Although the role of public enterprise in Latin America has been of central importance in the industrialization process, until recently it has received only marginal attention by economists. Trebat’s study is thus a welcome addition to the literature. He provides a thorough description of the historic evolution of Brazils state enterprises, which amounted to about 700 firms by the early 1980s (250 of which belonged to the federal government), and which accounted for 50 percent of the investment expenditures of the country’s 7,000 largest companies.
Trebat examines state enterprises from various vantage points. We learn about their overall performance in providing public utility services and in producing goods in such sectors as steel, petroleum, petrochemicals, mining, and the like, We are informed about their organizational changes over time (e.g., the circumstances which have led to centralization of decision making in ministries at certain times and firmer autonomy at other times). We are told of their linkage to other ownership sectors, both as competitors and as complementary partners (either as customers or providers of inputs). We learn of changing methods of financing expansion. And we find out about various ways of evaluating their performance. The book contains a wealth of information to illustrate various aspects of this study—both macro- and microstatistical information and a number of case studies.
Some of Trebat’s findings should challenge many accepted doctrines concerning the performance of state enterprises. For example, he shows how from 1966 to 1975, real value added of state firms grew 3.7 times, compared to 2.4 times for industry as a whole (p. 124); he presents evidence showing that “ . . . the public enterprise sector has stimulated rather than repressed the growth of the Brazilian private sector” (p, 136). We learn that for long periods “ . . . Managers have clearly had the latitude to focus upon achieving industrial efficiency without concerning themselves with the social objective of increasing employment” (p. 157); that “ . . . Average output per worker in Brazilian public enterprises more than doubled between 1966 and 1975 . . .” (p. 159); and that “ . . . if railroads are excluded, average productivity in 1970 of public enterprises was . . . more than double the manufacturing average . . .” (p. 160). And, finally, despite price controls over certain public sector firms, Trebat found that “ . . . Brazilian public enterprises, with the exception of the railroads, have been generally profitable . . . the average rate of return on capital . . . hovered at or above 20 percent during most of the late 1960s and well into the 1970s” (p. 167).
Trebat’s study is a valuable addition to the development literature in general, to the study of the industrialization process, and, especially, to the understanding of the economic role of the state in the process of development.
