Brazil has become the world’s leading exporter of beef in recent years. It has more cattle than its 214 million human inhabitants. But this leads to serious environmental damage: deforestation of the Amazon rainforest, as cattle drive the illegal appropriation and possession of deforested public lands. CREDIT: Mario Osava/IPS

By Mario Osava
RIO DE JANEIRO, Feb 14 2022 (IPS)

With its accelerated growth agriculture has emerged as a key sector of Brazil’s economy, but it is failing on its own to spread prosperity and reduce poverty and inequality, with industry in decline.

However, it can do so by bringing in foreign exchange with its large exports and thus create macroeconomic conditions for pro-poor social policies, argues Carlos Guanziroli, a professor at the Fluminense Federal University.

Brazil used to be a food importer, producing only about 50 million tons of grains in 1980. Thirty years later the harvest was three times bigger and in 2020 it reached more than 250 million tons, the economist noted.

The fivefold increase in the harvest in 40 years was due to a strong growth in productivity, since the sown area expanded by only 60 percent, from 40 to 64 million hectares, according to the Agriculture Ministry’s National Supply Company.

The country became the world’s largest producer and exporter of soybeans, meat, sugar, orange juice and, long before that, coffee. Agribusiness exports reached 120.6 billion dollars in 2021 and led to a sectoral surplus of 105.1 billion dollars, which more than offset the industrial deficit.

Soybean is the main symbol of the success of agribusiness in Brazil, whose landscape has been stained with its monotonous crops. In four decades, agricultural research has achieved high soy productivity in the hot lands of the Cerrado, the Brazilian savannah. Flat land suitable for mechanization, with regular rainfall and the possibility of planting corn or cotton after the soybean harvest are the advantages of tropical agriculture in Brazil. CREDIT: Mario Osava/IPS

Economic cycles

Brazil achieved this agricultural strength in the midst of dizzying economic, demographic and political upheavals in the country over the last 100 years.

The 20th century industrialization drive, which picked up speed after World War II and continued until the 1980s, was apparently set to give rise to a new industrial powerhouse, the “Great Brazil” announced by the 1964-1985 military dictatorship’s propaganda.

But industry stalled since the 1980s, with its share of GDP declining in the following decades, while agriculture took off.

In the 1990s, a previously neglected sector, family farming, gained a more clearly defined identity, thanks to promotion policies. Guanziroli, then a researcher at the United Nations Food and Agriculture Organization (FAO), contributed to this process.

Industrialization accelerated the urbanization of the population. Only 36 percent of Brazilians lived in cities in 1950. By 1980 the proportion had climbed to 67 percent and in 2010, when the last national census was carried out, it stood at 84 percent, according to data from the Brazilian Institute of Geography and Statistics (IBGE), which puts the current population of Brazil at 214 million.

In other words, during the following cycle of strong agricultural expansion and industrial stagnation the tendency towards urbanization was maintained. Mechanization, extensive monocultures and the high concentration of land ownership are some of the reasons for the massive rural exodus.

But agriculture involves an extensive chain, which includes manufacturers of tractors, harvesters and other machinery, chemical inputs, packaging, as well as activities such as transportation and other services, said Guanziroli.

“This chain accounts for 22 percent of GDP and 28 percent of all jobs” in Brazil, he stressed in an interview with IPS in Rio de Janeiro.

Farmer Alison Oliveira stands among his organic crops on the small farm he works with his wife near the town of Alta Floresta, on the edge of Brazil’s Amazon region. Sustainable family farming is a barrier against deforestation and soybean monoculture. CREDIT: Mario Osava/IPS

Family farming

Family agriculture, which comprises 3.9 million farms with more than 10 million employed workers in Brazil, according to the 2017 agricultural census conducted by IBGE, is a sector which stands to experience major social and economic benefits from public policies.

“It is more labor-intensive and responds to trends towards local consumption and organic production, which are more evident in developed countries, especially in Europe,” said Rafael Cagnin, an economist at the Institute for Industrial Development Studies, promoted by the sector.

In addition to providing employment for families and potential employees, family farming enhances food security and boosts the local economy.

The activity is defined not by the size of the property or what it produces, but by the predominance of family labor, which must not be surpassed by hired workers, said Guanziroli.

