Analysis of factors for the economic growth of Brazilian municipalities

Research Objectives: This research aimed to approach the management of municipal fiscal policies by investigating the causes of its economic growth and examining its fiscal and historical effects on the variation of GDP in municipalities.Theoretic Background: Institutional theory and endogenous economic growth was used to support our models and posterior analysis.Methodology: We used the Brazilian municipalities as our case study, taking the IBGE and STN databases for the period from 2002 to 2018. We examined the effects of municipal fiscal variables, such as expenses and revenues, and historical facts on the variation rates of municipal GDPs by using panel data models.Findings: Results show that historical factors were statistically significant for municipal economic growth. Specifically, in the Brazilian case, municipalities close to the Sugar and Coffee Cycles regions and those that have been the farthest municipalities away from Portugal.Originality: We couldn't find similar studies with this approach to the best of our knowledge.Theoretical and practical contributions: Findings obtained from this research are relevant for policymakers in general since they point to the role of historical factors in public economic policies.