Power to the States: "Fiscal Wars" for FDI in Brazil

Laura  Alfaro; Yasheng  Huang; Marios S. Kalochoritis

Case | HBS Case Collection | March 2001 (Revised February 2004)

Power to the States: "Fiscal Wars" for FDI in Brazil

by Laura Alfaro, Yasheng Huang and Marios S. Kalochoritis

Abstract

On January 6, 1999, Itamar Franco, the governor of the state of Minas Gerais, the second-largest state in Brazil, declared a 90-day moratorium on its debt payment to the federal government. The announcement triggered a run on the Brazilian currency, the Real, and threatened the macroeconomic stability carefully constructed by President Fernando Henrique Cardoso since 1993. Confidence in the country on the part of foreign investors was badly shaken. This case traces the origin of this crisis.

Keywords: International Relations; Investment; Financial Crisis; Borrowing and Debt; Brazil;

Format: Print

23 pages

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Citation:

Alfaro, Laura, Yasheng Huang, and Marios S. Kalochoritis. Power to the States: "Fiscal Wars" for FDI in Brazil. Harvard Business School Case 701-079, March 2001. (Revised February 2004.)

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Power to the States: "Fiscal Wars" for FDI in Brazil

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