Studies and proposals of researchers on the subject, especially in the 1990s, “sought to avoid simplifications, such as saying that family farmers were all poor and only produced food,” he said.

A misconception that is widespread – not only in Brazil – is that family farming is responsible for the production of 70 percent of the country’s food, Guanziroli said. He clarified that this is correct with regard to beans and cassava, but not to food production as a whole.

“This is a lie used for political means that affects dialogue and public policies, rhetoric that is not based on serious evidence,” he argued.

Studies estimated the share of family farms in total agricultural production at 38 percent in 1996 and 36 percent in 2006, according to IBGE census data. In 2017 the proportion dropped to 28 percent because of a prolonged drought that began in 2012 in the semi-arid Northeast region, which concentrates almost half of the country’s family farms.

A farmer harvests lettuce in Santa Maria de Jetibá, a mountainous agricultural municipality, the main supplier of horticultural products for school meals in the city of Vitoria, in southeastern Brazil. The synergy between family farming and school meals programs strengthens local production in the country. CREDIT: Mario Osava/IPS

Long-range policies

In Brazil, the recognition and clear definition of family farming benefited from good statistics from IBGE, a factor absent in many countries.

But studies on the subject and the proposals of researchers taken up by the government face hurdles, due to “ideological issues and the antagonism with agribusiness which has worn the issue down,” lamented Guanziroli.

“The idea was to clearly define family farming in order to promote projects and policies, such as credit,” he explained. It is an activity that is part of the agricultural business, integrated into the marketing chain, and inputs.

In spite of everything, the researcher assesses the balance of the last 30 years as positive. “Family farming has been consolidated, it has irreversible policies giving it a solid structure,” he said.

The best example is the National Program for the Strengthening of Family Agriculture (Pronaf), created in 1995, which continues to guarantee credits with low interest rates and favorable payment conditions. Not even the current far-right government, hostile to peasant farmers, has dared to abolish the program.

What is most lacking is technical assistance, “which never reached family farmers in those 30 years. We tried a thousand formulas, old institutions, non-governmental organizations, but we were unable to mobilize agronomists,” said Guanziroli.

Pig farmer Anelio Tomazzoni stands among biodigesters that convert the manure from his 38,000 hogs into biogas, in the southern state of Santa Catarina, Brazil’s main pork exporter. Energy production is a new aspect of agriculture and livestock farming in Brazil. CREDIT: Mario Osava/IPS

Agriculture and industry

Nevertheless, he believes that Brazil’s competitiveness lies in agriculture. “In industry we fell behind, it is difficult to compete with Asia,” he said. Some services, such as digital platforms, can be an alternative, but they require a long-term effort in education, in which Brazil is lagging.

But Cagnin told IPS from São Paulo that “Resuming Brazil’s economic and social development does not seem possible without progress in industry, following the example of other countries, especially the more complex ones.”

It is the sector that “generates and disseminates the most innovations in a capitalist economy, the one that builds bridges between other activities, adds value to agricultural or mineral products and promotes more sophisticated services,” he argued.

The economist, who specializes in industrial development, recognizes that Brazil’s political conflicts and educational shortcomings hinder progress in the midst of “technological transformations,” productive reorganization and new labor relations.

But industry is also indispensable because of the numerous serious risks facing the “agriculture of the future,” such as the climate crisis, changes in consumption and the directions that the large Chinese market will take, he maintained.

Everything points to the wisdom of not limiting the economy to a few export products, as Brazil is doing, and to seeking “synergies between industry and agriculture,” instead of excluding other sectors, he argued.

Demonstrators protesting at the Business & Climate Summit in Paris, May 20. Credit: A.D. McKenzie/IPS

By A. D. McKenzie
PARIS, May 21 2015 (IPS)

When it comes to climate change, business as usual is simply “not an option”.

That was the view of Eldar Saetre, CEO of Norwegian multinational Statoil, as international industry leaders met in Paris for a two-day Business & Climate Summit, six months ahead of the next United Nations Climate Change Conference (COP 21 ) that will also be held in the French capital.

Subtitled “Working together to build a better economy”, the May 20-21 summit brought together some 2,000 representatives of some of the world’s largest retail and energy concerns, including  companies that NGOs have criticized as being among the worst environmental offenders.

