Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83747
Authors: 
Martínez Fritscher, André
Musacchio, Aldo
Viarengo, Martina
Year of Publication: 
2010
Series/Report no.: 
Working Papers, Banco de México 2010-18
Abstract: 
Recent research links the inequality across countries and regions to colonial institutions. This paper argues that trade shocks could alter the development path of a country or subnational units, in spite of its colonial institutions. This hypothesis is analyzed using state-level data for Brazil, a country with high regional heterogeneity in endowments. We find that positive trade shocks, or improvements in export tax revenues, increased expenditures on education per capita and education outcomes in the period 1889 to 1930. In fact, trade shocks ended up altering the inequality in education levels across states in a permanent way. The paper ends by explaining why politicians spent windfall tax revenues to invest on education.
Subjects: 
Institutions
Fiscal Federalism
Education
Long Run Development
JEL: 
I20
H41
H75
N26
N36
N46
N96
Document Type: 
Working Paper
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