ABSTRACT
By the early 1980s Brazil and Mexico had hefty state sectors with hundreds of state enterprises. The 1970s had witnessed rapid expansion, but that period also marked the beginning of widespread disenchantment with such growth. Understanding the politics of privatization—the selling or otherwise divesting of state enterprises—requires some appreciation of how state firms fit into broader political economies. The strategy of state-led development adopted in both Mexico and Brazil was quite successful in promoting industrialization and generating some of the highest growth rates in the world. Both Brazil and Mexico could sell all but a dozen or so enterprises without reducing the state enterprise share of gross domestic product and investment by more than about 20 percent. Noticeable differences, potentially relevant for the analysis of privatization, emerge in a comparison of the number of firms, their political reputations, and the patterns of investment financing.
