“…This persistent deficit indicates that the demand circuits for intermediate goods, which were previously served by domestic producers, were gradually replaced by foreign suppliers. 11 According to Medeiros, Freitas and Passoni (2019), Marcato and Ultremare (2018) and Fujii and Cervantes (2013), increased import penetration caused the demand for intermediate inputs to leak abroad, thereby reducing the density of the domestic production structure.…”