Engines of Growth: The State and Transnational Auto Companies in Brazil
In the 1950s, Brazil prohibited car imports and forced transnational auto companies either to abandon the market or manufacture vehicles within the country. Although currently contending approaches to economic development would suggest that this type of industrialization policy would fail in the political-economic context of postwar Brazil, the plan was successful according to a variety of criteria. The Brazilian auto industry would become the largest in the periphery. The book explains the economic and political motivations behind the plan, and why Brazil relied on foreign firms to do the job. It documents the bargaining process between the Brazilian government and transnational firms, estimates the cost incurred by the government as a result of the plan, and provides new archival evidence that shows that firms would not have invested without government pressure. It argues that the current, polarized debate on the role of the state in economic development must become more nuanced, as the Brazilian auto case suggests that the effectiveness of state policy can vary greatly across sectors and over time.
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1 Approaches to State Intervention
2 Why Auto?
3 The Determinants of Firm Entry
4 Rent Redistribution and Linkage Effects
5 The Automotive Parts Sector
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Almeida ANFAVEA approved auto industry automobile automobilistica brasileira automotive industry beneﬁts BNDE Brazil Brazilian auto Brazilian market capacity competition constraints countries country’s cruzeiro decrees demand Desenvolvimento difﬁcult domestic content domestic market domestic-content levels domestic-content requirements economies of scale engines exchange rate export Fabral ﬁgures ﬁnal ﬁnancial ﬁnancing ﬁrst ﬁscal ﬁve ﬁxed Ford Industrial Archives Ford’s foreign capital foreign ﬁrms foreign-exchange GEIA Archives GEIA’s Getulio Vargas GM do Brasil growth Heinrich Nordhoff import incentives increased industria automobilistica industry’s inﬂation Instruction 1 13 jeeps Kubitschek Latin America loans Lucio manufacturing Mercedes-Benz million neoclassical Nordhoff Orosco passenger cars Paulo percent production proﬁts proposal railroads Relatorio rent-seeking Rio de Janeiro signiﬁcant Simca state’s strategy structure subcommission sufﬁcient SUMOC suppliers Table Target technological terminal sector TNCs tractor trade transnational ﬁrms trucks University Press Vabis Vargas Vemag vertical integration VW’s Willys