Aldo Musacchio

Associate Professor of Business Administration (Leave of Absence)

Aldo Musacchio has been in the faculty of HBS since 2004. He is currently an associate professor in the Business, Government, and International Economy Unit (BGIE) and a Faculty Research Fellow at the National Bureau of Economic Research (NBER).

Professor Musacchio’s first research projects focused on how companies can adopt corporate governance practices that protect investors in relatively adverse legal and institutional environments. His book, Experiments in Financial Democracy (Cambridge University Press, 2009) studies the mechanisms Brazilian firms used to follow high corporate governance standards before 1950, when the legal protections for investors were relatively weak. He argues that companies are not trapped in the legal systems in which they operate. They can overcome their institutional environments through better practices and by designing bylaws that compensate for the weak legal environment.

Professor Musacchio’s current research project with Professor Sergio Lazzarini, of Insper in Brazil, looks at the new ways in which states intervene in the economy. They are writing a book manuscript, tentatively entitled Leviathan in Business, that examines the new forms of state capitalism. Among other things, the book contains chapters on the effects of having the state as a minority shareholder, the role of development banks in capital formation, the importance of selecting well CEOs of state-owned enterprises (SOEs), and analyzing whether listing SOEs is enough to tie the governments hands, among others.

Finally, Professor Musacchio is also developing a series of cases and articles looking at best practices in state-owned enterprises. The objective of this research project is to provide lessons to improve the performance of large state-owned companies, especially in contexts where governments face political constraints to privatize such companies in full or in part, or where managers of state-owned enterprises cannot freely hire and fire workers or charge market rates for their services or products.

Aldo Musacchio has a B.A. in economics (with highest honors) from ITAM, in Mexico, and a Ph. D. in Economic History of Latin America from Stanford University. He is a faculty associate at the Weatherhead Center for International Affairs and a member of the Brazil Studies Committee and the Mexican Studies Committee, all at Harvard University. In 2012, he won the First Prize of the Manuel Espinosa Yglesias Prize for his research on foreign banks in Mexico (together with Stephen Haber) and was awarded the 2012 Prize for Professiona/Academic Meirt by the Alumni Association of ITAM (EX-ITAM). In 2007 he was selected as one of the “30 most promising professionals in their thirties (30 promesas en los treintas)” by Mexican business magazine Expansion. Musacchio is a member of the board of trustees of LASPAU: Academic and Professional Programs for the Americas, a nonprofit organization dedicated to advancing higher education in the Americas. Aldo Musacchio obtained a B.A. in Economics with highest honors from ITAM in Mexico City. He lives with his wife in the South End, Boston, Massachusetts.

  1. Overview

    by Aldo Musacchio

    Globalization and Emerging Markets (Elective Course) The world order has changed significantly in the last two decades. The influence of western-style varieties of capitalism has been challenged by new forms of capitalism that rely less on private enterprise and on the enforcement of rigid institutional structures (e.g., laws). This change is to a large extent explained because of the rise of emerging markets to the center stage of global capitalism. Large economies such as those of BRIC countries (Brazil, Russia, India, and China) or the so-called N-11 (Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey, and Vietnam) dominate some of the most important commodity markets and are growing and industrializing at a faster pace than any developed country. Additionally, investors that considered securities issued in emerging markets as a risky asset class in the 1990s are now buying emerging market bonds and stocks as the new blue chips. These trends are important because they provide a new set of opportunities for entrepreneurs and investors in the developed world and within emerging markets. Some of these changes, however, have taken place so fast that it is hard for investors, entrepreneurs, and managers in general to develop a framework that can help them differentiate secular trends from temporary transitions and provide them with lessons to deal with the weak institutions, political risk, and strong state presence that prevails in emerging markets. Therefore, this course provides a simple framework to understand the development strategies followed by emerging markets, identify and learn to deal with political risk and state capitalism, and, finally, to distinguish new trends that can provide sustainable business opportunities. The course uses a variety of country and company cases to accomplish these objectives -- from country cases on BRIC economies, to cases on energy, mining, and utility companies to banks operating in emerging markets. Doing business in emerging markets and interacting with the governments of those countries poses significant challenges. The business environment in these new dominant emerging markets is very different from that of the developed world. For instance, in the largest emerging markets governments play a greater role to promote economic development, the rule of law tends to be weaker and the enforcement of contracts can end up depending on the political whims of whoever is in power. Therefore, this course will have a strong focus on the strategic challenges managers face when dealing with state-owned enterprises or with governments that threaten firm performance either through expropriation, corruption, or other forms of state intervention. The course will focus on three interrelated modules that affect growth and business opportunities in emerging markets. First, the course provides a basic framework to understand the development strategies and sources of competitiveness in emerging markets. Second, the course will look at the kind of strategies that succeed when investing and doing business in or with emerging markets. Finally, the third module looks at business-government relations in three different ways. The module will begin by looking at the rising challenge of developing successful strategies in systems in which corruption is pervasive. Second, we will look at the importance of state-owned enterprises in emerging markets and the possible risks and business opportunities that they may bring. Finally, the module includes a series of cases that examine strategies for companies and investors to help them overcome expropriation risk.

    Keywords: emerging markets; globalization; strategy; macroeconomics; State capitalism; political economy; Emerging Markets; Multinational Firms and Management; Global Strategy; Economics; Energy Industry; Retail Industry; Mining Industry; Agriculture and Agribusiness Industry; Banking Industry; China; Africa; Dubai; Pakistan; India; Brazil; Russia; Cuba; Argentina;