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The formulation and management of the current Brazilian industrial policy.

INTRODUCTION

This paper seeks to describe how the current Brazilian industrial policy (IP)--the Productive Development Policy (PDP) was developed. The main motivation were the arguments submitted by Suzigan and Furtado (2010), who demonstrated that, as of the 80s, the lack of an efficient management system has been the main reason for Brazilian IP failure, albeit often times well-formulated. In this context, investigating the current IP management system becomes relevant such that eventual problems may be addressed, moreover in a scenario where the continuance of PDP by the incumbent federal administration is under discussion.

An industrial policy is an ensemble of actions whose purpose is to influence the production structure of a country, seeking to leverage its long-term economic development (Ferraz, Paula, & Kupfer, 2002; Pack & Saggi, 2006; Rodrik, 2004; Suzigan & Furtado, 2010). Such policies operate structural changes in an economy and its effects are noted over the long range. PDP was launched in 2008 and had its main goals stipulated for the year 2010, making it impossible to assess its compliance and efficiency. Therefore, this paper is limited to the analysis of the current policy's management process, applying mechanisms recommended by literature.

It is thought not possible to determine a basic success formula to ensure the favorable outcome of industrial policies; each country should find its own pathway, considering its own characteristics and particularities (Nelson, 2006). However, international industrial policy experiences implemented in South Korea, France and in the United States signal towards an ensemble of key IP formulation and management mechanisms, demonstrably essential for their effectiveness (Amsden, 1989, 2001; Suzigan & Furtado, 2010). That is, although there is no formula to guarantee the success of IPs, specific stages beg respect in their formulation, which stages operate as a checklist rather than a formula.

This entailed a review of literature on IP such as to afford the identification and understanding of the policy's essential management instruments. Content analysis was applied to achieve the proposed objective, through a secondary data survey and interviews made with government officials from the different agencies responsible for policy definition, follow-up and management.

The results ensuing from this effort suggest that the PDP management system found important advances when compared to previous Brazilian IPs. The PDP construction included specific, clear and transparent goals, and defined actions, measures, performance indicators (based upon business practices) and institutions and persons charged with managing each action. On the other hand, the IP still requires renovation and the most critical points identified were the lack of clear political leadership of the policy and the lack of a technical body capable of IP formulation and follow-up.

This article is divided into four sections besides this introduction. Section two shows the essential factors for a successful management system, as suggested by literature and case studies on this theme. In the sequence, the methodology applied to the study is described. The fourth section is reserved for data analysis. In this section, the PDP is examined from the vantage point of interviews and secondary data into the elements identified in the second section. The final considerations offer a reflection into the strengths and weaknesses of the current policy management system.

AN INDUSTRIAL POLICY'S MANAGEMENT SYSTEM

An industrial policy is an ensemble of actions whose purpose is to influence the production structure of a country, seeking to leverage its long-term economic development (Ferraz et al., 2002; Pack & Saggi, 2006; Rodrik, 2004; Suzigan & Furtado, 2010). Considering that development can be defined as economic growth pegged to structural changes in a country's economy (Schumpeter, 1982), the PI's function is to induce structural change processes that the private sector would not be capable of articulating in a sufficiently agile or efficient manner (Kupfer, 2004).

The existing literature expounds the discussion concerning the optimal level of state intervention in the conduction of economic and industrial development. On the one hand, there are authors (Canedo-Pinheiro, Ferreira, Pessoa, & Schymura, 2007; Ferreira & Handmanm, 2003; Ferreira, 2005) who argue for horizontal-type policies, that is, those that reach all industries in the same manner, without the distinction or election of priority industries. These authors contend that the State should resort to measures impacting all industries. On the other hand, there is a current arguing in favor of vertically-oriented policies, that is, policies that are more selective in choosing the industries to be fostered (Kupfer, 2004, Pack & Saggi, 2006). This model, called picking the winners, proposes that the State should rank priority industries while formulating its IP. The favored industries, in this case, would represent the key to a country's development.

