The Entangled Political Economy of Brazilian Cultural Policy: A Case-Study of the Rouanet Law

Abstract

We provide an analysis of the effectiveness of the cultural policy in Brazil under the Rouanet law for the period 1993-2016. We find that donations and sponsorships under this law have exacerbated existing disparities, benefitted mostly already profitable cultural organizations, and have given a small number of mostly state-owned firms not only a significant tax advantage, but also great control over the cultural sector. Rather than thinking of this as merely market failure or government failure we argue that this is a result of the entangled political economy of Brazil. We suggest that the typical reliance on a neat distinction between the private and the public sector in the literature on arts policy is unwarranted generally, but in particular in emerging economies such as Brazil. We argue that an entangled political economy provides us with a better understanding of the difficulties faced for cultural policy-makers in such countries. In particular we show that the general preference for indirect support through tax breaks over direct state support in the cultural policy literature should be reconsidered.

Keywords: cultural policy, emerging economies, direct and indirect support, entangled political economy

JEL Classification: Z18, O25, P16