The Efficiency of Industrial Policy in 21st Century? The Case of Brazil

The article aims to identify the key factors that undermine the efficiency of industrial policy in Brazil. It also draws attention to the importance of academic research into the nature and implications of industrial policy in the modern economy. The analysis starts with a systematization of industrial policy-related terms and a literature review. Because discussions on the topic are usually ideologically-biased, the author says, most of the existing studies are heavily polarized. Some economists strongly advocate governmental industrial programs, others express definite disapproval. The article contributes to the existing research by outlining key theoretical problems related to industrial policy and by highlighting the different approaches to the subject that have emerged in response to the changing paradigm of state interventionism. In light of the theoretical framework, Brazilian industrial policy is studied. Brazil warrants special attention, Czarnecka-Gallas says, because a historical analysis of government intervention in that economy confirms the importance of industrial policy – despite substantial policy changes and different methods used by the authorities over the years. After a brief summary of how industrial policy was applied in Brazil in the postwar era, the author looks at some vital components of the country’s current industrial strategy and confronts it with empirical data that point to a disparity between official goals and practice. As a consequence, in contrast to the strategy of Brazil’s economic development, which is based on industrial growth and innovation enhancement, the structure of the country’s economy and its trade patterns show that it is commodities and low-tech industries rather than innovative sectors that are driving the expansion of Brazil’s trade, the author says.