Public policy to support the development of LPA’s: an impact analysis in Minas Gerais, Brazil

Abstract The understanding that local productive arrangements (LPAs) are development-friendly justifies the intensification of the government’s actions to support them, which can occur through specific public policies, for example. Although there are different ways to analyze public policies related to LPA’s and numerous studies on this matter, few of them have focused on their influence on development. In this context, this study analyzes public policies that support the development of LPAs in Minas Gerais, Brazil, considering their impacts on development. The article clarifies the understandings of public policies, public policy analysis, and public policies to promote the development of LPAs, and used data on the performance of municipalities from 2005 to 2015. In order to identify the impact of the public policies related to LPAs through the average effect of treatment-on-the-treated (TOT) estimate, the research applied the propensity score matching (PSM) and the difference-in-differences (DID) techniques. The use of PSM suggested that the polices had a significant and positive impact on GDP (0.788) (a proxy for economic development) and IFDM (0.103) (a proxy for socio-economic development). As for the DID, the results indicate no significant impact on GDP and an IFDM of -0.0278. Several factors may explain these results, such as the variables used, most related to economic development, and the period analyzed. The study contributes to the literature due to the adoption of procedures that enabled the systematized identification of the impacts of public policies supporting the development of LPAs in Minas Gerais, Brazil.