This article provides an analysis of the effectiveness of cultural policy in Brazil under the Rouanet Law for the period 1993–2016. We find that the law, which provides tax incentives for donations to and sponsorships of the cultural sector, has exacerbated existing socio-economic inequalities, regional inequalities and inequalities between artistic genres. The gifts have predominantly gone to already successful projects, sometimes even already profitable projects. On the flip side, the gifts have primarily come from large, mostly partially state-owned, enterprises and act as the equivalent of a tax cut for these organisations.
From the evidence, it is not clear that any particular market failure is alleviated through the Rouanet Law; instead, it seems that the system of indirect support led to strong control over the cultural sector by big business in Brazil. We use these findings to criticise much of the literature on cultural policy, which tends to take Western well-developed institutions for granted. We argue that this literature is ill-suited to capture the economy of Brazil and other ‘limited-access states’ because of its implicit assumption of a pre-existing ‘open-access state’.

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Keywords Cultural Policy, limited access orders, direct and indirect support, state capacity, economics of the arts
JEL Public Policy (jel Z18), Industrial Policy (jel O25), Political Economy (jel P16)
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Journal The Journal of Public Finance and Public Choice
Dekker, E, & Rodrigues, A.C. (2019). The political economy of Brazilian cultural policy. The Journal of Public Finance and Public Choice. doi:10.1332/251569119X15675896589688