Here's the translation in informal English: "Subnational sovereign funds: a blessing or a curse for long-term growth?

Abstract

The paper discusses the window of opportunity opened to some subnational entities facing a 'positive' dilemma: a sudden inflow of compensation resources from oil activities. This is the case in Espírito Santo and the municipalities of Ilhabela, Maricá, and Niterói, where a part of the royalties transferred by the federal government feeds the so-called sovereign wealth funds. Despite the creation of sovereign wealth funds, there is not a unique understanding among the public administration of the different localities of how to manage financial resources consistent with preserving the wealth of its future population. In the view of this paper, sovereign wealth funds can play a central role in the regional institutional and financial arrangement for leverage infrastructure investments, which form the structuring basis for other productive investments. The article concludes, in line with the literature on experiences of regional development, which includes studies and best practices from other regions, with the need to create an agency to coordinate investment projects in infrastructure that combines the skills and interests of the local state and the market, carries out diagnoses, establishes priorities, and provides funding and liquidity to projects.