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Strategies Of Waste: Bidding Wars In The Brazilian Automobile Sector

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  • Rodríguez-Pose, Andrés
  • Arbixb, Glauco

Abstract

Since the mid‐1990s, Brazil has become one of the main recipients of foreign direct investment in the automobile sector. As in the late 1950s and early 1960s, world car manufacturers are investing heavily in the building of new car plants. The renewed interest of car companies in Brazil is a result of the huge and expanding internal market and the relatively stable macroeconomic panorama of the mid‐1990s. However, and in contrast to what happened in the 1950s and 1960s, most new car plants are being located outside the São Paulo metropolitan area, the traditional hub of the Brazilian motor industry. Although some argue that, among other reasons, this is the result of lower labour costs elsewhere in Brazil and of improved infrastructure in the country, this article aims to demonstrate that the recent decentralization of the Brazilian motor industry is basically linked to perverse territorial competition among Brazilian states. This sort of territorial competition – known in Brazil as the ‘fiscal wars’– represents a pure waste of resources, both for the states engaged in them, as well as for Brazil as a whole. Depuis le milieu des annès 1990, le Brésil est devenu l'une des principales destinations de l'investissement direct à l'étranger dans le secteur de l'automobile. Comme vers la fin des années 1950 et le début des années 1960, les fabricants mondiaux de véhicules investissent massivement dans la construction de nouvelles usines. Le regain d'intérêt de ces sociétés pour le Brésil résulte en partie de la taille et de l'expansion du marché intérieur, ainsi que de la relative stabilité du paysage macroéconomique du milieu des années 1990. Pourtant, et contrairement au phénomène précédent, la plupart des nouvelles usines s'implantent hors de la zone métropolitaine de São Paulo, centre traditionnel de l'industrie automobile brésilienne. Pour certains, ce choix provient, entre autres raisons, du fait que les co?ts du travail sont plus faibles partout ailleurs au Brésil e
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  • Rodríguez-Pose, Andrés & Arbixb, Glauco, 2000. "Strategies Of Waste: Bidding Wars In The Brazilian Automobile Sector," ERSA conference papers ersa00p505, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa00p505
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    References listed on IDEAS

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    2. Yveline Lecler, 2002. "The cluster role in the development of the Thai car industry," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 26(4), pages 799-814, December.
    3. Michael R. Betz & Mark D. Partridge & David S. Kraybill & Linda Lobao, 2012. "Why Do Localities Provide Economic Development Incentives? Geographic Competition, Political Constituencies, and Government Capacity," Growth and Change, Wiley Blackwell, vol. 43(3), pages 361-391, September.
    4. Filipe Lage de Sousa, 2010. "Regional Manufacturing Wages: Dancing to the Tune of Trade Shocks," SERC Discussion Papers 0046, Centre for Economic Performance, LSE.
    5. Carlianne Patrick, 2014. "Does Increasing Available Non-Tax Economic Development Incentives Result in More Jobs?," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(2), pages 351-386, June.
    6. Metaxas, Theodore, 2004. "Οικονομική Ανάπτυξη, Ανταγωνιστικότητα Και Μάρκετινγκ Της Πόλης: Η Άποψη Των Επιχειρήσεων Της Πόλης Της Λάρισας [Economic development, competitiveness and city marketing: firms' appreciation for th," MPRA Paper 43301, University Library of Munich, Germany.
    7. José Ricardo Ramalho & Marco Aurélio Santana, 2002. "VW’s modular system and workers’ organization in Resende, Brazil," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 26(4), pages 756-766, December.
    8. Ann Markusen (ed.), 2007. "Reining in the Competition for Capital," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number ricc.
    9. Ascani, Andrea & Balland, Pierre-Alexandre & Morrison, Andrea, 2020. "Heterogeneous foreign direct investment and local innovation in Italian Provinces," Structural Change and Economic Dynamics, Elsevier, vol. 53(C), pages 388-401.
    10. Carlianne Patrick, 2014. "The economic development incentives game: an imperfect information, heterogeneous communities approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 137-156, August.
    11. Shiuh‐Shen Chien, 2008. "Local Responses To Globalization In China: A Territorial Restructuring Process Perspective," Pacific Economic Review, Wiley Blackwell, vol. 13(4), pages 492-517, October.
    12. Filipe Lage-De-Sousa, 2006. "Trade Shocks in Brazil: An Investigation of Effects on Regional Manufacturing Wages," ERSA conference papers ersa06p441, European Regional Science Association.
    13. Sarah Bauerle Danzman & Alexander Slaski, 2022. "Incentivizing embedded investment: Evidence from patterns of foreign direct investment in Latin America," The Review of International Organizations, Springer, vol. 17(1), pages 63-87, January.
    14. Hector Rocha & Rolf Sternberg, 2005. "Entrepreneurship: The Role of Clusters Theoretical Perspectives and Empirical Evidence from Germany," Small Business Economics, Springer, vol. 24(3), pages 267-292, February.
    15. Danilo Limoeiro, 2015. "Beyond income transfers: The decline of regional inequality in Brazil during the 2000s," Progress in Development Studies, , vol. 15(1), pages 6-21, January.
    16. Theodore Kahn & Zack Zimbalist, 2022. "Public investment versus government consumption: how FDI shocks shape the composition of subnational spending in Mexico," Review of International Political Economy, Taylor & Francis Journals, vol. 29(2), pages 502-537, March.
    17. Lage de Sousa, Filipe, 2010. "Regional manufacturing wages: dancing to the tune of trade shocks," LSE Research Online Documents on Economics 33500, London School of Economics and Political Science, LSE Library.
    18. van den Berghe, D., 2001. "The Geography of International Strategy: a multi-level framework," ERIM Report Series Research in Management ERS-2001-51-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.

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