DRIVERS OF ECONOMIC GROWTH IN BRAZILIAN MUNICIPALITIES WITH DIFFERENT POPULATION SIZES: AN EMPIRICAL ANALYSIS (2000–2020)

Abstract

In an attempt to assess whether the heterogeneity among Brazilian municipalities with different population sizes would require specific stimuli for local economic growth, a spatial panel with control variables, interactive dummy variables, and data were used for the years 2000, 2010, and 2020. The effectiveness and significance of the variables analyzed were estimated to decrease as the population size increases. Thus, there would be more room for economic intervention in smaller municipalities. In localities with up to 25,000 inhabitants, having more populous neighboring municipalities proved favorable, while this effect would turn this effect would become detrimental in towns with 25,000 to 50,000 inhabitants. Public investment, improvements in education, and a smaller proportion of young people in the population would boost the economy of municipalities with up to 50 thousand inhabitants. Specialization in production proved advantageous for towns with up to 100,000 inhabitants, while the lack of basic sanitation would negatively affect small and medium-sized municipalities. Meanwhile, the concentration of industry and services would benefit towns with fewer than 500,000 inhabitants, but dependence on public administration would be a hindrance. Additionally, bank credit would favor municipalities with between 50,000 and 500,000 inhabitants, and current expenditure could benefit all population groups. This suggests that each town may require specific policies oriented to solve problems specific to their population size.