Brazil: The More The government “Gives”, The More Industrial Production Falls


The chart shows the behavior of industrial production in the world as a whole, in emerging markets and in Brazil.


Although far below the performance of industrial production in emerging markets (note that the data begins when China began the “big pull”), at least it evolved according to the world average.

For the past six years, however, it “dismounted from the world horse”. Curiously and more important, instructively, that coincides with the moment the government thought it had to adopt an authoritarian industrial policy:

  • Increase in subsidies from state banks
  • Reduction of industrial costs (lower payroll taxes and lower energy prices)
  • Local preference in government purchases
  • Local content policy in the oil and gas sector
  • National champions policy spearheaded by the national development bank (BNDES)
  • Rise in import barriers

The “gun”, however, backfired!

About the Author

Marcus Nunes
João Marcus Marinho Nunes is a partner of Phynance Estratégias Quantitativas e Investimentos and a professor of Economics at Fundação Getúlio Vargas in São Paulo, Brazil. He also blogs here: