Introduction

Can market forces be counted on to diminish remedy disparities in the regional distribution of income within one country? This question has been debated for generations both in advanced industrial countries and in developing countries. Those who believe that market forces will gradually eliminate regional differences in income argue that poor regions, where capital is scarce and labor is abundant, will benefit from an inflow of investments due to the high returns on capital (because of its scarcity) and the low cost of labor (because of its abundance). In reality, this has rarely happened. Thus, before introducing these Brazilian case studies of countering market forces in order to attain greater regional equity, let us briefly examine the experience of the United States, which should place them in a broader context.