However, choosing one model over the other is not doable and does not meet the core objective of an IP, which is to influence the production structure seeking a country's economic development. In this sense, the adoption of horizontal measures ensures the domestic industry's competitiveness through regulation, macroeconomic stability and tax policies, among other factors. On the other hand, the adoption of vertical measures fosters existing production chains and encourages the development of promising industries in the international market. Upon crafting an IP, the State should opt for measures that best fit its objectives, be they horizontal or vertical, since there is no formula for success (Nelson, 2006; Rodrik, 2004; Suzigan & Furtado, 2010). Therefore, horizontal and vertical policies are not surrogate but complementary to each other.

INDUSTRIAL POLICY MANAGEMENT MECHANISMS

The IP management system is one of the features required for its effective implementation and success. Besides completing and following up on the policy, this system is responsible for defining the roles of the actors involved and thus avoid conflicts among them (Busch, 2008; Suzigan & Furtado, 2010). Case studies covering Latin American countries indicate that the IP management models adopted in the region have not been efficient (Amsdem, 1986, 2001; Peres, 2006; Rodrik, 2004; Suzigan & Furtado, 2010).

Notably, failure is inherent to IPs, and a few actions may not reach the expected results. It is important that the State be equipped with a sufficiently efficient management system such as to detect failure in time and thus avoid wasting public and private resources and effort (Rodrik, 2004).

Basing on the authors mentioned in this section, elements were defined that should be considered in an IP formulation and structuring system. Structuring the management process should take into account issues such as the policy's objectives, its target public, coordination and control instruments, actors involved and their respective roles in the policy implementation, and the policy review and revamping manner.

Crafting an IP requires clear, transparent goals that meet the State's strategic objectives. Clear goals are construed as an easy understanding of the State's intents by the population. Transparent goals, in turn, are those containing the public means for effort development and follow-up (Abreu, 2006; Rodrik, 2004). Besides, Suzigan and Furtado (2010) highlighted the importance of goals being doable vis-a-vis society and not being excessively ambitious. These recommendations are due to IPs having met with much resistance from the Brazilian public opinion, given that IPs were scarcely successful over the past few decades.

Public-private interaction is the manner by which the State and the private sector relate together to formulate and follow up an IP. Rodrik (2004) and Suzigan and Furtado (2010) argue that this is one of the most important issues for an IP's success, since policies of this type target the private sector. Policy formulation and implementation should not be the State's exclusive responsibility; the private sector should be involved as a manner to meet its requirements and fulfill its commitment towards the proposed objectives and actions. This interaction should be taken into account from the establishment of goals through policy implementation and follow-up (Evans, 1995).

According to Rodrik (2004), public-private interaction should include steering and decision boards with a significant participation of the private sector, to guarantee that IP performance is in tune with their interests. Also, according to this author, the private sector should not be represented by trade associations alone, since they may act in favor of their own interests and not necessarily respect the claims of the companies they represent.

Amsden (1989) contends that public-private interactions should follow the stick-and-carrot model. In this model, private sector involvement cannot be driven by incentive concessions alone, but also by counterpart and penalty mechanisms to ensure the fulfillment of what has been agreed during the policy crafting stage (Hausmann & Rodrik, 2003). Asian IPs, for example succeeded in the implementation of this model, while Latin-American policies mostly failed for not creating sufficient counterparts with the private sector (Almeida, 2009; Amsden, 2001; Pack & Saggi, 2006; Rodrik, 2004). Finally, incentives veered towards emergency measures should factor in a timeframe clause and pre-defined objectives such as to encourage the private sector's autonomy (Amsdem, 2001; Rodrik, 2004).

Upon conceiving an IP it is of the essence to establish not only goals and intentions, but also an ensemble of well- defined measures. Measured are construed as the description of actions to be adopted to permit achieving the objectives (Rodrik, 2004). That is, a step-by-step implementation scheme that establishes those responsible, deadlines and indicators for each action (Suzigan & Furtado, 2010).

