Abstract: State-Owned Enterprise, Industrialization and Subsoil Property Rights: Brazil in the 1930s and 1940s
In the 1930s and 1940s state-directed industrialization took firm root in Brazil. This paper explores one of the strongest and earliest efforts in this activity, the formation of a state-owned enterprise for iron-ore mining, in the context of property rights theories about public goods. Doing so highlights the political economy of allocating to the public domain the property rights to natural resources in order to build state-owned enterprise. It also illustrates the process by which Brazil established one of the most economically interventionist states of the twentieth century. Focusing on the transformation of the British-owned Itabira Iron Ore Company into Companhia Vale do Rio Doce, a state-owned enterprise, demonstrates the expansion of the concept of the public domain that Brazilians invoked. The Brazilian state reverted to earlier property definitions that protected its sovereignty over the subsoil and mineral resources, and it used the global strategic circumstances of World War II to great advantage. As a result, the Brazilian state built its own role in the economy while promoting large-scale industry in the twentieth century.