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The aim of regional policy is the attainment of a more efficient and/or equitable interregional distribution of economic activity (Temple, 1994). As demonstrated elsewhere (Haddad, 1999), Brazil has undergone, in the last twenty years or so, deep structural changes, responsible for the setback in the process of polarization reversal in the economy. After 1988, with the new Constitution, the central government was hampered by a profound loss in its revenues to the state and municipal governments. Nevertheless, the fiscal crisis reached all levels of government, decreasing their financial capability for carrying out new investment ventures. The lack of investment in economic infrastructure increased the average cost of production; producers were facing increasing costs due to the inefficient mechanisms of trade and transportation, which lagged technologically.

Neither Here nor There: Regionally Targeted Social Policy or Socially Targeted Regional Policy? The First Four Years of Lula’s Administration