‘Made in Brazil’: study of the Brazilian state’s local content policy in the petroleum sector and its implications for industrial development

Johanna Fiksdahl

Student thesis: Master thesis


This thesis examines Brazil’s local content policy in the petroleum sector from 2002 and until today, and its impact on industrial development. The research question is the following: How has the Brazilian state’s local content (LC) policy shaped the industrial development of the petroleum sector between 2002 and until today? The project analyzes the developmental outcomes of the LC policy by exploring the different ways of involvement by the Brazilian state. Evans’ concept of ‘embedded autonomy’ is applied to the empirical data by following a three-step approach consisting of structures, roles and developmental outcomes. Firstly, my findings suggest that the autonomy of internal state structures and the embeddedness of external industrial structures in Brazil have shown certain developmental features such as continuity of collective goals and a commitment towards a joint project of local industrial development. However, industrial development has been undermined by the fragmentation of the state apparatus and embeddedness with local capital at the expense of transnational capital. Secondly, the examination of the roles of state involvement related to the LC policy indicate that the ‘custodian’ regulator role of ANP has been given most attention in combination with the dominant ‘demiurge’ producer role of the state-owned enterprise Petrobras, while there has been less focus on alliance-oriented ‘midwife’ and ‘husband’ roles that emphasize incentives and promotion. Thirdly and finally, the examination of developmental outcomes highlights that the LC policy has led to mixed results in which ‘embedded autonomy’ is only a partial attribute. The idea of LC illustrates a double-edged sword for the petroleum sector in Brazil, where both achievements and failures can be observed. The project concludes that although the LC policy has led to industrial development to some extent, the Brazilian state has been driven by piecemeal modernization rather than complete industrial transformation. Both ‘autonomy’ and ‘embeddedness’ have evolved individually, however; the case of LC does not suggest that Brazilian state involvement is overall characterized by ‘embedded autonomy’. This thesis will not provide recommendations for a new LC policy, but will highlight focal points as to how the LC policy has shaped the industrial development of the petroleum sector in Brazil.

EducationsMSc in International Business and Politics, (Graduate Programme) Final Thesis
Publication date2013
Number of pages98