For a developing country intent on transforming moribund state-owned firms into proud national champions, the auto sector is an obvious target. “As in the highly industrialized countries, the automotive industry … is becoming and will be without doubt the leading sector of the entire economy, by force of its magnitude, complexity, and dynamism.” Although these words were spoken by a forward-looking official in Brazil in the 1930s, they very well might have been uttered by an official in Tokyo in the 1950s, Mexico City in the 1960s, Seoul in the 1970s, or Beijing in the 1980s. The automobile industry has an enduring appeal for developing countries because the broad supply network creates extensive linkages and because it is often seen as a symbol of a modern industrialized country. Sheer numbers are in part responsible for its importance – currently nearly 50 million new vehicles are produced a year – but given the scope and complexity of the manufacturing processes in the auto industry, it has also been an important testing ground for new ways of organizing economic activity.

China has also used the auto sector as a testing ground, but as I explained in the previous chapter, rather than the central government dictating the development approach, it has been local governments that have experimented with new forms of organizing economic activity.