At the end, business leaders proclaimed that they wanted “a global climate deal that achieves net zero emissions” and that they wanted to see this happen at COP 21.

Throughout the conference, participants stressed that businesses will have to change, not only to protect the environment, but for their own survival. “Taking climate action simply makes good business sense. However, business solutions on climate are not being scaled up fast enough,” declared the summit organizers.

They pledged to lead the “global transition to a low-carbon, climate resilient economy.”

Saetre, for example, said his company wanted to achieve “low-carbon oil and gas production” and that it had embarked on renewables in the form of offshore wind energy. But he said that fossil fuels would still be needed in the future, alongside the various forms of renewable energy.

Acknowledging the widespread scepticism about multinational companies’ commitment, business leaders said that they could not “go it alone”, and called for support from governments as well as consumers.

Mike Barry, Director of Sustainable Business at British retailer Marks & Spencer, told IPS in an interview that global commitment was important in the drive to transform industry to have more environmentally friendly practices.

“Collective action can bring about real change,” he said. “We’re here today because we believe that climate change is happening and it’s going to have a significant impact on our business in the future and our success.

“Our customers would expect us to take the lead on this, and we want governments to take this seriously as well in the run-up to COP 21 [the 21st session of the Conference of the Parties to the United Nations Framework Convention on Climate Change to be held in Paris from Nov. 30 to Dec. 11].”

He said that Marks & Spencer and other companies in a network called the Consumer Goods Forum wanted to “stand shoulder to shoulder with government to say ‘this matters and we’re here to help’.”

But government consensus on how to address climate change has proved difficult, and even French President Francois Hollande, who opened the summit, conceded that it would require a miracle for a real agreement to be reached at COP 21.

“We must have a consensus. It’s already not easy in our own countries, so with 196 countries, a miracle is needed,” he said at the Business & Climate Summit, expressing the conviction, however, that agreement will be reached through negotiation and “responsibility”.

Hollande and other officials said the involvement of businesses was essential, and France, with its huge oil and electricity companies, evidently has a big role to play.

However, demonstrators outside the summit, held at the headquarters of the United Nations Educational, Scientific and Cultural Organisation (UNESCO), slammed big business.

“These multinationals (and the banks that finance their activities) are in fact directly at the origin of climate change,” read a statement from organisations including Les Amis de la Terre (Friends of the Earth, France) and the civil disobedience group J.E.D.I. for Climate.

Saying that it was ironic to have fossil-fuel companies represented at the summit, the groups asked: “Can one imagine for a second that the tobacco industry would be associated with policies to combat smoking aimed at ending the production of cigarettes? No, that would be the best way to ensure that the world continued to chain-smoke.”

The protesters added that if Hollande and his ministers wanted to show a real commitment to the environment, they should make it clear that “the climate is not a business”.

“The fight against climate change is not the business of fossil-fuel multinationals: they belong to our past,” the groups said in a joint release, handed out on the street.

At the summit, Christiana Figueres, Executive Secretary of the U.N. Framework Convention on Climate Change (UNFCCC), said that businesses should not be “demonised” and she called for collaboration rather than confrontation.

“We all start with a carbon footprint,” she said. “It is not a question of demonising anyone but realizing that we’re all here … This is not about confrontation. This is about collaboration. If you’re thinking about confrontation, forget it. Because we’re not going to get there.”

The summit – co-hosted by Entreprises Pour l’Environnement, an association of some 40 French and large international companies, and UN Global Compact France, a policy initiative for businesses – also addressed the vulnerability of island states in the face of climate change.

Tony de Brum, the Marshall Islands’ Minister of Foreign Affairs, said that island states in the Pacific and elsewhere had an interest in keeping pressure on carbon emitters because their populations’ survival was at stake.

Angel Gurría, Secretary General of the Paris-based Organisation for Economic Cooperation and Development (OECD), also highlighted the threat to vulnerable countries, saying that for them, climate change is not about protecting the environment for future generations, but “it’s about how long the water will take to overcome the land.”

Gurría said that greater reductions in carbon emissions were required than has so far been proposed by states, and he stressed that countries over time needed to “develop a pathway to net zero emissions globally” by the second half of the century.

