CORECON-SP (Conselho Regional de Economia de São Paulo)

1. How does Brazil’s neoindustrialization strategy differ from earlier industrial policies?

Brazil’s current strategy departs from traditional industrial policies by moving beyond isolated sectoral protection toward a systemic transformation of the productive structure. Rather than focusing solely on expanding industrial output, it seeks to address structural weaknesses such as low technological density, fragmented supply chains, insufficient long-term financing, and macroeconomic misalignment. The objective is to increase the country’s economic complexity and reposition its industry within higher-value segments of global production.

Neoindustrialization is also mission-oriented, drawing conceptually on Mariana Mazzucato’s framework. It is not merely about strengthening industry, but about rebuilding it on new foundations that integrate sustainability, innovation, and social inclusion, ensuring that the gains of development are more broadly distributed across society.

2. Which macroeconomic factors most constrain or enable industrial recovery?

Macroeconomic conditions are not neutral for industrial development. Even if Brazil achieved favorable macroeconomic indicators, industrial policy would still be necessary. Structural transformation does not arise automatically from macro stability alone.

Historically, Brazil’s main constraint has been the cost of capital. Persistently high interest rates discourage productive investment and favor short-term financial allocation. Exchange-rate volatility reduces predictability and export competitiveness, while rigid fiscal rules may restrict strategic public investment. Effective industrial transformation therefore requires coordination among monetary, fiscal, and exchange-rate policies.

3. Where can Brazil position itself in global value chains?

Brazil is likely to position itself as a strategic supplier within regional and global value chains, particularly in sectors such as technology-driven agribusiness, defense, healthcare, clean energy, and resource-based manufacturing.

Brazil can also function as an industrial hub for Latin America, although this potential remains underexploited. Firms will need to move beyond cost-based competition toward strategies centered on innovation, reliability, certification standards, and sustainability integration.

4. How can state coordination coexist with private dynamism?

The challenge is not to choose between state and market, but to construct governance capable of aligning both. The state should act as a strategic coordinator, defining technological priorities, financing instruments, and infrastructure conditions, while the private sector responds through investment, innovation, and productivity gains.

Such coordination must be transparent, performance-oriented, and continuously monitored. Institutional safeguards are essential to prevent regulatory capture or crony capitalism. Industrial policy succeeds when it strengthens systemic productivity rather than protecting specific firms.

5. Which financing mechanisms are most critical?

Public financing remains essential, especially through development banks and targeted credit programs, since private financial markets rarely support long-maturity industrial projects. Blended finance mechanisms can reduce risks and mobilize private capital.

Foreign direct investment can also be valuable when linked to technological transfer and domestic productive integration. Industrial financing is therefore not only a matter of volume but of horizon and developmental quality.

6. Which technologies should be prioritized?

Cross-cutting technologies such as digital manufacturing, automation, artificial intelligence in production, and green technologies are central because they enhance productivity across sectors rather than replacing existing industries.

Brazil’s industrial base has the capacity to absorb these technologies, but adoption depends on access conditions. Without competitive financing terms, technological diffusion will remain uneven.

7. Which structural reforms beyond technology are necessary?

Productivity depends strongly on institutional conditions. Logistics infrastructure, tax simplification, legal certainty, and long-term financing are essential for reducing systemic production costs.

Brazil’s tax system remains highly complex, and industry bears a disproportionate burden. Correcting these distortions could significantly improve industrial competitiveness and support sustained growth.

8. How can SMEs be integrated into modern value chains?

Integrating SMEs requires cluster policies, structured public procurement, digitalization support, and certification programs. Anchor-firm strategies can generate productivity spillovers by providing smaller firms with managerial know-how and demand stability.

Brazil already possesses institutional assets capable of supporting this integration, such as SENAI (Serviço Nacional de Aprendizagem Industrial – National Service for Industrial Training) and SEBRAE (Serviço Brasileiro de Apoio às Micro e Pequenas Empresas – Brazilian Micro and Small Business Support Service). Industrial policy should therefore function as a mechanism of productive inclusion rather than merely reinforcing large firms.

9. What role does workforce reskilling play?

Industrial transition demands continuous workforce qualification. Brazil must strengthen the alignment between technical education, universities, and industrial demand.

However, productivity cannot be reduced to education alone. Industrial modernization requires both human capital formation and access to updated technologies and equipment.

10. How can Brazil maintain competitiveness while strengthening resilience?

Global competitiveness and domestic productive capacity reinforce one another. Resilient supply chains require a diversified domestic industrial base.

Brazil’s public procurement in healthcare illustrates this dynamic, supporting domestic production capacity. With strategic policy continuity, Brazil could expand this resilience regionally and internationally.

11. Does Brazil’s innovation ecosystem support neoindustrialization?

Brazil has strong universities and research centers, but weak translation of knowledge into production. The main bottleneck lies in transforming scientific capacity into applied innovation.

Recent reforms have improved the functioning of FNDCT (Fundo Nacional de Desenvolvimento Científico e Tecnológico – National Fund for Scientific and Technological Development). Strengthening technology transfer, innovation financing, and productive partnerships remains crucial.

12. Can sustainability become a competitive advantage?

Sustainability can become a strategic advantage for Brazil due to its strengths in clean energy, bioeconomy, and circular production systems. It should be viewed not as a regulatory burden but as a vector of innovation and global market positioning.

The integration of New Industry Brazil (NIB) with the National Circular Economy Strategy (ENEC) treats decarbonization and material efficiency as core competitiveness drivers. Industrial success will depend on producing with lower carbon intensity, greater resource efficiency, and higher value-added content.

13. What are the main execution risks?

The main risks involve institutional fragility, policy discontinuity, fiscal constraints, and weak coordination capacity. Industrial strategies require long-term stability, yet policy environments often remain cyclical.

Macroeconomic incoherence also poses risks. High interest rates, fiscal rigidities, and exchange-rate instability can neutralize industrial incentives. Governance mechanisms and performance monitoring are therefore essential.

14. Which indicators should measure success?

Success should be measured primarily by structural indicators that reveal qualitative transformation. The most important metric is the technological complexity of exports, indicating whether industrial policy is increasing productive sophistication and reducing commodity dependence.

Other indicators include manufacturing’s share of GDP, productive investment levels, integration into global value chains, productivity growth, and circular-economy metrics such as recycling rates, carbon reductions, and green public procurement. Neoindustrialization will be successful when productivity, sustainability, and technological sophistication advance simultaneously.