Given that industrial policies involve high levels of uncertainty, the formulators may learn from other countries' errors and successes, adapting successful elements to local context. Therefore, upon crafting a policy and an efficient management system, resorting to international benchmarking becomes relevant (Rodrik, 2004).

Suzigan and Furtado argue that the choice of the institutions responsible for each action is one of the critical factors for IP management. The actors involved should be notoriously competent in performing their functions, ensuring the legitimacy of the recommended actions and avoiding conflicts among government agents (Abreu, 2006; Kupfer, 2004; Rodrik, 2004; Suzigan & Furtado, 2010).

The objective of industrial policy is to drive economic development from the production structure. To achieve this, the policy counts on actions in different areas, such as science and technology, infrastructure, capacity-building of labor and transportation, among others (Suzigan & Furtado, 2010). Thus, action implementation should count on the participation and coordination of different governmental agencies not reporting to each other. This arrangement may entail internal conflicts and power struggles. Therefore, the establishment of a political leadership hierarchically above these agencies and directly linked to the presidency is suggested (Abreu, 2006; Rodrik, 2004; Suzigan & Furtado, 2010). Besides ensuring IP fulfillment, such political individual would also respond before society (Rodrik, 2004).

None of the issues highlighted so far will suffice, however, should there not be a body of duly qualified state professionals, amassing adequate skills for policy and market trend follow-up, mainly as concerns technology (Lall, 2003; Suzigan & Furtado, 2010). Edquist (2001) contends that, in the absence of a skilled technical body, the State would do better by allowing market forces to operate, since the intervention would become a hurdle, rather than an encouragement to the production sector. In the Brazilian case, according to Almeida (2009), the absence of a body of duly skilled professionals has been a classic ailment of the State.

IP management should also contain follow-up indicators, that is, indicators to allow the control of action progression. This follow-up strengthens the IP management system, since it affords the measurement of managed variables and facilitates the agents' effective action in the face of policy failures (Abreu, 2006; Rodrik, 2004; Suzigan & Furtado, 2010).

Since an IP targets the long range, its effects will only be perceived gradually. In this sense, Rodrik (2004) highlights the importance of mechanisms that allow the constant renewal and renovation of industrial policy. This author argues that State institutions should be prepared to answer to a country's economic and social conjuncture changes quickly and require the capability to modernize and reinvent themselves constantly to follow market and science dynamics.

METHODOLOGY

This research effort has a qualitative nature and seeks to capture the development of the current Brazilian IP--the PDP--formulation and management stages by content interpretation. This is the most adequate method to respond to the question proposed by this article since this is a multi-faceted, hard-to-measure study object, besides being a process under way as we write, thus precluding policy result analysis. Moreover, this article is based upon the quest for a deeper and better understanding of a given fact, which characterizes it as exploratory.

The research strategy was the single case study, which according to Einsenhardt (1989) and Yin (2001), can be applied when the study object contains contemporary phenomena factored into real life content. This method contemplates the intensive study of a specific object, seeking to learn about it in the deepest, most complete manner possible (Yin, 2001).

For data analysis, this article resorted to content analysis, seeking to analyze text materials from myriad sources, such as media products, interview data and images through systematic procedures and message content description objectives (Bardin, 1977). For this purpose, interview transcriptions and field notes were categorized by qualitative data treatment. This stage involved an exhaustive generation of mutually exclusive categories, represented by an ensemble of codes referring to different impressions, critiques and factors converging upon research propositions, a technique called open codification (Flick, 2009). The second analytical stage involved axial codification, establishing proximity and cause and effect relations, enabling the identification of second-order categories based upon more comprehensive descriptions (Flick, 2009). Finally, this effort proceeded towards selective codification, where case histories were developed on a par with the overall scenario and their core phenomena (Flick, 2009).

