DP 0258 - Measuring the impact of the OECD guidelines for multinational companies

The OECD Guidelines for the responsible business conduct of Multinational Enterprises is one of the largest corporate social responsibility programs (CSR) in the world. By February 2021, 501 allegations of misconduct by multinational companies have been brought to the attention of the National Contact Points (NCP) of its signatory countries. These cases have resulted in a varied sample of experiences which can be used to quantitatively identify the impact on a company of being denounced within this framework. This paper describes an approach to measure the impact of the OECD Guidelines on the affected enterprises. Because adherence to the Guidelines is voluntary, these do not have judicial force or official sanctioning mechanisms. Their efficacy depends on the impact that they have on companies’ reputation and public image. Measuring this impact is not straightforward, yet a large literature on Corporate Social Responsibility has developed many methods to detect and quantify how the public’s perception of companies’ behavior and choices in areas not directly linked to their core business can be measured. In this paper we use several variants of event studies as methods to detect potential costs imposed on a multinational company of having an allegation of misconduct brought before a NCP. These methods use stock market data to detect stock price if there are oscillations around the time of the denunciation. If the companies’ returns suffer due to having alleged misconduct brought before this mechanism, it is reasonable to assume that the Guidelines and NCPs are effective. The variations revolve on what is used as a counterfactual to the observed market oscillations. We consider three counterfactuals: i) a market model; ii) a sample of non-denounced companies matched along a set of covariates; and iii) the firms’ returns over an interval of placebo-dates, when they were not denounced. We find clear evidence that in many cases the firms’ exposure through the program led to a statistically significant decrease in returns at the time of the denunciation. These effects varied, however, across firms, sectors and countries.

DP 0256 - Judicial attitudes under shifting jurisprudence: evidence from Brazil's new drug law of 2006

This paper exploits the diversity of panels at the court of appeals in the state of São Paulo to address the role of career backgrounds and ideology in shaping the response of judicial decisions to a major shift in jurisprudence on drug offenses. The Brazilian constitution reserves 80% of the seats in appellate courts to career judges, 10% to lawyers and 10% to prosecutors. In practice however, vacancies in panels coupled with backlogs have significantly increased participation of judges sitting by designation in appellate panels - who acted as rapporteurs in as much as 14% of all criminal appeals in São Paulo, between 2009-2013. Former lawyers and prosecutors are appointed by the state governor after nomination processes at the bar association and at the ministerial office. Judges sitting by designation are chosen at the discretion of the court’s highest council and do not retain prerogatives of tenured appellate judges and are typically hired with the purpose of reducing backlogs. Their performance affects their chances of being promoted to the court of appeals, relatively to similar judges that have not been designated. Based on a large dataset of criminal appeals related to drug offenses in the State São Paulo, Brazil, this study exploits the exogenous assignment of cases to rapporteurs, to identify the causal effects of career backgrounds on the response of appellate judges to a major shift in drug jurisprudence, which revoked the prohibition of conversion of confinement punishment in drug offenses introduced by the new drug law of 2006. Estimates of treatment-effects, conditional on case characteristics and panel-specific fixed-effects, confirm that career judges respond favorably to defendants, in line with the jurisprudence shift. Former prosecutors react against the shift, responding unfavorably to defendants. Former lawyers tend to exhibit a mixed behavior, weighing in their preferences as well as strategically favoring predominant “law and order” views. Finally sitting judges behave in a diffident fashion but also favoring prosecution.

DP 0257 - International City’s Networks and Diplomacy

The internationalization of cities and the constitution of a new international space of power involves a much more expressive number of cities than the usual global cities. Nowadays, dozens of international organizations are composed of regional capitals, medium, and even small cities. With diverse agendas and their own strategies of action, those organizations seek to interfere in global processes and negotiate with large corporations, multilateral organizations, and nation-states. Historically, the internationalization of cities carries strategic values such as peace, culture, and sustainability, among others discussed in this paper. More recently, the notion of the city as merchandise explains this process. Urban requalification and urban space commoditization are treated here under the conception of rugosities (Ribeiro, 2012), local and global rationality (Santos, 1995), and creative destruction (Brenner and Theodore, 2002). By hypothesis, I affirm that city internationalization is directly related to the democratic environment, degree of social participation, and local government’s autonomy. The magnitude of this process is measured confronting original database research to secondary sources and illustrated using the Brazilian scenario. Additionally, a theoretical discussion proposes an innovative classification of those networks according to their constitution, composition, agendas, and spatialization. The characteristics, agents, and means of city diplomacy are debated, and the adequacy of other terms (paradiplomacy, federative diplomacy, and metrodiplomacy). In conclusion, it summarizes notes and indications of further research aiming to deepen the knowledge about this new and important agent of the world order, the city network.

