Industrial Policy and Democratic Corporate Governance: Perspectives from the BNDES Case

In the early twenty-first century, Brazil underwent a remarkable economic boom, primarily driven by the Brazilian National Bank of Economic and Social Development (BNDES). This state-owned financial institution spearheaded a new industrial strategy, sponsoring domestic companies, such as Odebrecht and JBS, to their internationalisation. Nevertheless, this initial successful story took a dramatic turn. Over the years, the Brazilian national champions found themselves involved in corruption scandals, human rights violations and environmental damage, with BNDES indirectly funding these activities. This article seeks to discuss this crony capitalism arrangement, examining the role of corporate governance in safeguarding industrial policy from capture. We conclude by exploring how a democratic model of corporate governance could provide some insights for addressing this issue.