Industrial policy needs to produce results, not please – 01/26/2024 – Deborah Bizarria

The current economic policy discussion concerns Nova Indústria Brasil, a program that allocates R$300 billion to boost the industry through lines of credit, subsidies and local content requirements.

José Luís Gordon, director of BNDES, countered the first criticisms by saying that the entities in the benefiting sectors approved the new policy (swear?) and that those who criticized it were using the “old rhetoric of anachronistic neoliberal economists”. At the same time, he does not counter the arguments put forward by several economists.

Economist Bernardo Guimarães wrote a column explaining some points about the proposal. The first is that simply placing more resources in an economic sector will not necessarily generate greater productivity and growth.

Therefore, having clear criteria for choosing beneficiaries, goals and constant evaluation would be essential. This way, we could avoid the continued waste of billions of reais on policies that do not strengthen the industry or generate growth for the rest of the economy.

Economist Zeina Latif also presented pertinent points, such as the program’s lack of focus. In total, it includes the agroindustry sectors; health industrial complex; infrastructure, bioeconomy, sanitation, housing and mobility; digital transformation and defense technology.

Latif recalls that industrial policy (IP) should have a more precise focus, with clearly defined goals, and give preference to smaller-scale initiatives — contrary to what has been presented so far.

Furthermore, the scope creates the need for each objective to have instruments that do not harm other areas.

But, in practice, national content rules must make it more expensive and compromise the modernization of family farming and the adoption of digital transformation by companies, by restricting access to foreign and cutting-edge technology.

In the same week, the government further restricted access to the international market, increasing the import tax above the Mercosur value for purchases made from companies in countries outside the bloc.

This means that it will become more difficult for consumers and businesses to import the products they need at the cost of protecting some sectors that are unlikely to bring growth and the necessary jobs.

The criticism was not limited to economists alone. According to journalists from the SheetPresident Lula (PT) himself expressed dissatisfaction with the industrial package presented.

The president would have highlighted precisely the lack of concrete points in the proposal, opening space for criticism that it was a reissue of old measures.

It would also have pointed out flaws, including problems with the deadlines for meeting the established goals. Is Lula an “anachronistic neoliberal”? Certainly not.

Faced with so much criticism and contrary evidence, it is worth asking what the result of Nova Indústria Brasil will be. If you continue to listen only to the sector, you will be a mere Robin Hood in reverse.

We need an industrial policy that encourages innovation, competitiveness and integration with the world.

Without focus, clear goals and constant evaluation of results, the old new federal government program has a good chance of joining the numerous list of inefficient policies created by the Brazilian State.

To gain productivity, it is not state protectionism that the industry needs, but a shock of exposure to the free market.

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