Brazil’s Place in the Global Economy

The Unchanging Core of Brazilian State Capitalism, 1985-2015

“…Brazilian trade policy has been marked by a comparatively inward-looking bent, even after the trade opening of the 1990s. The government has played an active role in promoting trade, using export promotion through APEX, the export financing program PROEX, and loans to a variety of hand-picked firms (Porzecanski 2015, Pereira da Costa and da Motta Veiga 2011, World Bank/IPEA 2011. Import protections, anti-dumping initiatives, and domestic content requirements have been implemented by governments of all stripes (Gómez Mera 2007, Montero 2014a.…”

“…It is financed through a combination of funds from mandatory paycheck deductions (the Fundo de Amparo ao Trabalhador, FAT, and a public sector analog, PIS-PASEP), profits from past credit operations, bond issues, and loans from the federal government, often at very low base interest rates. 18 These sources of funds, however, have permitted the BNDES to expand its loan portfolio considerably over the years, and by 2010, it was lending more than three times as much as the World Bank, often at "concessional" interest rates (Porzecanski 2015). 19 The low cost and long duration of BNDES loans, especially as compared to private sector lenders, has made it the best source of long-term finance in Brazil (Santana 2011;Montero 2014a).…”

“…While the article defining national capital was removed from the constitution in 1995, a lingering preference for national firms persists, as do restrictions on foreign ownership of land and certain sectors. 27 A guiding force behind these policies has been the developmentalist belief that the local siting of industry is central to economic development, even if the companies are not Brazilian: this has meant the country "has served as a platform" for multinational producers to "satisfy the needs of the large (and relatively protected) domestic market" (Porzecanski 2015). In most sectors, this has permitted foreign firms to benefit from all of the market protections provided by law, without necessarily leading to the development of indigenous firm capacity.…”