State-owned enterprises have emerged as important instruments of development policy in most of the mixed economies of Latin America and, indeed, throughout the developing world. The entrepreneurial and commercial activities of the state typically extend to such diverse sectors of the economy as national resource development, banking and finance, external trade and commerce, light and heavy manufacturing, as well as transportation and the utilities.

Brazil has experimented widely with state-owned companies: By 1980 more than six hundred public enterprises were operating in many sectors of the economy. More importantly, the government's firms have grown rapidly in both size and scale of operations and now include all but one of the thirty largest enterprises in the country. At the same time, a large private sector has grown and prospered in Brazil, often with close input or output links with the state companies. The mixture of public and private ownership has resulted in the construction, in the short span of thirty years or so, of a highly integrated industrial complex capable of producing an increasingly sophisticated array of goods for domestic and world markets. Brazil recorded an average annual rate of economic growth of about 7% from 1950 through 1980, emerging as the most dynamic economy in the developing world and, with a GDP well in excess of $300 billion, as one of the largest economies in the world. Brazil is hardly a shining success story of contemporary economic development, but its economic strategy has produced an impressive transformation of a once very poor country. The state-owned enterprises, the subject of this book, were close to the heart of this strategy.