Policy implementers were interviewed, more specifically officials from the Finance Ministry (MF); the Development, Industry and Trade Ministry (MDIC); the Brazilian Industrial Development Agency (ABDI) and the National Social and Economic Development Bank (BNDES), from different hierarchical offices. The interviews were conducted until information became repetitive, that is, the investigators ended their field research when they could no longer obtain unprecedented information during the interviews. A semi-structured questionnaire was used for this purpose, based on theoretical review. Notably, to preserve the respondents' identity, the quotations included in data analyses were classified by letters (according to the respondent's agency) and numbers (one for each respondent).

THE PRODUCTIVE DEVELOPMENT POLICY'S MANAGEMENT SYSTEM

The PDP's management system will be presented hereafter, considering each variable discussed in this paper's second section.

Clear, Transparent Goals

The PDP's main objective is, as presented in its internet homepage, "to promote the Brazilian economy's long-term competitiveness." For this purpose, four major challenges were established by the State: to grow the investment rate to eliminate and avoid supply bottlenecks; to increase the innovation effort; mainly in the private sector; to preserve a healthy external balance and to strengthen micro and small business. For this purpose, as recommended in literature, indicators were created to follow up each one of these, expounded in greater details as follows.

The first challenge concerns increasing the industrial investment rate and ensuing supply capacity. In the past few years the Brazilian population has had income increases with consequent pressure applied upon internal demand. To curb inflation hikes, therefore, it is necessary to increase industry's supply capacity through investments. The indicator selected for this challenge was the Gross Fixed Capital Formation (GFCF), with an investment goal standing at 21% of GDP by the end of 2010. Notably, in 2007 the Brazilian investment amounted to 17.6% of GDP. For this goal to be achieved an 11.3% GFCF average annual growth rate is required in the period, given a 5% GDP annual growth rate.

The second challenge is the robustness of the balance of payments. The indicator chosen for this goal was the amount of Brazilian exports compared to total world exports, which stood at 1.18% in 2007. In 2010, the objective is to reach 1.25% in value, which requires a 9.1% growth rate between 2007 and 2010.

The third challenge for Brazilian competitiveness in the long term is the creation of conditions favorable to new entrepreneurs, broaching new market access for micro and small business enterprises (SMEs). As a measuring yardstick a 10% increase in the number of exporting SMEs by the end of 2010 was established. It is expected that Brazil will grow to 12,971 companies of this type by this year's end, from 11,792 in 2006.

The fourth challenge concerns the increase of the innovation capability of Brazilian companies. For such, a business system of greater magnitude is necessary, containing scale and governance compatible with the innovative process. The stipulated goal concerns private R&D expenditures. In 2006, private sector R&D expenditures were .5% of GDP and the purpose is to increase this figure to .65% by late 2010, which requires a 9.8% annual growth rate.

As noted, PDP goals are not long-term goals. However, field research findings indicate that the Brazilian State considers IP as something whose effects will be seen in the future; some sectoral goals were set as late as 2013 and 2018. Besides, an articulation was noted among government agencies towards a new policy following to PDP patterns.

As indicated in literature and presented above PDP goals are clear and transparent, since they are easy to understand and their indicators can be followed by the policy's webpage, which presents many policy follow-up reports. Besides, the goals are compatible with Brazilian reality and have been criticized for their conservatism, even (Almeida, 2009).

Public-Private Interaction

According to figure 1 below, extracted from the policy website, at the top of the organization chart is the National Industrial Development Board (CNDI). This board convenes Ministers, representing the public sector, and entrepreneurs, representing the private sector. The existence of this agency at the top of the policy governance structure concurs with Rodrik's (2004) arguments, highlighting the importance of the private sector in policy formulation. Besides, notably the State perceives this agency's importance, as indicated below:

"... CNDI is important for the business return of the PDP." (A.1)

[FIGURE 1 OMITTED]

Public-private interaction does not only happen within the CNDI, but also at the lower levels of the organization chart presented above. There is a discussion channel between government and business for each industry, called the competitiveness forum. One of their managers explained well how it operates:

"(...) government bodies, the private sector and workers. And stuff is brought to the table to rough and tumble and kick ass and finally to churn out public policies." (D.2)

In these agencies, governmental managers--considering medium and long term goals--stipulate very short range goals, to prevent entrepreneurs (mostly represented by their trade associations) from losing their interest and attend the meetings always.

