The introduction presents the book's core puzzle of why states promote the outward investments of national firms despite the political and distributional costs of doing so. It previews a theory of globalized state-led development whereby policy-makers promote the internationalization of domestic business to pursue the structural transformation of their home economies. The chapter also describes the book's research strategy of within-country and cross-national comparisons of globalized state-led development in Brazil and China.

Chapter 6 studies the effects of state support on firm internationalization. Based on an original dataset of the history of the foreign production and innovation investments of large Brazilian MNCs, it compares the internationalization trajectories of supported and non-supported MNCs before and after state support is introduced. Using a difference-in-differences design, it provides evidence of the effectiveness of state support for MNCs: Supported firms outpace non-supported firms both in access to markets (measured by number of host countries and access to free trade agreements) and knowledge (measured by the innovation ecosystems of the host countries and whether they establish a research and development center abroad). It further probes the mechanisms underlying this effect, relying on in-depth interviews with firm managers of supported firms and bank bureaucrats, the chapter shows that BNDES’ relational banking approach can explain why BNDES support generates positive results despite evidence of political considerations in allocation decisions.

Chapter 2 presents a theory of globalized state-led development that helps us understand the conditions under which this model is adopted and implemented. It begins with the developmentalist dilemma faced by states: how can they help national firms benefit from global markets while managing the domestic political tensions these interventions provoke? This tension has important points of comparison with the challenges faced by the East Asian developmental states, yet has become more acute. Globalization and democracy have deepened the developmentalist dilemma by increasing the relevance of international production and innovation networks, constraining policy space, and heightening political contestation. A theory of globalized state-led development explains the conditions under which governments navigate these competing pressures by supporting national firms at home and abroad.

Chapter 7 examines how relational banking operates through in-depth case studies of the ties between the BNDES and two Brazilian MNCs: JBS (an agribusiness firm) and TOTVS (an information technology firm). This case selection explores the comparative advantage-conforming and defying components of Brazil’s globalized state-led development. Through this granular empirical approach, the reader can observe the state’s interventions at the firm-level and isolate the precise levers and sequence through which the state influences firm behavior. The chapter presents both attitudinal (firm managers recognize the relevance of the state) and behavioral (support is temporally and sequentially connected to changes in the firm’s foreign investment portfolio) evidence that state financing shapes the internationalization trajectory of firms and helps states achieve their industrial policy goals.

This chapter examines political risk insurance as an alternative to international investment treaties, looking at some of the world’s leading providers of this service. It continues with a consideration of investment incentives, followed by a discussion of some of the main sources for further information on international investment law. This chapter then offers a concluding overview of some of the central debates in international investment law.

Although it is often assumed that private firms will have the required skills to generate impact, in many contexts governments actively sponsor new private capabilities via targeted industrial policies. Government capabilities are again critical here, as poorly designed policies may end up wasting public resources with unproductive firms that might request continuous support even when their initiatives fail. This chapter applies the decision framework presented in Chapter 3 to explore whether governments should expand their boundaries to include development banks with a mandate to improve private capabilities. The chapter also presents additional applications such as how private capabilities can be developed to deal with pandemics, taking COVID-19 as an example, and to promote the supply of affordable, frugal products and services.