Letter IEDI n. 879–IEDI's industrial strategy for Brazil
Today's Letter IEDI summarizes the document "Industry and the Brazil of the Future", resulting from discussions and reflections of the Institute's Advisers and the collaboration of renowned experts from different areas, complementing the studies carried out by our technical team. It presents the IEDI's view on the main challenges that the country must face in order to restore a path of sustained growth and socio-economic development. Key orientations to overcome such challenges are also addressed.
The document, which is available in full on the IEDI website (in Portuguese), shows the relevance of the industry for Brazilian economic and social development from various angles, given its leadership role in innovation and its outstanding position in formal employment, tax collection, investment and exports. Therefore, taking good care of the industrial sector is good for the economy as a whole.
In addition to emphasizing this evidence on the role of the industry, the IEDI sought to identify the guidelines and policies needed to remove obstacles to the smooth running of the economy and to promote development. Fiscal misalignment is the greatest of these barriers, and initiatives to rebalance public accounts are critical. In this area, the Tax and Social Security reforms are still to be completed.
It is also the understanding of the IEDI that political reform is inevitable. It should consist in introducing practices that promote the reduction of the number of political parties and enable programmatic coalitions capable of supporting governance and the implementation of reforms.
The study recommends several points to pursue to foster competitiveness and productivity in the economy, involving: reducing legal uncertainty, developing capital markets and new roles for the BNDES, reducing the cost of credit, reformulating our tax system with the introduction of a Value Added Tax (VAT), making adjustments in economic regulation, improving the business environment and encouraging private investments in infrastructure.
In the same direction, some lines of policies are recommended to broaden and improve the Brazilian economy's global positioning, among which the pursuit of trade agreements stands out. The country must open as many negotiating fronts as possible.
In terms of the industry, like many other developed and developing countries, five lines of action are recommended:
• Industry 4.0 – the country must create conditions to absorb emerging technologies in the ongoing worldwide industrial revolution and also ensure a certain role in the development of these innovations.
• Bolstering innovation through measures such as strengthening basic and technological education, promoting its articulation with the productive sector, and designing mission-oriented policies.
• Modernizing the industrial park to leverage industrial productivity and competitiveness.
• Increasing exports of manufactured goods, especially the sales of more complex and technology-intensive products.
• Adding value to activities in which Brazil has great potential for development or enjoys a recognized competitive advantage, such as agriculture and livestock.
Thus, for the IEDI, the contribution of industrial activities to the construction of Brazil's future will be maximized if the principles and guidelines discussed in this document are followed, since they are consistent with adequate macroeconomic and foreign trade policies and with robust industrial and technological strategies.