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Paulo Fridman\u2009\/\u2009Bloomberg via Getty Images<\/span><\/a> Aluminum recycling: the circular economy is one of the axes of the mission to decarbonize Brazilian industrial productionPaulo Fridman\u2009\/\u2009Bloomberg via Getty Images<\/span><\/p><\/div>\n The industrial policy incorporates lessons learned and seeks to distance itself from initiatives that proved unsuccessful in Brazil in the past. Instead of only benefiting selected sectors or offering tax exemptions, they are comprehensive and guided by missions that impact the economy and society at large\u2014the four missions of the CNI plan and the six axes proposed by the CNDI function as major targets. \u201cThe aim is to choose problems faced by contemporary society that need to be solved and jointly coordinate the efforts of the public and private sectors, academia, research centers, and workers,\u201d says economist Samantha Ferreira e Cunha, who is industrial policy manager at CNI and one of the coordinators of the Industry Recovery Plan.<\/p>\n Renato Garcia, an economist from the Institute of Economics at the University of Campinas (UNICAMP), explains that mission-oriented policies are gaining ground because they create what are conventionally called additionalities. \u201cDifferent stakeholders are combining their efforts and experiences to work on something new: a mission of great interest to society that does not necessarily have a link with what they have previously done,\u201d he says. Traditional industrial policies, he explains, have at times had an undesirable effect known as substitutability. \u201cIt was not uncommon for companies to take advantage of public policy incentives in place of making their own investments, obtaining results that were not much different to what would have been achieved if there had been no financial stimulus at all.\u201d<\/p>\n The international landscape had a strong influence on the Brazilian proposals. Over the past 15 years, long-term policies have been implemented in major industrialized countries with the aim of recovering economic growth after the 2008 crisis. The pandemic exposed major vulnerabilities in global supply chains and reinforced the importance of industrial policies and government willingness to create them. Shortages in the supply of semiconductors and integrated circuits during the health crisis forced entire industrial segments to reduce their operations, prolonging the impact of COVID-19 on the global economy. The risk of concentrating three quarters of global production of these inputs in five countries\u2014China, South Korea, Malaysia, Singapore, and Taiwan\u2014has now appeared on the radar of other industrialized nations. The USA has reacted strongly, approving new legislation called the Chips & Science Act, which will invest hundreds of billions of dollars in semiconductor research and development and domestic manufacturing (see<\/em> Pesquisa FAPESP issue n\u00ba 320<\/em>).<\/p>\n \u201cThe major world economies have spent at least US$12 trillion in industrial policies since 2015,\u201d reports CNI\u2019s Samantha Cunha. As well as investing in reindustrialization strategies, they have also been attempting to alter the design of global production chains, which could generate opportunities for Brazilian industries. \u201cSupply chains are being remodeled based on concepts such as nearshoring, which involves bringing final production links closer to the headquarters of North American and European companies, having previously transferred them to Asia to cut costs, or friendshoring, which means moving production to countries that are culturally closer and offer more favorable business environments,\u201d she explains.<\/p>\n Eduardo Cesar\u2009\/ Pesquisa Fapesp<\/span><\/a> Biodiesel production plant: Brazil has an advantage over other countries when it comes to generating renewable energyEduardo Cesar\u2009\/ Pesquisa Fapesp<\/span><\/p><\/div>\n Jo\u00e3o Carlos Ferraz, from the Institute of Economics at the Federal University of Rio de Janeiro (UFRJ), notes that building policies around major missions is not a new approach, but in the past, governments reserved the strategy for rare situations, such as wars and conflicts, during which they would channel public investments and private production capacity to defense efforts, for example. \u201cNow, there are calls to develop industrial policies this way even without conflict,\u201d he points out. He also explains that mission-oriented policies have gained support in recent years thanks to the work of Italian economist Mariana Mazzucatto, author of the book The Entrepreneurial State<\/em> (2011). Her most recent work, Mission Economy: A Moonshot Guide to Changing Capitalism<\/em>, published in 2021, is a kind of manual for public policymakers in charge of coordinating solutions to major problems in society. Mazzucatto, head of the Institute for Innovation and Public Purpose at University College London, UK, has visited Brazil twice this year: she met with President Luiz In\u00e1cio Lula da Silva in July and participated in the CNI National Innovation Congress in September.<\/p>\n Brazil\u2019s industrial missions were selected considering the agenda of international competitors. \u201cYou only need to analyze the industrial policies in place around the world today to see that 90% are associated with digital and green targets,\u201d says Ferraz. One of the challenges now is to get companies of all sizes on board. A 2021 survey by the CNI showed that while 86% of large Brazilian companies already used at least one digital technology, the percentage fell to 64% among medium-sized companies and 42% among small companies. \u201cInvesting in connectivity on small farms can have an extraordinary impact on production chains in the agroindustry. Information technologies can also help solve major social problems, such as encouraging companies to create tools that improve SUS services,\u201d says Garcia, from UNICAMP, mentioning the use of AI to integrate data from medical records as an example. In the effort to decarbonize the economy, there are various potential opportunities, such as exploring the international carbon market and the sustainable use of biodiversity. \u201cWe have some advantages over our competitors\u201447% of our energy mix is clean, which is above global averages,\u201d emphasizes Cunha, from CNI.<\/p>\n The mission in the health sector is a different matter, since the method of using health policies to increase industrial activity already exists. The Partnerships for Productive Development (PDP) program was started in 2012, through which the Ministry of Health creates a list of key products that are important to the SUS and represent a high cost to the government or a significant proportion of imports. Companies commit to provide the necessary technology to public laboratories in the country and, in return, are given exclusive manufacturing and commercial rights for a period of up to 10 years (see<\/em> Pesquisa FAPESP issue n\u00ba 302<\/em><\/a>). \u201cThe program had phases of expansion and contraction, but it never ceased to exist,\u201d says Elize Massard da Fonseca, a specialist in public administration and a professor at Funda\u00e7\u00e3o Getulio Vargas (FGV) in S\u00e3o Paulo. \u201cSome contracts were canceled in recent years, but others continued.\u201d<\/p>\n The experience of the pandemic, which clearly revealed the country’s dependence on the supply of vaccine inputs, was a leading factor behind the choice of this mission. \u201cThe Ministry of Health seems to have greater ambitions now than it did in the past,\u201d says Fonseca. The biggest challenge, she believes, will be dealing with technological evolution. \u201cDeveloping and transferring technologies are not immediate processes, and there is always a risk of investing in something that, by the time it can be adopted by the SUS, is no longer the therapy of choice,\u201d she explains.<\/p>\n For the defense industry, the idea is to invest in technologies with both military and civil applications, inspired by the advancement of the aerospace industry in the country after the creation of the Technological Institute of Aeronautics (ITA) seven decades ago. In a virtual meeting hosted by the Brazilian Association of Economists for Democracy in July, Verena Hitner Barros, executive secretary of the CNDI, said that the goal is to expand the production chains of the defense, aerospace, and security industries, with a focus on research in micro- and nano-electronics. \u201cOne of our challenges is to identify the weaknesses in the defense product chain that currently make our exports unviable,\u201d she explained.<\/p>\n