This presentation on state-owned enterprises in Brazil was made by Aldo Musacchio and Sergio G. Lazzarini at the OECD Workshop on SOEs in the Development Process held at the OECD Conference Centre in Paris, France, on 4 April 2014. Find out more at http://www.oecd.org/daf/ca/2014-workshop-soe-development-process.htm

1. STATE-OWNED ENTERPRISES
IN BRAZIL:
HISTORY AND LESSONS
Aldo Musacchio
Harvard Business School and NBER
Sergio G. Lazzarini
Insper Institute of Education and Research

2. VARIETIES OF STATE CAPITALISM
(Musacchio and Lazzarini, 2014)
Leviathan as an
entrepreneur
(owner/manager)
 Full state control and
ownership of SOEs,
with limited autonomy
and transparency
Leviathan as a
majority investor
 Publicly traded
SOEs with
improved autonomy
and transparency
 State-owned
holding companies
(SOHCs)
Leviathan as a minority
investor
 Partially privatized firms
(PPFs)
 Minority stakes under
state-owned holding
companies (SOHCs)
 Loans and equity from
state-owned and
development banks
Sovereign wealth funds
 Other state-controlled
funds (e.g. pension funds,
life insurance companies).
Privately-
owned
firms

3. Leviathan as an
entrepreneur
(owner/manager)
 Full state control and
ownership of SOEs,
with limited autonomy
and transparency
Leviathan as a
majority investor
 Publicly traded
SOEs with
improved autonomy
and transparency
 State-owned
holding companies
(SOHCs)
Leviathan as a minority
investor
 Partially privatized firms
(PPFs)
 Minority stakes under
state-owned holding
companies (SOHCs)
 Loans and equity from
state-owned and
development banks
Sovereign wealth funds
 Other state-controlled
funds (e.g. pension funds,
life insurance companies).
Privately-
owned
firms
Played a role in the initial
development of Brazil; yet
with different goals

4. EARLY DEVELOPMENT IN BRAZIL AND MODELS OF
STATE INTERVENTION
 Leviathan as an Accidental Owner (1880s-1930s).
 SOEs and the Big Industrialization Push (1934-1967).
 The Zenith of Leviathan as an Entrepreneur (1967-1979).
 The Demise of Leviathan as an Entrepreneur and
Privatization (1980s-1990s)
 The Reinforcement of the Model where Leviathan is a
Minority Shareholder (1990s -), especially through BNDES.

5. LEVIATHAN AS AN ACCIDENTAL OWNER (1880s-
1930s)
 In the second half of the nineteenth, domestic and foreign
entrepreneurs set up a nascent industrial sector.
 That is, the early infrastructure projects necessary for the
development of a domestic market were not undertaken by
the government directly (Musacchio, 2009).
 In this initial stage of state intervention, the government was
an insurer against failure and a residual owner. In that role,
the Brazilian government ended up owning and operating
SOEs mostly by accident.
 Example: shipping and railways. Lloyd Brasileiro had to be
bailed out in 1913, thus falling under government control
(SEST 1985-1994; Baer et al. 1973; Topik 1987).

6. SOES AND THE BIG INDUSTRIALIZATION PUSH
(1934-1967)
 Private stock and debt markets were in crisis and private
investors were not willing to take risks (Musacchio 2009).
 First wave: during and after World War II, under President
Vargas. ISI with significant state ownership.
– Example of companies: CSN in steel (1941); CVRD (Vale) in
iron (1942); Fábrica Nacional de Motores (FNM), a
manufacturer of buses, trucks and cars (1943); Companhia
Hidroelétrica do São Francisco in electricity (1948); and many
others.
 Second wave in the 1950s. Notable cases were Petrobras
(1953), and BNDE (1952).
– BNDE initially focused on SOEs in energy, steel and
transportation. By 1970, however, the private sector received
almost 70% of the loans (Najberg, 1989 18).

