Why do developing country governments support the creation of domestic multinational corporations (MNCs)? I argue that governments can use the outward foreign direct investments of domestic firms as a development strategy. Domestic MNCs bring a host of benefits to their home economy that firms that only invest domestically cannot. By investing internationally, developing country firms can access markets, technology, and skills that are unavailable in their home country. While governments face developmental incentives to support domestic MNCs, this policy has political and distributional consequences. It is a strategy biased towards big business, and perceived by both workers and public opinion as outsourcing domestic jobs and capital. Governments are likely to face strong political backlash when implementing this policy. I argue that governments will provide State Support for Domestic Multinationals (SSM) when key policy-makers hold causal beliefs regarding the developmental benefits of firm internationalization for the home economy and enjoy the organizational resources to address the political backlash this policy may face. I study the adoption and implementation of SSM in Brazil between 2003 and 2013. The Workers’ Party government used the Brazilian Development Bank to support the internationalization of domestic firms by providing three forms of support: mergers among large firms, loans for internationalization, and capital via shareholding. I trace the over-time variation in policy-makers causal beliefs to account for the adoption of SSM. I then measure SSM across the full universe of Brazilian MNCs and find that supported firms are more likely than non-supported firms to pursue forms of internationalization that provide benefits to the home country. I triangulate this data with in-depth case studies of Brazilian MNCs in agribusiness and information technology. I show that SSM faced significant political pressures from labor, social movements and public opinion resulting in different rates of deployment of the three forms of support. The rates of deployment, in turn, can be accounted for by the differing political and economic sensibilities built into each form of support. Shadow case studies of variations in SSM adoption and implementation in China, Japan, and Mexico, provide external validity for the argument.
Sierra, Fiorella Jazmin,
"Partners at Home and Abroad: How Brazil Globalized State-led Development"
(2015).
Political Science Theses and Dissertations.
Brown Digital Repository. Brown University Library.
https://doi.org/10.7301/Z0R20ZR1
