The Brazilian National Development Bank goes International: Innovations and Limitations of BNDES' Internationalization
| Author | Kathryn Hochstetler |
| Date | 01 September 2014 |
| Published date | 01 September 2014 |
| DOI | http://doi.org/10.1111/1758-5899.12131 |
The Brazilian National Development Bank
goes International: Innovations and
Limitations of BNDES’Internationalization
Kathryn Hochstetler
Balsillie School of International Affairs, University of Waterloo
Abstract
The Brazilian National Development Bank (BNDES) saw dramatic increases in its financial resources for lending after
2005. This article explains how the bank has been ‘internationalized’alongside this growth in total resources, beginning
with export finance and expanding to supporting foreign direct investments and other international economic activi-
ties. At the same time, legal and structural factors restrict BNDES’international activities in ways that are often poorly
understood, but that keep many of the bank’s resources inside Brazil or tightly linked to Brazilian firms. After a general
explanation of these factors, this paper examines empirical claims about BNDES’lending to its South American neigh-
bors, concluding that it is considerably more limited than both the bank’s critics and champions contend.
Policy Implications
•The international loans available from the BNDES for its regional neighbors and beyond modestly add to the
sources and diversity of international investment funding available. The scale is not as large as either the Bank’s
promoters or critics have claimed.
•Development banks in the developing world frequently stress that their loans are free of the onerous and paternal-
ist conditions imposed by traditional financial agents. While it is true that BNDES’loans are not accompanied by
demands for structural adjustment, they are also strongly conditioned on the use of Brazilian firms and/or products
to access funding. As such, they follow the logic of Brazilian development needs as much or more as those of their
recipients.
•Visions of Brazilian foreign policy continue to be strongly influenced by the rhetoric and ambitions of the Lula
administrations. Not enough attention has been paid to the way different presidents wield Brazil’s significant objec-
tive weight, a perspective that is especially important given the presidentialization of foreign policy in the region
(Malamud 2005).
Brazilian president Luiz In
acio Lula da Silva (2003–2010)
built Brazil an expanded international profile during his
years in office. The Brazilian National Development Bank
(BNDES –Banco Nacional de Desenvolvimento Econ
omico
e Social), was a key instrument for his domestic and glo-
bal ambitions. During Lula’s years in office, BNDES’
annual disbursements more than quadrupled, growing to
be three times the size of the World Bank’s annual lend-
ing in 2010. BNDES also undertook a major internationali-
zation drive starting in 1997, and Lula promised to
deepen that by giving the bank a larger role in Brazil’s
international relations. Despite these ambitions, this arti-
cle argues that BNDES’transition from a national devel-
opment bank to an international one was only very
partially achieved, notwithstanding the large role often
attributed to the bank by both its admirers and its critics.
The words of Lula himself provide the clearest view of
his intentions for BNDES’leading role in Brazilian foreign
policy. Near the end of his first term, he told a group of
newly trained Brazilian diplomats: ‘We are trying to con-
duct, through a policy of BNDES financing, that [regional
integration] which Bol
ıvar tried to achieve with the
sword; what others tried to do with struggle, we are
doing with financing policies.’
1
In Beijing in May 2009, at
a press conference following the announcement that
BNDES and the Bank of Brazil would open agencies in
China, Lula was even more expansive:
Brazil must have a BNDES Agency, because
BNDES will be the driver for the entrance of
Brazilian businesses in these countries, for the
construction of partnerships... Brazil must
behave like a big country. Brazil must behave
©2014 University of Durham and John Wiley & Sons, Ltd. Global Policy (2014) 5:3 doi: 10.1111/1758-5899.12131
Global Policy Volume 5 . Issue 3 . September 2014
360
Special Section Article
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