An Empirical Investigation of the Sources and Patterns of Regional Inequality in Brazil from 1950 to 2004

The problem of regional inequality dates back to the beginning of the Brazillian history as an independent country. Throughout its entire history until the second half of the 19th century, equality of output prevailed among economically active and occupied regions of the country. By the end of the 19th century, international economic disturbances and domestic inefficiencies led southern and northern regions of Brazil into different economic directions, creating what I call the \u27dichotomy state\u27 in the Brazilian economy. We can generalize the effects of these disturbances by the decline in demand of northern products and the rapid rise in demand for southern goods, namely coffee. Since then, income has remained in the south, allowing this region to develop and industrialize. Such early disturbances formed the starting point of regional inequality in brazil. Therefore, our focus lies on how and to what extent poor regions of Brazil have been able to catch to richer ones in terms of income and growth rates (convergence). More specifically, this research studies Brazil from 1950 to 2004 in order to see: (1) whether there is any evidence of convergence; (2) what are the main determinants of convergence and (3) how sectors have played a role in this convergence