PUBLIC EXPENDITURE ON INFRASTRUCTURE AND HUMAN CAPITAL AS A FORM OF PROMOTION OF PRO-POOR GROWTH IN THE BRAZILIAN STATES

Abstract

This paper evaluates the effectiveness of public expenditures in human capital and physical infrastructure to promote pro-poor economic growth in Brazilian states, from 1995 to 2008. For this, a system of equations with instrumental variables was estimated using the Generalized Moments Method (GMM). The results prove the efficacy of the governmental expenses in education, health and roads related to the advances of this kind of stocks of human and physical capital. The importance of this type of public politics for increasing the level of employment was proved too. The main result is the definition of the indirect linkage between these categories of public expenditure and the state economic growth by elevation of per capita income and the reduction of poverty in each state, analyzed here as instruments of promotion of pro-poor economic.