DP 0255 - ‘Robin Hood in Reverse’: persistence and barriers to redistributive fiscal policy

Despite improvements in the living conditions of the population, there has not been a significant change in income disparities. Since the growth of left-wing parties and political competition as per the median voter hypothesis do not stand in the Brazilian case, what could explain the tenacity of inequality in the country? To answer this, the paper, grounded in new institutionalism theory, employed a process-tracing method to explore the causes of the continuity of unequal income distribution in Brazil. The inquiry tests the mechanism using the case of redistributive fiscal policy and the literature of electoral rules and business influence in the political system. This analysis reinforces that the Brazilian government not only misuses its fiscal instruments to distribute income, but also acts as a ‘Robin Hood in reverse’: that is, it withdraws from those who have less to subsidize or pay transfers to those who have more.

DP 0254 - Brazil’s Participation in United Nations Peacekeeping Operations: evolution, challenges, and opportunities

Based on a state policy perspective, this paper seeks to present the path of Brazil’s participation in United Nations (UN) peace operations, from its genesis in 1947 to the present day, with the intent to comprehend whether there is a progressive and evolutionary pattern in these engagement efforts, and which would be the main challenges, contributions and future orientations to the country in this matter. To this end, in a first moment, the text will bring a conceptual discussion regarding the different definitions and understandings on peace operations. Subsequently, we will analyze the evolution of UN peace operations throughout its 70 years and the Brazilian positions during this period. In a third moment, we will present final considerations, identifying the upcoming challenges and the main possible perspectives for Brazil to engage in future peace operations. The intention, therefore, is to ascertain whether peacekeeping operations, as an instrument of international politics aligned to the guidelines of Brazilian defense and foreign policies, should continue to be supported by Brazil or if new reorientations are necessary as a national strategy.

DP 0253 - Are Fiscal VAR’s Non-Fundamentalness Easily Reversible Through the Addition of Informative Variables?

The VAR/SVAR (Vector Autoregressive and Structural Vector Autoregressive) models are the cornerstone of the contemporaneous empirical macroeconomic research, in particular for being able to measure the impact of fiscal policy shocks. They may be employed as atheoretical models, as well as a mean to support the estimation and testing of DSGE (Dynamic Stochastic General Equilibrium) models – the main theoretical tool for modern macroeconomics. Nevertheless, VAR models may be subject to pathologies, such as the non-fundamentalness. It is capable of biasing the estimates in any direction or intensity, and it consists of the non-invertibility of the MA (Moving Average) representation on the positive powers of the lag operator. This is associated with the insufficiency of the econometrician’s data to estimate the model’s correct parameters or with model misspecification. This study is the first to employ the latest and most efficient tests for non-fundamentalness on fiscal data for the USA: the Forni and Gambetti’s (2014) and Canova and Sahneh (2018) tests. The data and model were found to be non-fundamental.

DP 0252 - Brazilian Nuclear-Powered Submarine: national defense and technological externalities

In order to prepare and employ naval power and contribute to national defense, the Brazilian Navy, through its programs and projects, seeks to develop means of implementation of naval war operations and actions suitable for its main tasks – sea denial and control, and power projection. A significant portion of these efforts is the Submarine Development Program (PROSUB), which the ultimate purpose is to develop the first Brazilian nuclear-powered submarine. This paper aims to emphasize the importance of PROSUB (especially regarding the nuclear submarine) to the accomplishment of the Brazilian Navy constitutional mission and to the country’s development and security, notably stressing its positive externalities (in technological, human resources and social terms) and the importance of its continuity and enhancement.

DP 0250 - Fiscal Fatigue and Public Debt Limit in Brazil: are we on sustainable path?

In this paper I use Ghosh et al. (2013) approach to assess Brazil’s fiscal sustainability, fiscal fatigue, and public debt limit. Using monthly data for the last 21 years, I estimate Brazil’s fiscal reaction function and an eventual fiscal fatigue effect, which is a lack of government’s will (or capability) to implement higher primary surpluses as a reaction to higher levels of debt. I show that fiscal fatigue occurs at relatively mild levels of debt in Brazil. I also define Brazil’s debt limit, which is the precise level of debt/GDP ratio above which the debt dynamics becomes explosive, public debt becomes unpayable, and the government invariably defaults. I show that the debt limit in Brazil is much lower than the limits that have been estimated for advanced economies.

DP 0251 - Brazil in Antarctica: the scientific and geopolitical importance of PROANTAR in the brazilian strategic surrounding area

As the most inhospitable continent on Earth, Antarctica has more than 90% of its territory covered with ice and contains around 70% of all potable water in the world. Its proximity to South America is especially relevant to Brazil, which includes it in the country’s strategic surrounding area. Furthermore, Antarctica is administered through an international regime based on a system of conventions and documents, which defined research activities as its fundamental purpose. The objective of this paper is to present the aspects of the Brazilian Antarctic Program (PROANTAR, in Portuguese), the main instrument of the national Antarctic policy, and the Brazil’s continued presence in the continent. In addition, this work aims to depict the importance of Antarctic activities to Brazil, considering not only strategic concerns, but also their relevance to national scientific research. Finally, it investigates PROANTAR’s budgetary elements, pointing out its current perspectives, and examines which directions public policies should take to contribute to the program’s continuity and strengthening.