7. THE ZENITH OF LEVIATHAN AS AN ENTREPRENEUR
(1967-1979)
Number of SOEs in Brazil according to the date when they were founded, 1857–
1986
Source: Musacchio and Lazzarini (2014)

8. THE ZENITH OF LEVIATHAN AS AN ENTREPRENEUR
(1967-1979), EXPLAINED
 The military government, especially after 1969, was a strong
believer of state intervention and ISI.
 Example: local private industrialists complained about “the
lack of resources and low tariffs” to invest in the telecom
sector (Díaz-Alejandro, 1984). Eventually a state-owned
conglomerate, Telebras, was created (1972).
 Thus, SOE expansion was not only because of lacking
private capital, but also because of uncertainty regarding the
profitability of private projects (given the environment of
governmental intervention).
 Expansion was also driven by “empire building” by
autonomous SOE managers (Trebat, 1983) and
decentralization of SOEs in various ministries.

9. EMPIRE BUILDING
Organizational chart of the instances of control of Brazilian SOEs, c. 1979
Source: Musacchio and Lazzarini (2014)
Executive
Council for Economic
Development
Council for Social
Development
Ministry of Finance
Banco do Brasil
Acesita (Steel)
Caixa Economic
Federal
Ministry of Industry
and Commerce
Cia nacional de
Alcalis (ash)
Siderbras (steel
holding co.)
CSN
Acesita
Cosipa
Usiminas
etc...
Ministry of Mines and
Energy
Petrobras and
subsidiaries
Petroquisa
(petrochemicals) &
subsidiaries
Petrobras distrib.
Petrobras Fertilizers
Petrobras Mining
Trading subsidiaries
CVRD
Docenave (shipping)
Rio Doce Geology
and Mining
Vale Fertil
(Fertilizers)
Valesul (Aluminum)
Other subsidiaries
and co-owned
aluminum firms
Eletrobras (electricity
holding) and
subsidiaries
CHESF
Furnas
CBEE
Others
Ministry of
Communications
Telebras (telcom
holding co.)
Telerj
Telemig
Telesp
Other telecom
subsidiaries
Ministry of
Transportation
Railway holding co
(RFFSA)
many railway firms
Port companies
Shipping co's
Construction co's
others
Ministry of
Aeronautics
Embraer
Airports (Infraero)
Other ministries
Subsidiaries of other
ministries, including
commercial banks,
Agriculture research
firms (Embrapa), and
military companies.
Ministry of Planning
Secretary of
Planning
BNDES
Other financing
agencies

10. SOEs AND FIXED CAPITAL FORMATION
Fixed capital formation in Brazil originated from large SOEs, government units and
private firms
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1949 1959 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979
Large SOEs Government Private fims
Source: Original data from Trebat (1083)

11. THE DEMISE OF LEVIATHAN AS AN ENTREPRENEUR
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
GDP annual change (%) % private firms with financial loss % SOEs with financial loss
Source: Musacchio and Lazzarini (2014)

12. HOW SOEs and PRIVATE FIRMS RESPONDED TO
THE CRISIS
How Brazilian SOEs versus private firms responded to the economic crisis of 1981-
1983. Differences-in-differences adjusted with propensity score matching.
Source: Musacchio and Lazzarini (2014)
7.5%
-2.6%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
SOEs Private
Changeinthenumberofemployeespre-and
post-crisis

13. EVENTUALLY... PRIVATIZATIONS
0
5
10
15
20
25
30
35
40
45
50
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Financeiras
Não-financeiras
Total
Usiminas CSN
Embraer
Light
Vale, CPFL
Telebrás system
Banespa,
BEMGE
CESP,
COELCE
From 1990 to 2002, the government privatized 165 enterprises, obtaining total revenues
of around 87 billion dollars (BNDES, 2002).
Privatization revenues helped reduce public debt by an amount equivalent to 8% of GDP
(Carvalho, 2001) and improved the profitability of firms (Anuatti-Neto et al., 2005).

