Three Essays on Rural Development in Brazil

Arthur Amorim Bragança.

18/08/2014

Orientador: Juliano Assunção.

Co-orientador: Claudio Ferraz.

Banca: Bernardo Mueller. Gustavo Gonzaga. Leonardo Rezende. Rodrigo Reis Soares.

http://www.dbd.puc-rio.br/pergamum/biblioteca/php/mostrateses.php?open=1&arqtese=1022000_2014_Indice.html

Nível: Doutorado

This dissertation is composed of three articles on rural development and politics in Brazil. The first article studies the impact on agricultural development of the technological innovations implemented in the 1970s that allowed soybean cultivation in central Brazil. It combines the timing of these innovations with variation on agronomic potential to cultivate the crop to evaluate how agriculture responded to the technological innovations. Results indicate that the innovations induced reallocation of land from pasture to crop cultivation and increased the use of modern inputs and the total agricultural output. Migration seems to have been an important mechanism to enable agriculture to benefit from the technological change. The technological innovations changed the demand for skills in agriculture and induced in-migration of individuals with higher educational attainment and out-migration of individuals with lower educational attainment. Suggestive evidence indicates that the impact of technological innovations on agricultural output is one third lower when labor selection is accounted for. The results shed light to the importance of labor selection in enabling adaptation to changes in production possibilities. The second article investigates whether geographic heterogeneity affects the adoption of modern technologies in agriculture. It develops a model in which geographic heterogeneity affects technology adoption through adaptation costs. The model predicts that geographic heterogeneity reduces technology adoption, especially at intermediate adoption levels. These predictions are tested combining detailed data on soil characteristics with data on the adoption of the direct planting system (DPS). Its adoption requires adaptation to specific plot characteristics which makes the DPS suited to test the model and the adaptation costs mechanism. Estimates indicate that geographic heterogeneity decreases DPS adoption in a pattern consistent with the theoretical model. The results shed light to the importance of geographic characteristics to the diffusion of modern agricultural technologies. The third article examines the connection between political connections and government policies in the context of conservation policies in the Brazilian Amazon. Industries like agriculture or logging often oppose stringent conservation policies in the region and the article examines whether these industries are able to influence conservation policies when politicians connected to them are in office. It constructs a measure of connection to agriculture and uses regression discontinuity design to provide evidence that municipalities with mayors connected to agriculture have higher deforestation rates close to elections. Estimates also suggest that the effect is higher when the politicians have reelection incentives and is related to changes in enforcement of environmental regulations (as opposed to changes in demand for deforestation). The results provide evidence that politicians distort policies near elections to benefit interest groups connected to them.

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