Evaluation of the fiscal effects of RIDE-DF on the municipalities surrounding Brasília

Abstract

In Brazil, the establishment of Metropolitan Regions (RMs) and Integrated Development Regions (RIDEs) is common, aiming to improve integration among their members and stimulate regional development. However, there is a scarcity of studies that investigate their impacts. This paper investigates the fiscal impacts of the Região Integrada de Desenvolvimento do Distrito Federal e Entorno (RIDE-DF). We adopt a Difference-in Differences approach using local public finance data. The municipalities that joined the integrated region in 1998 were considered the treatment group. On the other hand, the control group was formed by the municipalities that entered the RIDE-DF only in 2018 and those identified as applicants seeking entry into the integrated region. In other words, the municipalities that would be eligible, bud didn’t join the integrated region in the date of the treatment (1998).This group represents an adequate contrafactual for the evaluation of the results of this arrangement. The results indicate the absence of impacts on local public spending, as well as a decrease in tax revenues. Furthermore, the municipalities that joined the RIDE-DF did not exhibit an increase in their level of economic activity (assessed through GDP per capita or the number of companies) when compared to the municipalities constituting the control group.