Structuring investment and regional inequalities in the Brazilian Northeast

This paper evaluates the longrun regional impacts of the construction of three oil refineries proposed for Brazil’s Northeast (NE) region. A dynamic, interregional computable general equilibrium (CGE) model was developed, with 28 regions in the NE and the rest of Brazil and 30 sectors. The database construction methodology could be applied to any other country. The main results of the refinery investment simulations in the NE indicate positive impacts in all regions. However, the construction and operation of these three refineries would generate an increase in intraregional inequalities. On the other hand, in the long run, these investments could contribute to the NE gaining an increased relative share of Brazilian gross domestic product (GDP).

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