14. Leviathan as an
entrepreneur
(owner/manager)
 Full state control and
ownership of SOEs,
with limited autonomy
and transparency
Leviathan as a
majority investor
 Publicly traded
SOEs with
improved autonomy
and transparency
 State-owned
holding companies
(SOHCs)
Leviathan as a minority
investor
 Partially privatized firms
(PPFs)
 Minority stakes under
state-owned holding
companies (SOHCs)
 Loans and equity from
state-owned and
development banks
Sovereign wealth funds
 Other state-controlled
funds (e.g. pension funds,
life insurance companies).
Privately-
owned
firms
Reforms also
reinforced new
models of state
capitalism

15. GOVERNANCE REFORMS AND THE RISE OF
LEVIATHAN AS A MAJORITY INVESTOR
Federal level State level
Number of SOEs 47 49
Number of listed SOEs 6 16
Total assets of SOEs (US$ million) $625,356 $66,152
% of total assets held by listed SOEs 58.3% 67.8%
Top listed SOEs, by assets Banco do Brasil (banking)
Petrobras (oil)
Eletrobras (electricity)
Banco do Nordeste
(banking)
Banco da Amazônia
(banking)
Cesp (electricity)
Banrisul (banking)
Sabesp
(water/sewage)
Cemig (electricity)
Copel (electricity)
Source: Compiled based on data from the Securities and Exchange Commission of Brazil and the Department of
Coordination and Governance of State-owned Enterprises (DEST), Ministry of Planning. Total assets include only firms
with direct stakes by the government.

16. THE LEVIATHAN AS A MAJORITY INVESTOR MODEL: SOME CASES
OF NATIONAL OIL COMPANIES (NOCs)
Statoil
(Norway)
Petrobras
(Brazil)
Pemex
(Mexico)
CEOs/incentives
CEO selected by Board
Board (influenced by
President of Brazil)
President of Mexico
Do CEOs usually change after
presidential elections
No In 3 out of 7 elections Yes
CEO compensation has pay-for-
performance component
Yes Yes No
Financials/transparency
Autonomous budget Yes
No, some investments need
gov't approval
No, some investments
need gov't approval
Listed? Yes Yes No
Main institutional investors
Norwegian national
insurance fund
Local pension funds, Black
Rock
Bondholders & Ex-Im
Bank
Regulation
Norwegian Petroleum
Directorate (NPD), reporting
to the Ministry of Petroleum
and Energy, de facto
independent
National Oil Agency (ANP),
linked to the Ministry of
Mines and Energy.
However, influenced by the
government
National Carbohydrates
Commission (CNH in
Spanish), a decentralized
agency linked to the
Ministry of Energy
(SENER)
Source: Adapted from Pargendler, Musacchio and Lazzarini (forthcoming). Compiled from the companies’ websites and from questionnaires sent to Pemex.

17. YET, ESCALATING POLITICAL INTERFERENCE AT
PETROBRAS AFTER 2012 (e.g. GASOLINE PRICES)...
50
60
70
80
90
100
110
120
130
140
01/02/12
01/17/12
02/02/12
02/17/12
03/07/12
03/22/12
04/09/12
04/24/12
05/10/12
05/25/12
06/12/12
06/27/12
07/13/12
07/30/12
08/14/12
08/29/12
09/14/12
10/01/12
10/17/12
11/01/12
11/21/12
12/06/12
12/21/12
01/11/13
01/29/13
02/15/13
03/04/13
03/19/13
04/04/13
04/19/13
05/07/13
05/22/13
06/07/13
06/24/13
07/10/13
07/25/13
08/09/13
08/26/13
09/10/13
09/25/13
10/10/13
10/25/13
11/11/13
11/28/13
12/13/13
01/03/14
01/20/14
02/04/14
PETROBRAS
IBOVESPA

