Measuring micro- and macro-impacts of regional development policies: the case of the Northeast regional fund (FNE) industrial loans in Brazil, 2000–2006

This paper formulates a framework to measure the micro- and macro-impacts of regional development policies in Brazil using the first-differences method that controls for observable characteristics and unobserved fixed effects. Next, it applies this framework to measure the impact of the Northeast regional fund (FNE) industrial loans on employment and labour productivity growth at the micro- (firm) level and on gross domestic product (GDP) per capita growth at macro- (municipalities, micro-regions and spatial clusters) levels for the 2000–2003 and 2000–2006 periods. The results show a positive and statistically significant impact of the FNE industrial loans on job creation at the micro-level but no significant impacts on the GDP per capita growth at the macro-level.