Determinants of Firm Entry into the Brazilian Automobile Manufacturing Industry, 1956–1968

This article examines the negotiating process between the Brazilian state and transnational auto companies. It argues against dichotomous frameworks that emphasize either economic or political variables in shaping foreign direct investment and in favor of a more complicated bargaining framework that takes into account the strategic objectives of state policy as well as the form and timing of firm investment. Using archival evidence and interviews, the article documents the implantation of the industry; it concludes that the process of firm entry into Brazil must be understood in light of the policies and institutions that made the threat of market closure and the deadlines credible and made it costly for firms not to participate on schedule.