The reconstruction of the Brazilian industry: the connection between the macroeconomic regime and the industrial policy

Vol. 36 No. 3 (2016)

Jul-Sep / 2016
Published March 1, 2020
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Bresser-Pereira, Luiz Carlos, André Nassif, and Carmem Feijó. 2016. “The Reconstruction of the Brazilian Industry: The Connection Between the Macroeconomic Regime and the Industrial Policy”. Brazilian Journal of Political Economy 36 (3):493-513. https://doi.org/10.1590/0101-31572015v36n03a03.

The reconstruction of the Brazilian industry: the connection between the macroeconomic regime and the industrial policy

Luiz Carlos Bresser-Pereira
Professor Emérito da Fundação Getulio Vargas (FGV-SP).
André Nassif
Professor da Universidade Federal Fluminense e economista do BNDES.
Carmem Feijó
Professora da Universidade Federal Fluminense.
Brazilian Journal of Political Economy, Vol. 36 No. 3 (2016), Jul-Sep / 2016, Pages 493-513

Abstract

This paper is predominantly analytical. Concerning the macroeconomic regime, we propose more consistency between monetary, fiscal, exchange rate and wage policies. Such consistency is to provide sustainable long-term economic growth with structural change. Also, it is to make it feasible to not only maintain average real interest rates below the average real return rates on capital, but also competitive real exchange rates (i.e. marginal undervalued real exchange rates) and real wages that increase in step with productivity growth. This will help guarantee sustainable economic growth. As for industrial policy, theoretical and empirical evidence suggests the need to pursue strategies that diversify production, especially within the manufacturing sector as well as within tradable segments of the service sector. Although theoretical arguments are favorable to strategies that diversify production in countries that did not manage to catch up with developed countries, such strategies should avoid semi-autarky policies, which means that production chains, segments and sectors that are not the focus of industrial policy should have zero import tariffs, or close to zero.

JEL Classification: O1; O23; O24; O25.


Keywords: reindustrialization catching up macroeconomic regime industrial policy