The importance of an adjusted economy

It’s no secret to anyone and we have been arguing for years that a newer industrial park, which supports a neo-industrialization process, is capable of producing more and better, increasing the productivity of the economy as a whole, with lower energy consumption and better sustainability.

The process of deindustrialization in Brazil, which has been occurring for decades, was accentuated by the Covid-19 pandemic. According to data extracted from the World Bank, the manufacturing sector’s share in the Gross Domestic Product (GDP) reached new historic lows, further indicating that the industry continues to lose prominence in the Brazilian economy. In 1984, the manufacturing industry represented 34.27% of GDP and in 2022 only 11.12%.

This is the lowest percentage since 1947, the year in which the historical series of national accounts calculated by the Brazilian Institute of Geography and Statistics (IBGE) began. The series shows that the industry has suffered an almost continuous setback since the beginning of the 2000s, highlighting both the difficulties in competitiveness and also in recovering the losses caused by the Covid-19 crisis.

The causes are many and complex. They range from the Brazil Cost and the lack of qualification of the workforce, reaching the low level of productive investment – ​​the so-called Gross Fixed Capital Formation (GFCF), which has never been so low. We know that productive investment and technological updating are necessary for the industry to remain competitive compared to its competitors worldwide.

What we have seen is the Brazilian economy losing the battle of competitiveness and productivity, but the numbers indicate that the loss of relevance of the industrial sector in GDP is a global and structural phenomenon.

In recent decades, in several countries around the world, the decline in the weight of the manufacturing sector has been accompanied by an increase in service sectors designed to meet an increasing demand for activities such as technology and information services, personal, health and education.

In Brazil, however, the deindustrialization process has long been classified as “premature”, as it occurs at a faster speed than that seen in other economies and because it occurs before the country has reached a higher level of development and per capita income.

For this and other reasons, we have defended the creation of an articulated industrial policy, which promotes the transformation of the industrial structure, with an improvement in the rate of gross fixed capital formation, the advancement of digitalization, energy transition, decarbonization, transformation in companies’ business models to result in a strong increase in the productivity and competitiveness of the economy and the consequent insertion in global value chains. That’s why we have supported actions linked to Nova Indústria Brasil (NIB) and actively participated and contributed to the National Industrial Development Council, the CNDI.

We consider it essential that there is an adjusted economy on a growth path. The agenda to combat the items that make up the so-called “Brazil Cost” must continue to be addressed. We must continue to pursue the “structural reforms” agenda, in order to remove obstacles to competitiveness.

With a more productive and competitive industry, Brazil and society win. We support the implementation of the proposed actions with responsibility, clear pre-established goals and transparency, so that Brazil moves forward with a new productive structure that can contribute to resolving our serious economic and social problems.

The approval by the National Congress of the projects that are part of the NIB, including the “Accelerated Depreciation” and the creation of the “Development Credit Letter (LCD)” are important elements for the competitiveness of the industrial sector, which bring us optimism and count with all our support.

(

) Gino Paulucci Jr He is a businessman and president of the Board of Directors of Abimaq

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