The Return of Industrial Policy in Brazil

Abstract

Up to the 1970s, Brazil implemented an industrial policy aimed at substituting imports that was consensually acknowledged for being active and strong.1 Such activeness was the result of the broadness and depth with which the Brazilian state was willing to intervene in markets, taking on a leading allocating role in the economy. The strength of the industrial policy at that time stemmed from the meeting of three essential conditions to boost it: (i) co-existence with a favorable macroeconomic environment; (ii) intensive use of classic instruments (tariff barriers, financial and fiscal incentives for prioritized sectors in two National Development Plans); and (iii) use of stateowned companies (some existing since the 1950s, some created in the 1970s).