18. THE MINORITY INVESTOR MODEL: BNDES
BNDES
IDB
World KDB KfW
(Brazil) Bank (Korea) (Germany)
Total assets (US$ bi) 330.4 87.2 428.3 123.3 591.4
Equity (US$ bi) 39.7 21 165.8 17.3 21.2
Profit (US$ bi) 6 0.3 1.7 1.4 3.5
New loans (US$ bi) 101.4 10.3 26.3 n.a. 113.1
Total outstanding loans (US$ bi) 218.1 63.0 233.6 63.6. 571.1
Size of staff 2,982 ~2,000 ~10,000 2,266 4,531
Return on equity (%) 15.1 1.4 1.0 8.1 16.5
Return on assets (%) 1.8 0.3 0.4 1.1 0.6
Profits per employee 2 ~0.2 ~0.2 0.6 0.8
Assets/equity 8.3 4.2 2.6 7.1 28
Assets (US$ mi) per employee 110.8 43.6 42.8 54.4 130.5
Source: based on Torres Filho (2009), with updated information from the banks’ annual reports.

19. OVER TIME BNDES REFOCUSED ON PRIVATE FIRMS
Source: Musacchio and Lazzarini (2014)

20. BNDES AS A MINORITY SHAREHOLDER: THE CASE
OF VALE (BRAZILIAN MINING FIRM)
Vale’s pyramid in 2009. Percentages refer to voting shares.
Funcef Petros Funcesp Previ Opportunity Cidade de
Deus Part.
Espírito
Santo
Mitsui Eletron BradesparLitelUnião Federal
18,2% 21,2%49%
VALE
ValeparBNDESPar
11,5%
53,9% Furthermore, the government
has “golden shares” and
regulates the industry (e.g.
royalties)

21. BNDES AS A MINORITY SHAREHOLDER
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0
10
20
30
40
50
60
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Percentageofequity
Numberoffirms
Firms with director indirectstakes
Firms with directstakes
Average directholding as a percentage of total equity
Source: Created based on data presented in Musacchio and Lazzarini (2014).
Note: Indirect stakes occur when BNDESPAR buys a company that is part of a pyramidal ownership structure; that is, when it owns a company that, in turn, is a
shareholder in another corporation (e.g., BNDES owns Valepar, which in turn owns Vale).

22. THE INVESTMENT ARM OF BNDES (BNDESPAR)
BECAME AN IMPORTANT SOURCE OF REVENUE
Source: Musacchio and Lazzarini (2014)
-20
-15
-10
-5
0
5
10
15
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Billionsofreaisof2009
Loan operations Equity and other investments
Exchange rate operations Inflation indexation

23. EVIDENCE ON MINORITY STAKES BY BNDES (1995-2009)
ROA is the dependent variable.
Minority state equity is measured as…
Direct or indirect stakes (dummy) Direct stakes only (percentage) Stake > 0% Stake ≥ 10%
(1) (2) (3) (4) (5) (6)
Hypothesized effects
Minority
0.111** 0.003 0.009** 0.004*** 0.003 0.183***
(0.055) (0.039) (0.004) (0.002) (0.047) (0.060)
Minority×Group
-0.131** -0.041 -0.012*** -0.007** -0.070 -0.233***
(0.061) (0.045) (0.005) (0.003) (0.057) (0.080)
Controls
Group 0.124** 0.101 0.116** 0.096 0.091 0.091
(0.051) (0.079) (0.050) (0.096) (0.092) (0.097)
Ln(Revenues) 0.078*** 0.027** 0.079*** 0.032*** 0.030*** 0.034***
(0.025) (0.013) (0.025) (0.011) (0.011) (0.012)
Leverage -0.012 -0.387*** -0.012 -0.380*** -0.388*** -0.360***
(0.008) (0.057) (0.008) (0.056) (0.055) (0.055)
Fixed assets -0.280** -0.223** -0.281** -0.225** -0.200** -0.256***
(0.115) (0.090) (0.115) (0.091) (0.096) (0.091)
Foreign control 0.035 -0.029 0.031 -0.038 -0.047 -0.018
(0.033) (0.027) (0.034) (0.037) (0.039) (0.041)
State control 0.01 -0.019 -0.003 -0.073 -0.070 -0.080
(0.046) (0.063) (0.055) (0.078) (0.075) (0.079)
Merger -0.019 -0.031 -0.007 -0.081 -0.090 -0.077
(0.045) (0.051) (0.046) (0.060) (0.064) (0.064)
Year, firm, firm–industry fixed
effects
Yes Yes Yes Yes Yes Yes
With propensity score matching No Yes No Yes Yes Yes
N (total observations) 2,920 1,169 2,919 1,194 2,919 1,194
N (number of firms) 367 128 367 130 130 130
p (F-test) < 0.001 < 0.001 < 0.001 < 0.001 < 0.001 < 0.001
Source: Inoue, Musacchio and Lazzarini (2013)

