Heroes or Villains? Agribusiness Leaders in the Amazon Region

Abstract

In recent years, the Amazon rainforest has faced voracious depletion due to logging and farming activities. These activities are often justified as necessary for economic development in the region. However, effective leadership, particularly at the local level, can play a crucial role in promoting simultaneously both economic growth and ecological sustainability. This study examines the effects of leaders’ occupational background in agribusiness on economic development and environmental preservation. We employ a Regression Discontinuity Design (RDD) to compare the performance of marginally elected (almost randomly) agribusiness leaders with non-agribusiness leaders in terms of new firm creation and deforestation rates in Brazilian Amazon municipalities from 2004 to 2016. Our findings suggest that agribusiness leaders are more effective than their non-agribusiness counterparts in promoting the creation of new businesses in their municipalities. This increased economic activity has not necessarily been accompanied by higher deforestation rates. The analysis of mechanisms shows the importance of fiscal policies, which are under the control of local leaders, in promoting economic prosperity without sacrificing environmental sustainability. This study underscores the need to move beyond simplistic notions of “heroes” and “villains” in the quest to reconcile economic and ecological objectives as aimed by the United Nations Sustainable Development Goals.