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Leviathan in Business: Varieties of State Capitalism and Their Implications for Economic Performance

63 Pages Posted: 31 May 2012 Last revised: 30 Jun 2012

Aldo Musacchio

Brandeis University- International Business School; National Bureau of Economic Research

Sérgio G. Lazzarini

Insper Institute of Education and Research

Date Written: May 30, 2012

Abstract

In this paper we document the extent and reach of state capitalism around the world and explore its economic implications. We focus on governmental provision of capital to corporations – either equity or debt – as a defining feature of state capitalism. We present a stylized distinction between two broad, general varieties of state capitalism: one through majority control of companies (e.g. state-controlled SOEs) and a hybrid form that relies on minority investments in companies by development banks, pension funds, sovereign wealth funds, and the government itself. We label these two alternative modes Leviathan as a majority investor and Leviathan as a minority investor, respectively. Next we differentiate between these two modes by describing their key fundamental traits and the conditions that should make each mode more conducive to development and superior economic performance.

Keywords: state capitalism, state-owned enterprises, development banks, sovereign wealth funds

JEL Classification: P51, L32, L33

Suggested Citation

Musacchio, Aldo and Lazzarini, Sérgio G., Leviathan in Business: Varieties of State Capitalism and Their Implications for Economic Performance (May 30, 2012). Available at SSRN: https://ssrn.com/abstract=2070942 or http://dx.doi.org/10.2139/ssrn.2070942

Aldo Musacchio

Brandeis University- International Business School ( email )

415 South Street MC 32
Waltham, MA 02454-9110
United States

National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://www.nber.org/people/aldo_musacchio

Sérgio Giovanetti Lazzarini (Contact Author)

Insper Institute of Education and Research ( email )

R Quata 300
Sao Paulo, 04542-030
Brazil
55-11-45042387 (Phone)

HOME PAGE: http://www.sergiolazzarini.insper.edu.br/indexelazza.html

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