Productive efficiency and the future of regional disparities in Brazil

Abstract: We use Stochastic Production Frontiers to estimate the recent levels and the evolution of productive efficiency across regions in Brazil. Results are available for agriculture, industry and services, as well as for total production. We observe a substantive efficiency growth exhibited by agriculture at the national level, which is counterbalanced by the poor performance of services. The regional results show that efficiency levels still replicate, in general, the regional inequality that marked the country’s history through decades. However, the efficiency growth reveals new signs of convergence among states, especially for industry, with effects on the aggregate production. This indicates that inequality trends in productive efficiency may be starting to change.