"... so that people feel there's progress, that things are moving, that they should continue to participate in the meetings..." (D.2)

A critique of public-private interaction is basing such relations upon the participation of associations and not directly upon companies. The critique resides in the fact that such associations do not necessarily act in the benefit of the group's interests but, rather, towards their own interests. This is, unfortunately, a common practice in Brazil, which is fortunately being reviewed. The so-called "beta tests" were created, signifying a moment when goals created by governmental agents and business associations are validated with the entrepreneurs of a specific industry in order that the trade association's interests do not prevail over business interests.

"We learned with the PDP that the trade association is not enough, we're always after the main entrepreneurs of each industry." (A. 1)

One PDP point that runs against literature recommendations is the lack of counterparts required from the private sector, despite the intention of demanding counterparts being included in the policy disclosure materials. This factor, however, rests as intention only but is under discussion within government, which leads the authors to believe that there may be advances in this direction in a near future, as indicated by the following statement:

"There is this increasingly stronger discussion on counterparts (...) and, if you look at the document, you'll see the word 'counterpart'." (A.3)

"... we will discuss a few commitments with the private sector." (A. 1)

Upon analyzing the existence of time clauses as well, evidence points towards this being a practice, as in the case of the IPI value-added tax reduction on automobiles, which reduced tax dues for a short period. Albeit the communication that this was an instant measure sought to combat the economic crisis, it had been already provided for by the PDP.

Well-Defined Measures

To reach such short, medium and long term goals alike, the PDP established measures to be adopted since its inception, both horizontal and vertical, including follow-up indicators for each of them. According to the PDP follow-up report, confirmed by field research, 99% of the measures have been implemented (ABDI, 2010). This was one of the great PDP advantages vis-a-vis prior policies, minimizing the risk of the policy remaining as intentions or challenges alone.

International Benchmarking

Albeit not disclosed in the policy's materials, field research disclosed benchmarking by the government, as presented in an example extracted from one of the interviews conducted:

"For example, 'Industry A' contracted a petrochemical industry characterization study compared to other world industries. (.) the study contemplated cluster studies elsewhere." (D.2)

Institutions in Charge of Each Action

PDP also seems to follow the political foundations found in the notorious agency competence to minimize conflicts and supporting policy. This fact is noticeable to the extent that the agency responsible for the management of each one of the actions and measures of a specific field of policy interest is the same agency that holds the deepest understanding of its problematics and also the agency wielding the greatest power/competence to change it, as seen in Figure 1 above.

Following the PDP's governance structure shown in Figure 1, we find the executive secretariat composed by the ABDI, MF, MCT and BNDES, who are the main policy managers and the agencies effectively responsible for the PDP's daily management. These agencies follow up on the indicators and seek to solve eventual problems in due time.

Also notable are several programs developed concomitantly. It is interesting to note that they are all coordinated by the agencies best qualified for such, corroborating the view presented in the theoretical section of this article. Systemic actions, for example, are horizontal, tax-oriented measures, and therefore should be under the MF.

The policy's strategic highlights deal with issues ranked by government as of the essence to develop Brazilian industry, percolating myriad production complexes. The highlights are increasing exports, integration with Africa, production integration with Latin America and the Caribbean, fostering SMEs, achieving sustainable production and regionalization of the Brazilian production. Since these are actions that require articulation among many government and private agencies, these activities fall under ABDI's responsibility, an agency established in 2004 precisely to promote this integration.

