The Political Challenge of the Industrial Crisis – Opinion

The industrial decline, which has worsened in the last ten years, increasingly visible in the trade balance and ignored by the central government, will be one of the most urgent and most important challenges for the next president if he really wants to restore economic development. . One of the clear signs of the country’s modernization over the past half century has been the increase in the share of industry in the export of goods. But this growth began to lose strength before the recession of 2015-2016, and after that the sectoral crisis became undisguised, but the topic remained off the government’s agenda.

From 2018 to 2021, the share of medium and high technology industry in the value of exports decreased from 15.8% to 11.8%. According to the analysis of Fundação Centro de Estudos do Comércio Exterior (Funcex), whose share in the high-tech segment fell from 4.7% to 2.2%. Stadao. The qualitative change in foreign trade is yet another indication of the reversal of the changes accumulated after World War II.

The trade balance reflected the decline in the sector. In the first half of the year, the deficit of the high-tech industry reached 21.1 billion US dollars, which is 28.6% more than a year earlier. According to a study by the Institute of Industrial Development Research, the deficit in the medium and high-tech industry increased by 34.6% and reached $38.5 billion between January and June of this year.

The discrepancy between Brazil and other countries in the industrial scenario has been condemned by national businessmen. Brazil’s share of global manufacturing value added rose from 1.35% in 2019 to 1.28% in 2021, according to a United Nations (UN) study cited by the National Confederation of Industry. The country has been losing positions in the international rankings since 1996, but remained in the top ten until 2014. The losses continued, and in 2021 the Brazilian industry was in 15th place.

The expansion and modernization of the industrial sector, especially since the 1950s, required much more than huge investments. The advancement of industrialization was the result of expanding channels of finance, complex industry policies, the exchange rate reform of 1968, tax incentives, and efforts to create and absorb technology. There were hits and misses. Not all of the resources earmarked for the sector have been used properly, but the progress accumulated over several decades has been significant.

However, the long phase of expansion and modernization of the industry was interrupted, and the main explanatory factors are known. The economy is very closed, the tax system is not very functional, capitalization and financing schemes are imperfect, legal certainty is lacking, and the workforce is not well trained, to name but a few of the most obvious obstacles. The lack of development policy as of 2019 exacerbated this situation, with the economic damage far greater than that caused by the pandemic.