Book | 2014

Reinventing State Capitalism: Leviathan in Business, Brazil and Beyond

by Aldo Musacchio and Sergio G. Lazzarini


In this book we describe the transformation of state capitalism from a model in which governments owned and ran corporations and broadly controlled the allocation of financial resources into two new varieties of state capitalism: Leviathan as a majority and as a minority investor. In this book we study the implications of such transformation using detailed data from Brazil between 1976 and 2009. In the Leviathan as a majority investor governments have started to list state-owned enterprises, have selected professional managers to run them, and have given them more financial autonomy. We argue that the transformation from owner and manager to majority shareholder has reduced many agency problems commonly faced by SOEs, but has not reduced the temptation governments face to intervene in the operation of large strategic enterprises. In the Leviathan as a minority shareholder mode, governments have small equity ownership in corporations and in general do not intervene in management. We find evidence that such equity investments allow firms to alleviate capital constraints and increase capital expenditures. Yet we also find instances in which governments use their minority positions to intervene in the management of firms, especially in natural resource industries.

Keywords: State capitalism; state-owned enterprises; industrial policy; development banks; Capitalism; Financial Markets; corporate governance; corporate governance theory; CEO effects; Public Sector; Economic Systems; Financial Institutions; Corporate Governance; Business and Government Relations; Governing and Advisory Boards; State Ownership; Privatization; Public Ownership; Emerging Markets; Banking Industry; Mining Industry; Energy Industry;


Musacchio, Aldo, and Sergio G. Lazzarini. Reinventing State Capitalism: Leviathan in Business, Brazil and Beyond. Cambridge, MA: Harvard University Press, 2014.