Investment policies, development finance and economic transformation: Lessons from BNDES

Abstract This article analyses the extent to which the Brazilian Development Bank, BNDES, responded to investment policy directives and the consequences its finance had in the Brazilian economy between 2007 and 2015. Anchored in an analytical framework that draws relational linkages from policy directives to policy impacts and extensive empirical evidence, it is demonstrated that BNDES has adequate form, function, technical autonomy and capacity to accomplish its investment encouragement mission. Most financing went to policy priorities and beneficiaries turned projects into new or expanded utilities, production capacity and capabilities. Consequent positive impacts in terms of growth in employment, updated facilities and the expansion of goods and services were observed. It is hoped that this article can contribute to a growing literature concerned whether and how the State institutions can, innovatively and effectively, contribute to sustainable economic development.