The discretionary use of oil revenues in Brazil: Federal dynamics

Abstract

Abstract This article analyzes the Brazilian case of federal centralization of oil revenues, to show how jurisdictions’ preferences may direct federal dynamics through central federative mechanisms. The study uses historical and institutional approaches that explain continuity and change in territorial regimes. Specifically, we analyse the loss of discretionary power in the use of oil resources through the understanding whether and how these changes affected the approval of National Law 12858 in 2013, which determined that federal government, states, and municipalities should spend their share of oil revenues on education and health. We show the way subnational preferences affect federal policies, highlighting the importance of causality and context, both politically and institutionally, and indicating a return to a governability pattern that seemed to be buried with the economic stabilization plan of 1994.