Patrick J. W. Egan

Governing Development: Foreign Direct Investment and the State in Brazil

The central questions of my dissertation concern how multinational firms from the developed world respond to and attempt to influence institutional and political environments in Brazil. In this work, I connect Brazil’s experience with multinational corporations to larger questions of economic development and governance – can policy pave the way for industrial upgrading and export-led growth? Do firms alter their investment profiles in country on the basis of state incentives? How does the party and institutional setting translate into a coherent, directed industrial policy, and do multinationals adapt to these realities? Finally, what does Brazil’s experience with multinational corporations in select sectors tell us about the role of the state in a modern developing economy?

The findings of my research reveal how state policies can affect the composition and character of Foreign Direct Investment in developing countries. My theoretical model focuses on the impact of state policy in two distinct qualities of multinational investment: export promotion and research and development intensity. I link instances of uncoordinated investment promotion to low levels of both indicators, and show how political and institutional factors contribute to varying investment profiles over time. I concentrate on the automotive and information technology sectors, as both exhibit strong state involvement and high penetration by multinational corporations.

To test my theories on state-multinational interaction, I combine broad statistical analyses of confidential firm-level data with case studies of investment policy in Brazil and its antecedents. My investment data are supplemented with a series of interviews of current and past policymakers in Brazil and firm directors in Brazil and the US. I have conducted interviews with congressional representatives, former central bank heads, directors of state agencies, and business leaders and journalists during fieldwork in Brazil. My analysis examines the evolution of investment policy across time, and compares investment patterns in Brazil with other countries in Latin America. My arguments are subjected to multiple tests in a variety of methodological settings.