Industrial Policy: international and comparative dimensions

Call for papers for Tempo do Mundo Journal - Issue 36

Industrial Policy: international and comparative dimensions

Submissions until February 28, 2025

Publication date: April 2025

 

The current international geopolitical context, marked, among other factors, by the relative decline of the North Atlantic and the rise of the Asia-Pacific, particularly China, reflects and intensifies profound transformations. Among these, perhaps the most evident is the restructuring of production. The 2008 crisis exposed the failure of globalization's promises and repositioned the State as one of the central actors in the economic development process. As a result, major global economies have resumed the development and defense of industrialization policies.

Factories worldwide have undergone significant changes, and the geographic expansion and complexity of global value chains have transformed the production and commercialization of goods into activities that mobilize complex networks across various sectors and countries. In this context, the perception of vulnerabilities in these chains has stimulated reshoring processes and the revaluation of technological systems, both in central and emerging countries. Thus, industrial policy has once again become a prominent issue on the agendas of major powers and international organizations.

Following this trend, Brazil launched, in January 2024, the New Industry Brazil (NIB), developed and approved by the National Council for Industrial Development (CNDI). This policy is the result of a broad dialogue among Council members, which includes 20 ministries, the BNDES, and 21 representative entities of civil society, held in the second half of 2023. The NIB presents itself as a Neo-Industrialization policy with a 10-year horizon. It innovates and differentiates itself from previous industrial policies by incorporating the concept of missions for development, positioning the industry as a means to overcome societal problems (e.g., decarbonization), rather than an end in itself. Rather than being a vertical policy subordinated to the institutional ecosystem of traditional industrial policies, the NIB was formulated to avoid being captured by specific industrial sectors.

The NIB was developed in a context of deindustrialization of the Brazilian economy. In this scenario, Brazil and Argentina were the two countries that suffered the most from this phenomenon, in relative terms, in the last ten years.

Furthermore, the climate emergency and energy transformation present both challenges and opportunities for the NIB. It is not enough to simply increase Brazilian industrial production and the number of manufacturing firms possibly in new sectors. It is necessary to diversify and improve the economic structure, foster innovation and the adoption of frontier technologies, promote decarbonization, prioritize the use of clean and renewable energy, protect the environment, and create good jobs. For this, it is essential to discuss new instruments and mechanisms for productive integration in the region, as well as to situate sustainability from a geopolitical perspective.

Another challenge relates to the complementarities between industrial and fiscal policies and the required changes in the management of Brazil's fiscal policy. Since 2016, with the implementation of the spending cap and currently with the institutionalization of the new fiscal framework, there have been questions about the State's ability to implement public policies due to constant budgetary constraints. This raises the question: what industrial policy instruments are possible when public resources for investment and innovation are scarce?

It is also crucial to consider the acceleration of digital transformation in factories, known as Advanced Manufacturing (in the US) or Industry 4.0 and 5.0 (in Europe). The new technologies employed have dramatically impacted cost reduction, the creation of new business models (such as the platform and network economy), the increased importance of services, and new production processes based on automation, high connectivity, and artificial intelligence. Another factor driving the resumption of industrial policies was the acceleration of the global energy transition, in the face of climate change and environmental issues and the steady fall of the cost of renewable energies. In this sense, ecological concerns have even led to the emergence of a new field of action: green and sustainable industrial policy. Contemporary problems, such as difficulties in the supply of strategic inputs and energy, instability in supply chains, the need for economic decarbonization, and geopolitical conflicts, among other obstacles and challenges, have significantly contributed to the resumption of industrial policies and are central issues in this issue of the Tempo do Mundo Journal.

Moreover, major world powers have adopted industrial policies as state projects, aiming to address the challenges of the current geopolitical landscape. Recent international phenomena have highlighted the importance of regional supply chains and reinforced the trend toward nearshoring.

In this regard, the debate on building new industrial policies, new strategies for rapprochement between countries, updating foreign trade tools, and the new geopolitical challenges for the development of countries in general, and Brazil in particular, is fundamental to understanding the country's possibilities and limitations and contributing to the debate on the role Brazil can play on the global stage.

Thus, this issue of the Tempo do Mundo Journal aims to discuss the challenges of development based on an industrialization policy in a context of budgetary constraints, climate change, energy transformation, and the need for innovation and job creation, taking into account international experiences of industrial policies in a comparative perspective.

This issue will be coordinated by Daniela Freddo, Professor at the Department of Economics at the University of Brasília and Technical Advisor at the Center for Management and Strategic Studies (CGEE) and Andrea Roventini, Professor of economics at the Sant’Anna School of Advanced Studies in Pisa (Italy).