“Governments at COP 21 need to send a clear directional signal that will drive action for decades to come,” he said. “We are on a collision course with nature, and unless we seize this opportunity, we face an increasing risk of severe, pervasive and irreversible climate impact.”

Edited by Phil Harris    

Smelter at the El Teniente mine, which produces 37 percent of Chile’s copper. Credit: Marianela Jarroud/IPS

By Li Yong and A.L. Abdul Azeez
VIENNA, Oct 30 2014 (IPS)

As representatives of the United Nations Industrial Development Organization (UNIDO), we are sometimes asked whether industrial development is still relevant to a world which many observers have claimed over the past decades to have entered the “post-industrial age”. Our answer is always an emphatic “yes”, shaped both by the evidence of history and current events.

In the wake of recession and sluggish growth, policymakers globally are increasingly recognising the merits of industrialisation, both in developing and in richer countries.

The European Union, Japan, the United States and a few other countries have given greater prominence to reindustrialisation in their respective economic policies in recent years, while both middle-income countries and least developed countries have cited industrialisation as vital for their future prosperity.An integrated approach to society’s most urgent challenges must address all three dimensions of sustainable development - economic, social and environmental.

UNIDO promotes industrial development as the primary vector through which poverty can be eradicated, by enhancing productivity, stimulating economic growth and generating associated increases in incomes and employment. We cooperate with governments and private sector actors to harness the investments necessary to strengthen the productive and trade capacities of our member states.

History has shown that industrialisation has an immense potential to propel upward social mobility; as a result of the Industrial Revolutions in England and the United States in the 19^th and 20^th centuries, millions of people were lifted out of poverty. Latterly, industrialisation has been central to the booming growth enjoyed by East Asian economies, and especially China, where GDP per capita has risen over 30-fold since 1978.

However, UNIDO recognises that while industrialisation has often been the motor for positive economic change, this has sometimes been achieved at the expense of social inequality and environmental degradation. Industrialisation must therefore be embedded in a socially equitable and environmentally sustainable policy framework if it is to achieve the desired developmental impact.

An integrated approach to society’s most urgent challenges must address all three dimensions of sustainable development – economic, social and environmental. At UNIDO’s 15^th General Conference in Lima, Peru, in December 2013, the organisation’s 172 member states unanimously adopted the Lima Declaration, giving UNIDO a mandate to promote Inclusive and Sustainable Industrial Development (ISID) as the principal means of realising their industrial development policy objectives.

The achievement of ISID represents UNIDO’s vision for an approach that balances the imperatives of economic growth, social cohesion and environmental sustainability.

The world is united in regarding poverty eradication as the overarching objective of development, and UNIDO’s member states have placed it at the core of ISID. Industrial development has been shown to be a key driver of processes which make a difference to the world’s poorest citizens.

Research from UNIDO demonstrates that countries with a larger share of industry in their economies perform better with regard to a wide range of indicators corresponding to social well-being, such as income inequality, educational opportunities, gender equality, health and nutrition. The contribution that ISID could make to youth empowerment through skills development and youth entrepreneurship is now widely recognised.

Similarly, environmental sustainability is also central to ISID. UNIDO promotes Green Industry and the use of clean technologies in industrial production; greater resource and energy efficiency; and improved water and waste management. Not only do these measures reduce harmful emissions and waste, but they also offer a significant potential for increased competitiveness and employment opportunities.

ISID also prioritises creating shared prosperity. This means that the benefits of growth must be inclusive if they are to improve the living standards of all women and men, young and old alike. Employment opportunities, particularly in the industrial and agro-industrial sectors, must be available to all members of the workforce, thus building greater prosperity and social cohesion.

As we approach the end of the Millennium Development Goals (MDG) framework in 2015, the international community has been reflecting on how best to address outstanding challenges. Although the MDGs achieved some remarkable successes, for example in terms of halving extreme poverty and increasing access to education and sanitation, much still remains to be done in order to achieve “the world we want”.

The post-2015 development agenda currently being discussed by the international community aims to address the many development issues that still need to be resolved. The Open Working Group, which was tasked with formulating the Sustainable Development Goals (SDGs) that will be at the core of the post-2015 development agenda, has recognised the importance of inclusive and sustainable industrialisation by including it as one of the 17 Goals it has proposed, clustering it in Goal 9 with resilient infrastructure and innovation.