24. THE POSITIVE EFFECT OF MINORITY STAKES WAS
HOWEVER REDUCED AS CAPITAL MARKETS IN
BRAZIL DEVELOPED...

25. BNDES AS A LENDER
Source: Source: Created based on original data from the Central Bank of Brazil
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0% Jun-00
Nov-00
Apr-01
Sep-01
Feb-02
Jul-02
Dec-02
May-03
Oct-03
Mar-04
Aug-04
Jan-05
Jun-05
Nov-05
Apr-06
Sep-06
Feb-07
Jul-07
Dec-07
May-08
Oct-08
Mar-09
Aug-09
Jan-10
Jun-10
Nov-10
Apr-11
Sep-11
Feb-12
Jul-12
Dec-12
May-13
BNDES creditoperations/GDP (%) BNDES credit/total creditto the private sector (%)
Gross fixed capital formation/GDP (%)

26. “NATIONAL CHAMPIONS”
Percentage of total loans in the database
Company In 2004 In 2009
Petrobras (oil) 14.5 39.4
Telemar Norte Leste (telecom) 10.4 7.7
Vale do Rio Doce (mining) n.a. 8.5
Suzano (paper & energy) 3.4 2.6
Brasil Telecom n.a. 3.2
Neoenergia (electricity) 3.2 2.5
CPFL Energia (electricity) 6.8 n.a.
VBC Energia (electricity) 2.7 2.0
CSN (steel) 4.2 2.3
Klabin (paper) 1.3 2.1
Aracruz (cellulose) 2.4 n.a.
Cesp (electricity) 11.2 n.a.
Sadia (food and agribusiness) 3.2 n.a.
CPFL Geração (electricity) n.a. 2.1
Embraer (airplanes) n.a. 1.4
Source: Musacchio and Lazzarini (2014), using the database employed by Lazzarini et al. (2012).

27. DO BNDES LOANS IMPROVE PERFORMANCE AND
INVESTMENT? ECONOMETRIC EVIDENCE
 In general: inconclusive.
 Ottaviano and Sousa (2007): some lines positively affect
productivity, other lines have a negative effect.
 Sousa (2010): overall null effect on productivity.
 Coelho and De Negri (2010) larger effect on more productive
firms.
 De Negri et al. (2011) effect of loans on employment and the
extent of exports, but not on productivity.
 Pereira, Simões and Carvalhal (2011): subsidized loans have
positively affected investment (aggregated data).
 Lazzarini, Musacchio, Bandeira-de-Mello and Marcon (2012):
no effect on firm-level performance or investment, except for
a reduction in financial expenditures due to credit subsidies
(2002-2009, publicly traded firms).

28. CONCERNS ON BNDES
 Credit Misallocation
– Literature on state-owned banks: misallocation problem involves funding of
bad firms (e.g. Bailey et al., 2011 in China).
– Here: the bank is probably transferring credit to a substantial set of firms
that would not need subsidized credit in the first place.
 Selection of “Champions”
– Lack of clear criteria; and some evidence on the role of political connections
(Lazzarini et al., 2012; Sztutman and Aldrighi, 2013).
– Policy of champions apparently abandoned after 2012; with new emphasis
on state-controlled firms.
 Soft-budget Constraints and Bailouts
– Very low index of nonperforming loans; and no systematic selection of bad
firms.
– Yet bailouts do occur from time to time especially through convertible bonds
(e.g. JBS in 2011)
 Residual Interference in the Target Firms
– Especially when there is collusion of minority owners and firm-level rents.
Example: Vale (BNDES + pension funds).

