In the 1950s, Brazil prohibited car imports and forced
transnational auto companies either to abandon the market or
manufacture vehicles within Brazil. Although current approaches to
economic development would suggest that this type of
industrialization policy would fail in the political-economic
context of post-war Brazil, the plan was very successful. This 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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