Managing Multinationals Industrial Policy, State Institutions, and the Quality of Foreign Direct Investment in Brazil

Foreign Direct Investment (FDI) has increased in many countries, and it is a potential catalyst for development. Yet all FDI is not equal. This dissertation uses the case of Brazil since 1990 to demonstrate how host country political institutions can have an effect on the investment profiles of multinational firms. Specifically, I argue that innovation-intensive and efficiency-oriented FDI is relatively uncommon in Brazil due in part to the characteristics of state institutions. I develop theoretical frameworks of institutional coherence and firm incentive structures, and support my argument with original interviews and firm-level data from Brazil and other developing countries. I concentrate on the automotive and information technology industries in Brazil, which are dominated by multinational firms. I argue that increasingly integrated global value chains change the context for host country governments and industrial policy, but that states do retain influence over both the production models pursued by firms and potential developmental spillovers from investment.