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Strategies of Waste: Bidding Wars in the Brazilian Automobile Sector

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  • André Rodríguez-Pose

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. Copyright Joint Editors and Blackwell Publishers Ltd 2001.

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  • André Rodríguez-Pose, 2001. "Strategies of Waste: Bidding Wars in the Brazilian Automobile Sector," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 25(1), pages 134-154, March.
  • Handle: RePEc:bla:ijurrs:v:25:y:2001:i:1:p:134-154
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    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. Josh Whitford & Aldo Enrietti, 2005. "Surviving the Fall of a King: The Regional Institutional Implications of Crisis at Fiat Auto," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 29(4), pages 771-795, December.
    6. José Ricardo Ramalho, 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.
    7. 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.
    8. Ann Markusen (ed.), 2007. "Reining in the Competition for Capital," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number ricc, November.
    9. 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.
    10. 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.
    11. 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.
    12. Filipe Lage de Sousa, 2010. "Regional Manufacturing Wages: Dancing to the Tune of Trade Shocks," SERC Discussion Papers 0046, Spatial Economics Research Centre, LSE.
    13. 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.

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