Railroad development had a profound impact in nineteenth- and early-twentieth-century Brazil. Direct benefits were small for passengers, but large for freight services, and contributed heavily to the transition from stagnation to growth. Domestic-use activities received a differentially large stimulus. Estimates of the social rate of return reveal that Brazil did not overinvest in railroads. A different allocation of subsidies to railroad capital could have generated additional gains. Backward linkages did little for industry, but the “leakage” attributable to imported inputs was modest. Institutional externalities were mixed. By 1913 railroads had paved the way for dramatically improved economic growth.

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This paper analyzes the different options -liquidation, federalization, privatization and restructuring -that the Brazilian state governments had for the transformation of their state banks under the PROES in the late 1990s. Specifically, this paper explores (i) the factors behind the statesÕ choices and (ii) the effects of the transformation process on bank performance and efficiency. We find that states that were more dependent on federal transfers, whose banks were already under federal intervention and that established development agencies, were more likely to relinquish control over their banks and its transformation process. We find that privatized banks increased their performance, while restructured banks did not.

This paper analyzes the different options -liquidation, federalization, privatization and restructuring -that the Brazilian state government had for the transformation of state banks under the Programa de Incentivo á Redução do Setor Público Estadual na Atividade Bancária (PROES) in the late 1990s. Specifically, the paper explores (i) the factors behind the states' choices and (ii) the effects of the transformation process on bank performance and efficiency. We find that states that were more dependent on federal transfers, whose banks were already under federal intervention and that established development agencies were more likely to relinquish control over their banks and transformation processes. We find that privatized banks improved their performance, while restructured banks did not.

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