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Industrial Policy in Brazil: a Framework

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  • Donald Hay

Abstract

We presume that the objectives of industrial policy in Brazil are determined in the current context by the general philosophy of the Plano Real.1 That is, the creation of an efficient and progressive economy, based on free markets and an economy open to international trade. Such a vision for the economy might be adopted solely for ideological reasons, but might also be thought to be the best way to achieve long term growth and social objectives. Alternative objectives might be the growth of the economy in itself without concern for efficiency, as in the economic plans of the Geisel era, or a desire to protect and create employment. The latter objective is certainly of continuing importance for policy, especially where rapid adjustment of a sector in response to trade or technology shocks generates major losses of employment which are regionally or sectorally concentrated. The question of sectoral adjustment will be discussed below. The general question of employment does not fall within the ambit of industrial policy within the vision of the Plano Real, though it can be argued that the best way to create employment is to ensure that the economy is efficient and can compete internationally. Rather, the key to employment lies in labour market policies, and policies for training, education and health. These areas are not generally recognized as part of industrial policy and will not be considered in this paper, though they are clearly very important. Similarly, questions of infrastructure will not be considered here, though their importance in Brazil is well known

Suggested Citation

  • Donald Hay, 2015. "Industrial Policy in Brazil: a Framework," Discussion Papers 0074, Instituto de Pesquisa Econômica Aplicada - IPEA.
  • Handle: RePEc:ipe:ipetds:0074
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    References listed on IDEAS

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    4. Braillard, S. Lael & Verdier, Thierry, 1994. "Lobbying and adjustment in declining industries," European Economic Review, Elsevier, vol. 38(3-4), pages 586-595, April.
    5. Karp, Larry S & Perloff, Jeffrey M, 1995. "Why Industrial Policies Fail: Limited Commitment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(4), pages 887-905, November.
    6. Dani Rodrik, 1993. "Trade and Industrial Policy Reform in Developing Countries: A Review of Recent Theory and Evidence," NBER Working Papers 4417, National Bureau of Economic Research, Inc.
    7. John Peterson, 1991. "Technology Policy in Europe: Explaining the Framework Programme and Eureka in Theory and Practice," Journal of Common Market Studies, Wiley Blackwell, vol. 29(3), pages 269-290, March.
    8. Stiglitz, Joseph E & Uy, Marilou, 1996. "Financial Markets, Public Policy, and the East Asian Miracle," World Bank Research Observer, World Bank Group, vol. 11(2), pages 249-276, August.
    9. Luzio, Eduardo & Greenstein, Shane, 1995. "Measuring the Performance of a Protected Infant Industry: The Case of Brazilian Microcomputers," The Review of Economics and Statistics, MIT Press, vol. 77(4), pages 622-633, November.
    10. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    11. Jorde, Thomas M & Teece, David J, 1990. "Innovation and Cooperation: Implications for Competition and Antitrust," Journal of Economic Perspectives, American Economic Association, vol. 4(3), pages 75-96, Summer.
    12. Amsden, Alice H. & Singh, Ajit, 1994. "The optimal degree of competition and dynamic efficiency in Japan and Korea," European Economic Review, Elsevier, vol. 38(3-4), pages 941-951, April.
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