Sugarcane ethanol industry effects on the GDP per capita in the Center-South region of Brazil

Abstract

The demand growth for biofuels worldwide led to a significant increase in the Brazilian sugarcane ethanol industry from the 2000’s. This scenario affected specially the Center-South region of Brazil, which comprises the states of São Paulo, Paraná, Minas Gerais, Mato Grosso do Sul, Mato Grosso, and Goiás, as well as the Federal District of Brasília, because it surpasses all other regions of the country in terms of the production and production facilities. Therefore, the aim of this study is to quantify the sugarcane ethanol industry effects on the per capita municipal gross domestic product (GDP) in the Center-South region of Brazil, for the 2000-2012 period. To that end, we estimated two econometric models, using panel data models and quantile regression. The results show that sugar ethanol industry has an important effect on GDP per capita for the Center-South region municipalities, furthermore the effects are more intensive on the lowest municipalities levels of the per capita GDP, thus being able to provide support for making public policy.