Given the ambitious scope of the post-2015 development agenda and experience gained over MDGs, the focus of international deliberations has now shifted from the determination of the SDGs to addressing the means of implementation.

Recognising the budgetary constraints imposed by the prolonged period of stagnant growth and recession experienced in many countries, the recent report of the International Committee of Experts on Sustainable Development Financing acknowledged the necessity of mobilising alternative resources for the implementation of the SDGs, including those of the private sector.

UNIDO has already worked extensively on securing greater engagement from private industry in international development, and over the past year was honoured to have been selected to co-lead the United Nations System’s consultations on engaging with the private sector. As the organisation mandated to promote industrial development, which is quintessentially a private-sector activity, we are well-placed to partner with and promote private enterprise, and look forward to achieving increased progress in this field in the future.

Industrialisation has consistently transformed living standards throughout modern history. ISID is the next phase in its evolution. The overarching goal of the post-2015 development agenda is to eradicate poverty and improve the quality of life of the world’s poorest citizens.

This is a challenge which UNIDO is well-placed to meet in partnership with governments, the global development community, business and civil society.

Edited by Kitty Stapp

Excerpt:

Industry’s share of GDP in Argentina rose from 16.7 percent in 2002 to 18.1 percent in 2010. Credit: Ministry of Industry

By Marcela Valente
BUENOS AIRES, Jul 24 2013 (IPS)

Industry in Argentina has seen a sustained rise in production, exports and employment since 2003. But in order for this trend to become a structural change, greater import substitution is needed, analysts say.

The book “Argentine industry faces new 21st century challenges and opportunities”, published by the Economic Commission for Latin America and the Caribbean (ECLAC), states that knowledge-intensive industry activities have become increasingly dynamic in the last few years in this South American country.

The introduction by ECLAC Executive Secretary Alicia Bárcena says that since 2003, “Argentina has followed a path of growth, technical progress, job creation and poverty reduction without precedent in over half a century.”

But she added that it is necessary “to accelerate the process of structural change”.

In the report compiled by ECLAC economists Giovanni Stumpo and Diego Rivas, various experts make in-depth analyses of the potential and the critical aspects of 11 of the 13 industrial sectors that the Ministry of Industry included in its Strategic Industrial Plan 2020, launched in 2011 by the government of centre-left President Cristina Fernández.

The 11 sectors are the automotive, pharmaceutical, leather and footwear, capital goods, construction materials, dairy, agricultural machinery, software, textile and apparel, poultry and pork industries.

Industry’s share of GDP in Argentina rose from 16.7 percent in 2002 to 18.1 percent in 2010, while manufactured products made up 35 percent of total exports over the last year.

In the period studied, the economy grew by 7.5 percent a year on average, with highs of 10 and 11 percent in some quarters. Unemployment, meanwhile, fell from 19.7 percent to 7.8 percent, and the proportion of unregistered workers dropped from 48 to 33 percent of the total.

“Unlike other Latin American countries, Argentina did not reorient production towards commodities for export,” says the ECLAC report, with respect to the policies implemented since Fernández’s late husband and predecessor, Néstor Kirchner (2003-2007), took office.

Nevertheless, the experts take a cautious stance in the report and point out that commodities – such as soy, Argentina’s leading export – continue to weigh heavily in the economy, which means there are still major pending challenges.

In a conversation with IPS, economist Gabriel Yoel, a researcher at the General Sarmiento National University’s Institute of Industry, said that bringing about “structural change is a challenge” that industry still faces in Argentina.

“The trade deficit must be reduced by means of import substitution,” he said.

Yoel, co-author of the chapter on the automotive industry, said “there was growth as never before since the industry set up shop here in the 1970s.”

But up to the 1990s, no more than 200,000 to 300,000 vehicles were produced annually in Argentina, and no cars were exported, he said.

However, production grew along with exports since the early 1990s, when Argentina, Brazil, Paraguay and Uruguay created the Mercosur (Southern Common Market) trade bloc, which since last year has a fifth full member, Venezuela.

An average of 800,000 vehicles a year are currently produced, 60 percent of which are exported, Yoel said. But despite that increase, he said there is still a shortage of spare parts, which are mainly imported.

“Production by car-makers shot up, but output by parts suppliers still falls short of demand,” he said.

