The Political Economy of Brazilian Industrial Policy (2003 - 2014): Main Vectors, Shortcomings and Directions to Improve Effectiveness

Abstract

This paper is a study about industrial policy and its role in development, investigating how it was recently adopted in Brazil. After a decade of neoliberalism, industrial policy returned to the agenda, increasing the interest in its evaluation. Initially, the article explores general matters related to the needs for industrial policy and to the required factors and procedures that contribute to successful implementation. A benchmark is created to interpret the Brazilian experience. Despite its prioritization and the achievement of specific advances, industrial policy in Brazil failed to produce more consistent results. The main reasons include the lack of an appropriate coordination structure, the incapacity to focus on clear productivity and competitiveness targets, the excessive number of sectors contemplated, the lack of any consistent evaluation and the inability to achieve an encompassing negotiation with business representatives. These deficiencies weakened the possibility of addressing the serious shortcomings inherent to Brazilian industry.

Industrial policy matters: the co-evolution of economic structure, trade, and FDI in Brazil and Mexico, 2000–2015

“…Embedded in a more favourable economic context, the government was committed to creating mechanisms to raise investment rates and accelerate GDP growth (Suzigan et al, 2020). Previous focus on a few strategic industries was abandoned as the number of industries "prioritized" jumped to 25-ranging from industries in which the country already had comparative advantage, such as paper and pulp, animal protein, mining, and steel, to industries vulnerable to international competition, such as textiles, automotive, shipbuilding and capital goods (Guimarães, 2021). An unspoken policy for fostering leading companies at the global stage-or national champions-was carried out, but the beneficiaries were firms of low and mid tech industries.…”

“…The Greater Brazil Plan (Plano Brasil Maior-PBM) was launched in 2011, the first year of Dilma Rousseff's first term (2011)(2012)(2013)(2014). In broad terms, it did not differ significantly from its predecessor, but since it was adopted in a less favourable domestic economic and political environment, in practice it had a strong defensive nature (Guimarães, 2021). Antidumping was revived as an important protectionist tool, payroll taxes were curtailed to reduce costs and improve competitiveness, public procurement was given a greater role in industrial policy (Stein & Herrlein Júnior, 2016;Suzigan et al, 2020).…”