PEW: Monica Martinez-Bravo

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This paper studies the effects of local political concentration on long-run economic development in Brazil. Contrary to what is observed in other contexts and time periods, we document that municipalities with higher levels of political concentration prior to Brazil's military dictatorship (1964-1985) achieved higher levels of development in the long-run. We argue that the attempts of the military to undermine the power of traditional elites generated positive dynamics in terms of economic development. As evidence of this, we show that the municipalities where power was concentrated in the hands of few traditional elites adopted political and economic policies that lowered the entry barriers to other political contestants, which resulted in lower levels of elite persistence over time. These findings suggest that policies that aim to increase the levels of political competition can be beneficial in the long-run, even if they are implemented during non-democratic regimes.