Public ownership per se will not ensure that state-owned enterprises always act in line with the broader public interest. An inherent problem is that the state-owned company is primarily an agent of government development policy, but it also pursues a set of sometimes conflicting microeconomic objectives. The conflicts between the “macrosocial” and microeconomic objectives of the public enterprise pose institutional problems that would not appear to have been resolved in a completely satisfactory manner in any national setting. In Brazil, they have been a source of controversy over the last two decades. What types of social controls over public enterprises have been created? How well (or poorly) have these operated in practice? What forms of control might emerge in the future?

Control over public enterprises in Brazil has been a matter of relations between individual public enterprises and the central government as represented by a supervisory ministry. This ministerial model of control has demonstrated weaknesses that have resulted in either poor control of the public enterprise sector, causing public firms to overlook broad social objectives, or excessive control that has prevented them from paying attention to proper business goals. Yet these ministerial controls have been the only controls functioning since Brazil's closed political system removed from the scene other potentially important agents of social control over public enterprises, for example, a legislature, political parties, consumer groups, and labor unions.

An argument developed in this chapter is that the overall condition of the Brazilian economy has been a determinant of the quality and intensity of ministerial controls.