Starting in the early 1980s, Brazil moved away from authoritarianism and centralization. Direct elections of governors were introduced in 1982 and direct election of the president was reestablished in 1989. The decentralization of fiscal resources and social services followed in subsequent years. With a territory of 8.5 million square kilometers and a population of 188 million people, Brazil is the fifth largest country in the world. It is not surprising, therefore, that after the demise of developmentalism and the military regime (1964–1985), the country moved toward the decentralization of government as part of the democratization process. The results of decentralization, however, are extremely puzzling.

While historically Brazil's federal institutions have granted a high degree of autonomy to its states and, to a lesser extent, to its municipalities, the postdevelopmental decentralization process further increased the fiscal resources, policy-making responsibilities, and political authority of the subnational governments – municipalities in particular. Nowadays, Brazil is one of the most politically and fiscally decentralized federal systems in the developing world (Souza 1997, 1). Some scholars even consider that, since the constitutional reform of 1988, Brazil may well be “overdecentralized” (Selcher 1998, 37; Stepan 2000).