With redemocratization and the promulgation of the 1988 Constitution,
Brazil became highly decentralized in terms of the distribution of fin
ancial revenue and political strength. As a result, sub-national gover
nments, and especially the states, are now at the centre of the politi
cal and financial scene. In the absence of party-oriented politics, re
gional politicians, and particularly the state governors of the most i
mportant states, provide the federal government with ruling coalitions
. The central question addressed in this article is what the state gov
ernments and their politicians are doing with this political and finan
cial strength. A further point made is the importance of incorporating
the states into the framework of analysis of decentralization: at the
state level it is possible to identify a number of details about proc
esses which remain too general at the national level and too specific
at the local level. Brazil's experience in a decade of political and f
inancial decentralization shows that although decentralization fosters
democracy, a variety of other political and economic factors are also
of influence, thus exposing the limits of decentralization's impact o
n policy results.