its economic, social, and environmental impacts. One of the most important aspects to be dealt with is the effect of this growth on income (using the consumer theory, Deaton and Muellbauer [3] show that the level and distribution of per capita income enable an evaluation of social welfare)
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