The strategic area mobilizing programs are veered towards industries the government deems strategic to the country's future. They are: biotechnology, health, defense, nuclear power, nanotechnology, and communications and information technologies. Since they represent knowledge-intensive programs, the charge of these programs is the MCT. However, programs specific to industries under a ministry, such as health and defense, are under the responsibility of their respective ministries.

Programs oriented towards strengthening competitiveness are responsible for fostering different industries displaying export potential and/or amassing the potential to yield chain effects over the industrial structure ensemble. These programs fall under the MDIC's responsibility, since this ministry has public-private interlocution channels already established for these areas, the so-called competitiveness forum, which were used by PDP.

Programs to consolidate and grow leadership are veered towards industries whose companies enjoy international acclaim and competitiveness; as the name suggests, they seek to consolidate and grow this leadership. Since companies of this magnitude require differentiated loans to innovate and invest, the program manager is BNDES, the main agency responsible for measures of this type.

Leadership

Another important variable for policy implementation is the person directly responsible for it having easy access to the president of the republic. This individual is important to maintain the policy within the presidency's priority agenda (Rodrik, 2004; Suzigan & Furtado, 2010). Government is such a complex organization that not nominating a responsible party for the policy (an agency, institution or professionals) places the entire IP engineering in jeopardy. Upon inquiring respondents about this theme, it became notable that the policy was crafted by three main agencies: ABDI, MF and BNDES. Noteworthy is the fact that one of the highest government echelon officials was the main government economic consultant for industrial policy matters since the Cardoso administration. Upon taking a formal office, this person joined technical expertise and political power together and, upon deeply analyzing PDP, a great similarity was noted between suggested measures and his academic production.

"Official X' was the interlocutor to everybody prior to joining 'agency A'; when he became the president of 'Agency A', this helped a lot (...) and participated in the formulation of the PDP". (A.1)

"This looks like 'Official X', this really looks like 'Official X'. (A.2)

Such intellectual leadership was not perceived to play the role of the political leader; conversely, this is a problem still far from being solved. First because this official, despite being recognized as a policy mentor, does not wield any power over the other agencies in charge of managing it; therefore, albeit influential, this official does not have the powers to apply pressure upon any minister. Besides, this leader is verifiably not recognized by some officials, who called policy formulators "a secret society". Graver than this is the fact that Brazilian society does not know who this leader is, in order to demand explanations, since the authors of this paper were only able to identify him after a few interviews were conducted.

Duly Skilled Government Officials

Field research unveiled that the same official can be responsible for more than one industry and, often times has not experience for such. Therefore, notably this variable was flawed, since it lacks a competent technical body to assess technologies and following up industries:

"We have no specialists, who are our leaders ... 'Mr. X' is a leader to works both in industry A and in industry B. We don't have one [responsible for each industry] for each. 'Mr. X' handles two [industries]..." (A.2)

This response shows us that the problem still exists in Brazil and no effort to change this situation was noted.

Performance Indicators

Follow up indicators are construed as the tools used to monitor the measures proposed by the policy. In the PDP case, a policy follow-up system was established including performance indicators for each action, based on indicators used in the business sector, something innovative for the Brazilian government.

"... we built an indicator system based on PMI [a project management methodology carrying the name of the institute that developed it, the Project Management Institute]. For next year we'll do something based on the BSC [Balanced Scorecard, a measurement and performance management methodology developed by Harvard Business School professors]" (B.1)

These indicators are centered in a single system and a manager who is always following up and helping sectoral program managers when necessary. This support is basically oriented to coordinate other government agencies; for example, if Industry X manager needs to talk to Ministry Y, then this manager requests the assistance of ABDI indicator manager, who will seek the most appropriate person in the ministry. As explained by the indicator manager himself:

"... we talk to managers a lot. My phone here is always busy. I'm always trying to talk to people ..." (A.3)

At field work for this article, the authors had the opportunity of knowing the PDP follow-up system in detail, and a great advance in this direction was noted. The system is centralized and followed up in real time. Should there be any problem or delay, the system manager can establish contact with the sectoral policy manager in due time to understand what is happening and what action is to be prosecuted to solve the problem at hand. However, a critique of the follow-up system is that it is fed by the managers themselves, and many of the follow-up indicators stem from the understanding of the manager himself, a fact that may entail some distortion.

