Industrialization and deindustrialization: an empirical analysis of some drivers of structural change in Brazil, 1947-2021

Abstract

This article investigates the causes of structural change in Brazil, through the rise and the fall of the manufacturing industry, and the consequences for total factor productivity and manufacturing labour productivity, from 1947 to 2021. Our results show that the industrialization of the Brazilian productive structure is positively associated with expansions in infrastructure investments and with the pursuit of a competitive real exchange rate, that is, with policies oriented towards economic development. Our findings also indicate that such variables exert a direct influence on total factor productivity and manufacturing labour productivity and an indirect influence through their impacts on the Brazilian productive structure. Our conclusions suggest that an important cause of the Brazilian premature deindustrialization, and then of its poor performance in terms of total factor productivity and manufacturing labour productivity, is the adoption of policies not oriented towards economic development adopted since the neoliberal reforms of the 1980s and 1990s.