Foreign Direct Investments: impact of party affiliation on the Brazilian subnational allocation of investments

• Autor(a) principal: Coury, Júlia Reis
• Data de Publicação: 2023
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Biblioteca Digital de Teses e Dissertações da USP
• Texto Completo: https://www.teses.usp.br/teses/disponiveis/101/101131/tde-14062023-114532/
• topic: Brazilian political parties; Economia política; Filiação partidária; Foreign Direct Investment; Investimento Estrangeiro Direto (IED); Minas Gerais; Minas Gerais; Partidos políticos brasileiros; Party affiliation; Political economy

Is party affiliation an important aspect of the subnational allocation of Foreign Direct Investments (FDI) in Brazil? If important, would a governor from a more pro-business party affiliation attract more investments than a pro-labor one? Based on the availability of data from the Electronic Declaratory Registration - Foreign Direct Investment (EDR - FDI) and Quinquennial Census of Foreign Capital, both by the Brazilian Central Bank (BACEN), I examined FDI patterns from 2011 to 2016. More specifically, the research developed: a quantitative analysis of political and economic determinants for the subnational attraction of FDI; and a qualitative investigation of one state, Minas Gerais (MG), for a closer evaluation. Based on the results of the Arellano-Bond (1991) models, market size, service sector agglomeration, states\' trade dimension, and partisan affiliation, especially if the governor is from PSDB (pro-business), are relevant factors for FDI subnational allocation. In turn, the results suggested that a higher cost of bureaucracy and alignment with the presidents political party decrease FDI. The MG in-depth case refined the importance of pro-business party affiliation by characterizing the two administrations of PSDB (pro-business) and one administration of PT (pro-labor). Interviewees analyzed the role of different party affiliations in the state government, and a pro-business party impacted how the governor treated foreign investors. The party affiliation aspect was fundamental for consultants, civil servants, and lobbyists in FDI subnational allocation.