Sustainability in the tropics: does a boom in deforestation lead to a bust in development?

Working Paper 82

Abstract

We revisit the hypothesis tested in Rodrigues et al (2009) that the process of human development in Amazonia follows a boom-and-bust (inverted U) pattern. We show that the ‘boombust’ pattern that Rodrigues et al report is a spurious artefact of spatial correlation, driven primarily by the large, multifaceted (and unobserved) differences between municipalities in and around Amazonas and Maranhão states.

We confirm these (non-) results in the time series data; there is no ‘smoking gun’ dynamic boom and bust associated with land clearing in any municipality data from 1980 to 2000. Furthermore, the past economic performance of municipalities categorised as ‘postfrontier’ by Rodrigues et al are themselves shown to have been economic underperformers since the 1970s, and, if anything, they have improved their relative economic standing in the years since 2000.

In sum, we find no evidence in either the cross section or the time series data of any ‘boombust’ patterns of development in the Brazilian Amazon.

Diana Weinhold, Eustáquio J. Reis and Petterson Molina Vale