Abstract
With redemocratization and the promulgation of the 1988 Constitution, Brazil became highly decentralized in terms of the distribution of financial revenue and political strength. As a result, sub‐national governments, and especially the states, are now at the centre of the political and financial scene. In the absence of party‐oriented politics, regional politicians, and particularly the state governors of the most important states, provide the federal government with ruling coalitions. The central question addressed in this article is what the state governments and their politicians are doing with this political and financial 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 processes which remain too general at the national level and too specific at the local level. Brazil's experience in a decade of political and financial 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 on policy results.