In this book we study the evolution of corporate governance arrangements that governments in emerging markets, and more specifically in Brazil, have adopted in the last 20 years. We argue that governments have transformed the governance of flagship state-owned enterprises (SOEs) in a way that has improved significantly the agency problems that were pervasive in public firms in the 1970s and 1980s. We argue that the process of privatization and liberalization of the 1990s and early 2000s created two new forms of hybrid capitalism in which SOEs operate as publicly-listed corporations, with the government acting as a majority or minority shareholder. The book describes the transformation in SOEs, the improvements in governance and the forms in which governments still use its financial arms to lend and invest in companies. For instance, in Brazil the government uses the national development bank invests in equity and provides subsidized loans to companies. The book explores what firms do with such loans and capital injections. We do not argue that the new models of state capitalism have solved all of the agency and political problems of the old forms of state capitalism. The argument is that the new models of state capitalism have eliminated many agency problems, but still there are obstacles and political temptations making it hard to eliminate political intervention in state-owned enterprises or in the provision of subsidized loans to politically-connected firms. That is, these new models of state capitalism are perhaps a second best solution, yet a solution that is the product of the complex political economy of emerging markets.