Analysis of the Brazilian context for clean development mechanism projects under an economical perspective

Abstract

The creating of clean development mechanism (CDM) projects depends on the institutional environment of host countries. Although Brazil has resources for developing CDM projects, institutional environment is not favourable. The objective of this article is to examine this argument under the perspective of three different economic theories: resource-based view (RBV), transaction cost economics (TCE) and new institutional economics (NIE). The results show that this theoretical triad may explain how economic aspects at firm and institutional environment levels influence the manner in which strategies are chosen and competitive advantage is gained by firms in the field of CDM projects. In the specific context of Brazil, opportunities are supported by the predominance of renewable sources in the energy mix and self-developed clean technologies. On the other hand, the obstacles include small-scale projects and the lack of nationwide policies, which defines the path dependence of CDM projects.