"Leviathan as minority shareholder”. This is the definition that Sergio Lazzarini, of the São Paulo Institute of Education and Research, and Aldo Musacchio, of Harvard, have given regarding Brazilian state capitalism, precisely to underline the differences with China and Russia.
“The visible hand”, as l´calls itEconomist in a report this week comparing the economies of China, Russia and Brazil, it operates differently in the three countries. And in Brazil it represents a real anomaly compared to other emerging countries.
Indeed, the green-gold state is able to manage the country's main companies, even without holding majority control. A formula that provides various advantages to the national economy. For example, it limits the ability of the state to reward customers or to pursue social policies, given that private shareholders still have enough control power.
But which gives the state more leverage over its own money: Up to 2009, the state's holdings in BNDESar, the National Development Bank's investment management company, totaled $53 billion, just 4% of the stock market. Yet the government was able to make its voice heard loudly.
Studying 256 companies listed on the Stock Exchange, between 1995 and 2003, Musacchio and Lazzarini discovered that the State provides the necessary resources to invest where private resources are lacking.
But it's not all rosy. The case cited by the Economist is that of Petrobrás, the multinational energy company with a state majority. The wind blowing from the east, from China in particular, where the economy is advancing at the push of a button by state capitalism, has also convinced Brazil to carry out interventionist choices. In fact, the government is forcing Petrobrás to sign supply contracts with local companies, to the detriment of the quality of the equipment and competitiveness. Or as in the case of Vale mining group, where in addition to the removal of CEO Roger Agnelli, which took place despite the extraordinary results achieved, we are witnessing the retention of officials that the company has no need for.
The visible hand was also felt on the occasion of important mergers: BRF was born from the food giants Sadia and Perdigão; and while the telephone company Oi bought Brasil Telecom, in the paper mill sector, Fibria was born from the merger of VCP and Arucruz.
It is therefore politics that has a leading role in national economic choices. Not only in the case of the most authoritarian regimes, but also in democratic Brazil. A model that paves the way for corruption in the folds of the state machine. And it is no coincidence that the Transparency International ranking places Brazil 73rd in the world, followed by China at 75th and Russia at 143rd.
Read the news on The Economist,
