Leviathan Evolving: Varieties of State Capitalism in Brazil and Beyond
Abstract: We document the reinvention of state capitalism that occurred around the world at the end of the twentieth century. The model of state capitalism in which the government was an owner and manager (the model we call Leviathan as an entrepreneur) reached a major crisis in the 1980s. Given governments’ temptation to use state-owned enterprises (SOEs) for political or social goals, the model had becoame too costly to sustain. As a way to attract minority private capital, many SOEs adopted new governance practices such as public listing and professional management, giving rise to a new model of state capitalism, Leviathan as a majority investor. The 1990s wave of reform and privatization brought about yet another new model of state capitalism. The state retained minority equity positions in some of the privatized firms and began to use sovereign wealth funds, holding companies, and development banks to acquire minority positions in private firms. This transformation gave rise to the model of state capitalism which we call Leviathan as a minority investor. Although we present a general discussion of these new varieties of state capitalism, most of our detailed empirical analyses are based on firm-level data for Brazil, which is a typical case of state capitalism in its many forms. Testing a host of distinct hypotheses, we propose conditions that might allow a government to use each of new models of state ownership to more effectively improve firm-level performance and achieve its development objectives.