Although the capacity of parts manufacturers has increased in the last few years, it has failed to keep up with growth in the production of vehicles, he added.

Above and beyond the performance of specific industries, Yoel argued that it was necessary to look all the way back to the 1960s to compare the current growth of manufactured products, productivity and industrial employment.

He said progress has been made in terms of organisation, quality, and links with academia and with public institutions.

Argentina has benefited from the current high prices of natural resource-intensive goods, but “no economy can develop without industry,” he said.

For that reason, Yoel concurs with those who warn that if industry – which generates quality jobs – is not developed in Argentina, 10 million of the country’s 40 million people “will be superfluous”.

With respect to the possibilities of competing with industrial goods in the global market, Yoel was optimistic – as long, he said, as the goods are knowledge-intensive. As an example, he cited Martín Churba, a clothing designer who exports exclusive garments to Japan.

Economist Fernando Porta at the National University of Quilmes said industry was undergoing a revival and overall growth, while exports are on the rise, the domestic market is strong, and new jobs are being created.

But he was cautious with regard to the evolution of that trend. “The recovery process does not seem to me to form part of a deeper structural change,” Porta, who was responsible for the chapter on the pharmaceutical industry in the ECLAC report, told IPS.

He said there was still a large technological gap between Argentina and industries in developed countries, and even in some emerging economies. He also said there were “islands of productivity” in industry, with most sectors “showing lower levels of activity”.

“More development is needed across the board – greater homogeneity,” Porta recommended.

What is needed, he said, more than production and trade targets like the ones set by the Strategic Plan, is “an overall development strategy” that addresses the problems of each sector in particular.

The ECLAC book makes this point. In software, for example, an area where Argentina has made great strides, a shortage of skilled human resources is a limiting factor. Around 50 percent of demand is unmet. The state is fomenting development of the sector by offering scholarships, but growth has been slow.

Porta said Argentina has a strong pharmaceutical industry, although it is focused on production rather than research and development of medicines.

“R&D and the development of the active ingredients and their combination for obtaining therapeutic effects continue to be concentrated outside of the country,” he lamented.

This means that, although Argentina produces and exports more and more medication, it continues to depend on the import of medicines, and even has a significant trade deficit – similar to the challenges faced in the automotive industry.

Industry is the ailing sector of the Brazilian economy, with production falling 2.7 percent in 2012 in spite of government incentives, and in contrast with the strong expansion of retail trade and the lowest unemployment rate in history.

The enigma of a stagnant economy that nevertheless has symptoms of growth that is happening too fast for the country to handle, including a shortage of labour and rising inflation, appears to be explained in several recent publications.

Some of the causes mentioned by economists are a fall in the number of young people joining the labour market and accumulated excess inventory.

The slowing of manufacturing activity is the chief concern of the government of President Dilma Rousseff and economic operators, because it accentuates a trend that calls into question the future of the country. Deindustrialisation, recognised years ago by industrialists and a few economists, is now hard to ignore.

Improved forecasts for this year are raising expectations. But low levels of investment, reflected in the 11.8 percent fall in production of capital goods in 2012 and the surge in inflation, which may cause the Central Bank to take measures to curb demand, do not support the promise of a vigorous recovery.

Results at the close of 2012 were “a bucket of cold water,” frustrating hopes of resuming the path of growth and indicating that “the crisis is deeper” in Brazilian industry, and not just a circumstantial effect attributable to the severe problems facing the global economy, said Julio de Almeida, a consultant at the Institute for Industrial Development Studies (IEDI).

Brazil “has not kept up with the development of global industry” in the last 20 years, as China, South Korea and India have done, he told IPS. As it has not developed the most dynamic sectors, like electronics and the pharmaceutical industry, it has not advanced enough in technological innovations, either, he added.

For the past 15 years, industry and certain “organised services” have also been suffering from an accumulation of costs, whether logistical, financial or energy-related, which have harmed their competitiveness, he said.

To cap it all, wages have increased in the last five years at a rate much higher than productivity. Only last year they rose by an average of 5.8 percent, while productivity fell by 0.8 percent, according to IEDI.

