Interest Groups and Economic Policy: Explaining the Pattern of Protection in the Brazilian Agricultural Sector

This article examines the determinants of the pattern of protection across products in the Brazilian agricultural sector from 1969 to 1989. Three key determinants of policy are explored: interest group pressure, government objectives, and structural change associated with economic crisis and a change in political regime. The principal agricultural policies are analyzed, and nominal protection coefficients (NPCs) and producer subsidy equivalents (PSEs) are calculated. When NPCs are used as the dependent variable, econometric results indicate that interest group characteristics such as group size were an important determinant of the pattern of protection. With PSEs, government efforts to raise tax revenues, generate foreign exchange, and control inflation played a more significant role. The results of this paper suggest that future studies of the political economy of protection should pay more attention to the specification of the dependent variable because the conclusions can depend crucially on this choice. (JEL O13, Q18)