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Structural Change and the Manufacturing Sector in the Brazilian Economy: 2000–2014

  • Carlos Aguiar de Medeiros
  • Fabio Neves Peracio Freitas
  • Patieene Alves Passoni
Chapter
Part of the Palgrave Studies in Latin American Heterodox Economics book series (LAHE)

Abstract

There is an extensive literature that discusses two related processes of structural change that would characterize the Brazilian economy since the 1990s, the deindustrialization and regressive specialization processes. We argue that most of the latter literature based their investigation on indicators that, though traditional, are not sufficient to support their conclusions on the continuity and intensity of the two structural change processes under analysis. Indeed, the traditional indicators of deindustrialization involving the manufacturing industry share of total value added and employment are limited for various reasons. First, because we believe that a deindustrialization analysis should focus its attention on the subset of manufacturing activities that are responsible for the main technological flows within the economy. Second, because these indicators are directly related to the investment to output ratio and the latter is positively related to the trend rate of growth of output. Thus, a decrease in the trend rate of growth of the economy can lead to the misleading conclusion that a deindustrialization process is going on. On the other hand, the traditional indicator for the analysis of regressive specialization, the manufacturing industry share of total exports, can also lead to misleading inferences if not complemented by the use of other indicators. This is particularly true in the case of the Brazilian economy, which has a strong presence and competitiveness in the three major primary commodity groups (agricultural, mineral, and oil), all of them positively affected by the fast expansion of the Chinese economy in the period under analysis. In order to overcome the limitations of these traditional indicators, we focused our analysis on the performance of the innovative industry group (II)—which comprises those manufacturing industries most related to the process of technological innovation and diffusion in the economy—used indicators of the II competitiveness in external (the Brazilian share in world exports) and internal (the domestic production share on total intermediate and final demand) markets, and analyzed the evolution of the density of the II interindustry relations (its backward and forward linkage indicators) over the period. Our analysis shows that the deindustrialization and regressive specialization processes in the Brazilian economy have not been as continuous and intense as suggested by the existing literature. In particular, we show that such processes are concentrated in the period from 2010 to 2014, due to the innovative industry group (II) competitiveness loss in domestic and external markets.

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Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Carlos Aguiar de Medeiros
    • 1
  • Fabio Neves Peracio Freitas
    • 1
  • Patieene Alves Passoni
    • 1
  1. 1.Economics Institute of the Universidade Federal do Rio de Janeiro (UFRJ)Rio de JaneiroBrazil

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