It is possible for less competitive countries to survive if the world economy is growing at a good rate, but problems appeared with the crisis that broke out in 2008 in the United States and then spread mainly to Europe, which “shrank the industrial market” worldwide and created intense competition in the domestic Brazilian market, de Almeida said.

In spite of it all, de Almeida believes that this year there may be some recovery, thanks to government measures to reduce electricity costs, cut taxes for some industrial sectors, lower interest rates and stabilise exchange rates, as well as its announcement of large forthcoming investments in transport infrastructure.

However, it will be necessary to boost productivity by investing heavily in technological innovations, especially because Brazil’s industrial base is “aged,” he said.

In fact, the mechanical engineering industry, especially the automotive industry, is increasingly predominant in the country.

With its long production chain, ranging from automobile parts to agricultural machinery, the automotive segment represented 21 percent of industrial production in 2011, according to the National Association of Automobile Manufacturers (ANFAVEA).

This proportion has doubled in the last 20 years, while the contribution of manufacturing as a whole to GDP has declined, falling to 14.6 percent in 2011. In other words, the importance of automobiles in the Brazilian economy is still rising.

As a result, the main government measure to reduce the recessionary effects of the international financial crisis was to cut taxes on vehicles, from December 2008, after three months of a sharp decline in sales. The strategy had been used before in other crises.

Oil and steel are also key elements in Brazilian efforts to reverse deindustrialisation.

Recovery is being sought in the shipbuilding industry, taking advantage of the oil discovered under a salt layer deep below the sea bed of the Atlantic ocean, close to the Brazilian coast.

In order to bolster national production, legislation was designed to demand variable and increasing proportions of Brazilian-made components, that may reach up to 70 percent of every ship, platform, depth sounder and other equipment constructed for oil extraction.

All these state interventions, such as tax or financial incentives for specific sectors and measures seen as protectionist, including customs barriers and requirements for a high national content for products like automobiles, as well as oil tankers, are rejected by many free market analysts, who have a keen following among operators and media specialised in economics.

Deindustrialisation is not necessarily a “sickness,” since “industry is doing badly, but Brazil is doing very well,” with high employment and high wages, said economist Edmar Bacha in interviews last year when he announced a book he edited, titled “O Futuro da Indústria no Brasil” (The Future of Industry in Brazil), published in February 2013.

According to the book, the manufacturing sector in Brazil lost competitiveness mainly due to the rise in wages, which drove up costs.

The average wage in Brazil grew 14.4 percent a year between 2006 and 2011, a global record seconded at a great distance by Australia, which had nine percent wage growth, according to co-authors Beny Parnes and Gabriel Hartung.

Bacha, who took part in previous governments that implemented more free market economic policies, maintained that competitiveness is not built by protectionism, but by more open trade, allowing integration into international production chains. Mexico is cited as an example.

Taking a broader range of expert views, the only point of agreement about the loss of industrial capacity is that it is caused by lack of competitiveness. But there are broad differences in interpretations of its origins and solutions.

Analysts in the commodities sector, for instance, question the primacy attributed to industry as the driver of progress and innovation. They argue that agriculture today adds a great deal of technology and knowledge, involving scientific research and mechanisation.

But the Brazilian government is led by so-called “developmentalists,” for whom economic growth is paramount, and chief among them is President Rousseff herself.

It is ironic, then, that industrial decline continues while the country is administered by leaders who prioritise the sector and, to recover its competitiveness, have adopted measures accused of being overly interventionist by the partisans of free market solutions.

By Irfan Ahmed
LAHORE, Pakistan, Jan 4 2013 (IPS)

The European Union (EU) is Pakistan’s largest trading partner, with overall trade between the two countries topping eight million euros in 2011.

Pakistan enjoyed a one billion-euro surplus that year and stands to gain even more from the EU’s generous trade concessions, announced in the aftermath of the devastating floods that ravaged this South Asian country in 2010 and 2011.

Still, in order to fully benefit from these concessions, Pakistan will have to enforce stricter labour standards and comply with the terms and conditions of several international conventions on human rights, governance and environmental safety to which it is a signatory.

Currently, most workers in Pakistan’s export sector do not receive social security benefits, work in hazardous conditions and are paid on a piece-by-piece basis in lieu of a regular salary.

These hands that enable trade to the EU often go home empty, feeding into a cycle of poverty that continues to consume this country of 176 million people.