Most industry is located in the South-east region and, to a lesser extent, the South, while farming and other natural-resource-based activities prevail in the North, North-east and Centre-West regions.1 The South and South-east enjoy significantly higher income (Figure 1.3) and perform better in key socio-economic indicators. Inequality among regions has been declining since 2000, mainly due to above-average growth rates in areas specialised in agriculture and mining, however, the position of the most lagging areas (most of which are located in the North-east) improved only marginally (OECD, 2013b). The fall in poverty and inequality is attributed to changes in labour income as well as direct income redistribution, including a large-scale conditional cash transfer programme, Bolsa Famflia (Box 3.1) (OECD, 2013a, World Bank, 2011).