The effect of public policies and local aspects on economic development: an empirical analysis based on the municipalities of Minas Gerais

Abstract

This research used cross-section data, from 2016, to analyze the effect of public spending distribution and some economic, demographic and political preferences on municipalities’ development from Minas Gerais (i.e.: Índice Mineiro de Responsabilidade Social – IMRS) and their sub-dimensions (i.e.: education, health, social vulnerability, security, sanitation/housing/environment and culture/sport/leisure). Thus, the variables were selected by Extreme Bounds Analysis – EBA and econometric-spatial models were estimated. The results indicate that development is typical from smaller cities, far from the capital (safer), with higher elderly people proportion (less subject to crime), lower fertility (trait of safer and less vulnerable places), good tax autonomy (attribute of less vulnerable areas, with more sanitation and culture/leisure), lower spending on education and public administration and higher on housing. Furthermore, the results minimize the state (i.e.: municipal administration) and the local productive profile relevance on development and reveal negative externalities from the state capital.