29. CONCLUSIONS AND LESSONS (1/2)
 The model of Leviathan as an entrepreneur was ubiquitous in the early
development of Brazil. Yet, some development and private capital
markets were already in place before 1930 (e.g. Musacchio, 2009).
 SOEs were also used to control macroeconomic distortions (such as
high inflation or unemployment), which not only undermined their
performance but also created uncertainty for private investment.
 Thus, not clear what would have happened if the state acted in a more
selective way, emphasizing projects with positive externalities and “self
discovery,” leaving room for a diversified and competitive private sector
to thrive.
 SOEs with more autonomous governance and external orientation
apparently performed better; yet, autonomy led to empire building.

30. CONCLUSIONS AND LESSONS (2/2)
 Reforms and privatizations led to the emergence of the models of
Leviathan as a majority investor and Leviathan as a minority investor.
The former involved governance reforms in SOEs but has not
completely eliminated the risk of intervention. There is need of
sophisticated capital markets and independent regulatory bodies.
 The model of Leviathan as a minority investor was reinforced especially
through BNDES (equity and loans). When it acted as a minority
shareholder, highest impact was observed in the case of standalone
firms with constrained opportunity. Progressive exit is recommended
as capital markets develop.
 The effect of loans is rather inconclusive. Apparently there is a
probably of credit misallocation involving firms that get subsidies
without substantially changing investment. There should be more
emphasis on small firms and projects with positive externalities (e.g.
Chile’s CORFO).

31. THANK YOU!
amusacchio@hbs.edu
sergiogl1@insper.edu.br

32. ANCILLARY SLIDES

33. PETROBRAS: 1980 vs 2012

34. CORPORATE GOVERNANCE AND PERFORMANCE
OF NOCs
Governance Index: Based on whether (1) some of the equity of the NOC has been privatized ; (2) the government is a minority shareholder ; (3) there are
independent board members; (4) independent board members have a simple majority on the board of directors; (5) there are no government officials holding board
seats; (6) the chairman is an external board member; (7) the firm has budgetary autonomy; (8) the company’s financials are audited by a private auditing firm.

35. Fixed investment is the dependent variable.
Minority state equity is measured as…
Direct or indirect stakes (dummy) Direct stakes only (percentage)
(1) (2) (3) (4)
Hypothesized effects
Constrained opportunity
×Minority
53.032 21.657 7.114*** 3.767**
(48.268) (13.371) (1.697) (1.641)
Constrained opportunity
×Minority×Group
-52.350 -18.091 -7.113*** -3.710**
(48.084) (13.544) (1.693) (1.659)
Controls
Minority 5.732 3.433 0.502 0.284
(3.927) (3.603) (0.402) (0.381)
Minority×Group -5.906 -5.079 -0.651 -0.438
(3.889) (3.897) (0.401) (0.373)
Constrained opportunity -1.968 -2.706 -2.452* -3.566*
(1.457) (1.657) (1.341) (1.875)
Group -0.077 -3.133 -1.014 -5.859
(1.008) (2.974) (1.008) (3.863)
Constrained opportunity
×Group
1.48 0.317 1.591 0.263
(1.761) (2.372) (1.444) (2.890)
Ln(Revenues) -0.768 -2.252** -1.207* -2.278**
(0.698) (1.106) (0.661) (0.954)
Leverage -0.002 -6.641 -0.001 -1.387
(0.031) (4.296) (0.029) (3.641)
Fixed assets -4.689 2.92 -1.477 7.852
(5.837) (8.051) (3.300) (12.527)
Foreign control 2.677 2.907 3.882 4.447*
(2.273) (2.214) (2.487) (2.599)
State control -5.127 -6.810 -0.773 -4.805
(6.091) (6.546) (1.498) (4.237)
Merger 0.313 -5.968 0.116 -5.649
(1.411) (3.725) (1.453) (3.799)
Year, firm, firm–industry fixed effects Yes Yes Yes Yes
With propensity score matching No Yes No Yes
N (total observations) 1,970 861 1,969 878
N (number of firms) 314 122 314 124
p (F test) < 0.001 < 0.001 < 0.001 < 0.001
Source: Inoue, Musacchio and Lazzarini (forthcoming)

