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Strategies Of Waste: Bidding Wars In The Brazilian Automobile Sector

  • Rodríguez-Pose, Andrés
  • Arbixb, Glauco

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 S�o 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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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa00p505.

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Date of creation: Aug 2000
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Handle: RePEc:wiw:wiwrsa:ersa00p505
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  1. Coe, David T & Helpman, Elhanan & Hoffmaister, Alexander W, 1997. "North-South R&D Spillovers," Economic Journal, Royal Economic Society, vol. 107(440), pages 134-49, January.
  2. Jeffrey Sachs & Andrew Warner, 1995. "Economic Reform and the Progress of Global Integration," Harvard Institute of Economic Research Working Papers 1733, Harvard - Institute of Economic Research.
  3. Wood, Adrian, 1995. "North-South Trade, Employment and Inequality: Changing Fortunes in a Skill-Driven World," OUP Catalogue, Oxford University Press, number 9780198290155.
  4. Sachs, Jeffrey D & Warner, Andrew M, 1997. "Fundamental," American Economic Review, American Economic Association, vol. 87(2), pages 184-88, May.
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