"Today, contracts between national companies and a foreigner seem like war treaties, " Resende said.

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But Resende shows that the details of modular manufacturing are not easy to master.

ECONOMIST: Car making

Mr Lara Resende opted to resign too, as did Jose Pio Borges, the official in day-to-day charge of privatisation.

ECONOMIST: Crossed lines in Brazil

The boldest experiment began two years ago in Resende, a third of the way between Sao Paulo and Rio de Janeiro.

ECONOMIST: Car making

Although they are not simply copying Resende, they are picking out its most effective element: the construction of modules by suppliers.

ECONOMIST: Car making

The government has replaced ambitious subway and light-rail projects with bus corridors that amount to little more than rearranging traffic flows, Resende said.

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But the firm insists that Resende can still meet its goals without abandoning the new approach if its managers supervise the contractors more closely.

ECONOMIST: Car making

Throughout glittering careers in which they alternated high-profile government jobs with profitable stints in banking, the Mendonca de Barros brothers and Mr Lara Resende broke no rules, but attracted the envy of less talented mortals.

ECONOMIST: Crossed lines in Brazil

Mr Lara Resende is a respected academic economist, who was one of the main intellectual authors of the real plan, the inflation-beating strategy launched by Mr Cardoso as finance minister in 1994, and who has since devised the government's plans for a crucial pension reform.

ECONOMIST: Crossed lines in Brazil