36. IF NOT BASED ON MARKET FAILURE CONSIDERATIONS,
CREDIT MISALLOCATION: STATE BANKS MAY END UP
TRANSFERING SUBSIDIES TO LARGE FIRMS THAT COULD
RAISE CAPITAL ELSEWHERE…
ROA EBITA/assets Tobin’s q Finex/assets Capex/assets Fixed/assets
Firm is observed with 0.021 0.052 -0.108 -0.148** 0.001 -0.018
with BNDES loan [0.048] [0.049] [0.241] [0.052] [0.022] [0.032]
Belongs to a group -0.158 -0.151 -0.006 -0.026 -0.025 -0.020
[0.096] [0.078] [0.682] [0.082] [0.019] [0.096]
Ln(Assets) 0.062 0.073 -0.204 -0.170 0.067 0.150**
[0.080] [0.079] [0.467] [0.133] [0.033] [0.050]
Leverage -0.256 -0.145 0.283 -0.101 -0.084 -0.249
[0.162] [0.148] [1.051] [0.259] [0.117] [0.129]
Fixed -0.154 -0.041 -1.022 0.807 -0.101
[0.161] [0.177] [1.450] [0.439] [0.212]
Foreign 0.148 0.138 -0.512 -0.048 -0.029 -0.037
[0.091] [0.074] [0.627] [0.047] [0.027] [0.087]
Fixed effects
Firm Y Y Y Y Y Y
Year Y Y Y Y Y Y
Industry-year Y Y Y Y Y Y
N (total) 260 260 260 146 251 260
p (F test) < 0.001 < 0.001 < 0.001 < 0.001 < 0.001 < 0.001
 p < 0.10 * p < 0.05 ** p < 0.01 *** p < 0.001. Robust standard errors in brackets, clustered on each firm. Regression
weights come from propensity matching score (kernel) estimation on the observed variables for the initial year of the sample
(2002). Fixed-effect regressions are restricted to regions of common support.

37. AN INCREASINGLY IMPORTANT SOURCE OF
REVENUE FOR THE GOVERNMENT
Source: Afonso e Barros (2013)
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Dividendsdividedbytotalgovernmentrevenues
Sourceofdividends,percentage
Petrobras and Eletrobras BNDES Other Dividends/total revenues

38. IN ADDITION, RETURNS FROM THE EQUITY
BUSINESS ARE FALLING...
-0.3%
-2.1%
-17.9%
7.4%
-15.5%
-12.4%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
BNDESPAR IBOVESPA
Estimated variation in the market cap of BNDESPAR’s portfolio of large firms.
Source:: BNDESPAR, annual reports. * 2014 data until mid March, 2014.
2012
2013 2014*

39. BNDES: PERFORMANCE IN THE LOAN BUSINESS
Source: Calculated by Musacchio and Lazzarini (2014) with data from (BNDES 1953-2010). Returns are
calculated as profits from BNDES’s investment portfolio (carteira de participações)—mostly through
BNDESPAR—over the stock of such investments. All data was deflated using the IGP-DI index.
Between 2005 and 2009, the difference between the net
interest margin of loans and the SELIC rate was, on
average, -7.6%, which is close to the difference between
the TJLP and the SELIC in the same period (-6.7%).
Thus, BNDES pays around 7.6 cents per each dollar
loaned