On 18 October 2016 Humberto Vieira Barbosa Laudares defended his PhD dissertation in Development Economics, simply entitled “Essays on Development Economics in Brazil”, at the Graduate Institute. Professor Ugo Panizza presided the committee, which included Professor Jean-Louis Arcand, Thesis Director, and Professor Gani Aldashev, from the Université libre de Bruxelles. In three distinct chapters, Mr Laudares assesses the impact of nineteenth-century slavery on current inequality, the causal effects of the construction of roads crossing the Amazon rainforest on local development, and the fiscal, social and political outcomes of investments in fiscal capacity.
How did you come to study those three topics?
I wanted to study issues that matter to development, i.e. inequality, infrastructure and fiscal capacity, using Brazil as a reference. I was also very curious to better understand the extent to which events in the past still influence development outcomes today. It motivated me and my co-author – Felipe Valencia, from the University of Bonn – to explore the effects of slavery on inequality, using colonial institutions to eliminate the problem of endogeneity between economic activities and location of slaves. The same curiosity led me to identify a historical telegraph line laid in the wilderness of the Amazon forest in the beginning of the twentieth century and to use it as an instrumental variable for the current road in order to evaluate its impact on development outcomes and deforestation. Finally, fiscal capacity is a topic that has attracted me from the outset of my professional career working in governments and international organisations.
Tell us about your findings.
In the first paper, “Tordesillas, Slavery and the Origins of Brazilian Inequality”, we find that the effect of slavery on income inequality, measured by the Gini coefficient, is 0.103, which corresponds to 20.7% of the average income inequality measure of our sample. The main channels of persistence identified are income racial imbalance, education racial imbalance and public institutions.
In the second paper, “From Telegraphs to Space: Transport Infrastructure, Development and Deforestation in the Amazon”, I find that for each kilometre’s distance from the highway, the income decreases on average by 0.10%. Transport infrastructure has also affected deforestation in the Amazon as it opens new frontiers for cattle farming and soybean agriculture. For each kilometre’s distance from the highway, the average percentage of trees per pixel increases from 2% to 9%. I also observe that in indigenous areas the forest coverage by pixel is 24% larger than in other areas.
In the third paper, “Ready to Tax: What Happens When Brazilian Municipalities Invest in Fiscal Capacity?”, I find that certain types of investments in fiscal capacity increase property tax revenues by USD 1.3 to USD 1.6 per capita annually, given that the average property tax revenue per capita of the full sample is USD 9.34. The results also show that the number of households in a municipality where waste is collected increases by 2,210 on average when the municipality invests in fiscal capacity in comparison to those that do not. In addition, I do not find evidence that investments in fiscal capacity affect re-election outcomes.
Can you give examples showing the applicability of your research?
The three papers are policy relevant. Firstly, once we identify that slavery still causes income inequality as well as education and income imbalances between black and white people, one can conclude that since the abolition of slavery in 1888, Brazil has not been effectively promoting equality of opportunities for all, especially for the blacks. Policies targeting this issue, such as quotas in the universities and overall improvement in public education, should be prioritised. Secondly, roads have a positive effect on local development, which is consistent with the literature. But what about their impact on the deforestation of the Amazon? And what about their lack of impact on education, for instance? What type of development strategy are we envisaging for the Amazon region? If we want a more sustainable planet, we are going in the wrong direction. Thirdly, the results of the fiscal capacity paper indicate that the federal government could set up programmes to incentivise local governments to invest in fiscal capacity. This is a crucial agenda for federal states – and also for international development.
What are you going to do now?
I am passionate about development, and there is a lot of work to be done. As a next step, I plan to keep a foot in academia, where I could pursue my research projects. I may also continue working in public policy in order to – hopefully – help countries pave a more promising path to prosperity.
How will you remember your doctoral experience?
As a mix of intellectual humility, hunger to learn and resilience!
Full citation of the thesis: Laudares, Humberto Vieira Barbosa. “Essays on Development Economics in Brazil”. PhD thesis, Graduate Institute of nternational and Development Studies, 2016.
Illustration: The division of Paraisópolis and Morumbi in São Paulo. Photo by Tuca Vieira.