Renovation and Review

PI is a long-term process that requires constant review. In the PDP case, the government has notably becoming aware of this fact, despite the goals being set for a two-year span only. A constant discussion and articulation were noted among government agencies to craft a policy for the forthcoming years that follows PDP's patterns. In competitiveness fora and indicator follow-up, there is a permanent review to understand hurdles and overcome them in forthcoming years. Besides, if very long range goals are disclosed, the private sector may lose interest. It is important, therefore, that the State be aware that an IP cannot envision a two-year span only, but the process should be permanent, a fact captured during field research.

"... we're trying to improve that phase, the PDP 2010 conclusion. We're hoping to submit some objective reports and stick to this structure for PDP 2 ..."(A.3)

"... we're going to expand the existing objectives for PDP 2 and add a few more we consider relevant, it's a constant review ..." (A.1)

The statements above contain evidence that PDP does end in itself; quite contrarily, a major interest by the technical body involved in its continuity and renovation is noted, using the already-established coordination structure. This fact signals towards an evolution in the understanding of agents of the relevance of renovation to the continuity of projects.

Evidence that PDP is reviewed is present not only in the statements, but also in adjustments evident during policy conduction. The first is the already mentioned adequacy of some managers of industries such as the oil and gas industry, which was shifted from Petrobras to BNDES. Besides, PDP included other industries, such as the toy-making industry, in the course of policy conduction.

FINAL CONSIDERATIONS

Analysis of the current Brazilian industrial policy--the Productive Development Policy (PDP)--formulation and management indicated that the policy management system has had substantial advance, however, there are still critical points that need improvement.

In terms of strengths, notably PDP goals are clear and transparent, besides being doable vis-a-vis reality. Also, the actions responsible for the achievement of the goals were defined while launching the policy. Again, also during launching, the responsible parties and follow-up indicators for each action were defined.

The creation of follow-up indicators was perhaps its major advance; manners to follow up each action were created, using a system based on the PMI, a project management technology vastly used in the business sector, something unprecedented in the Brazilian State. These indicators' feed system, however, deserves qualification, since this task is performed by the manager of each action, which may entail distortions.

Another important advance was the existence of a concern with a constant policy renewal. During field research, the investigators noted that PDP is a policy that will be renewed and reinvented. Besides, the investigators verified that the Brazilian State considers IP to be something perceived over the long range and is therefore concerned with the renovation and review of the policy. Notably, the continuity of the PDP has been discussed and should be announced still in the first half of 2011.

The existence of international benchmarking is also a strength. The Brazilian State is aware of the measures adopted by other countries and seems to use them to craft the Brazilian policy, always adapting it to the country's reality.

Despite these considerable advances, the PDP management system has serious problems; the first of them is public- private interaction which, despite a few advances, still needs improvement. One such improvement is not centering all private sector negotiation and representation in trade associations only, since not all of them act according to the interests of all their members. Therefore, the authors suggest that the State open communication channels with business in a clear, transparent manner, to prevent the conveyance of the idea that the administration is favoring company A or company B for shady reasons. Besides, one of the fundamental principles for the success of an industrial policy has not been enforced by the State, that is, the requirement of counterparts from the private sector. Without this, the business class will benefit from the policy without being necessarily committed to the country's economic development.

Another weakness in PDP's management system is the lack of a policy leader. Field research unveiled that there is an intellectual leader; however a political leader is non-existent. This intellectual leader has no power over ministries and does not hold PDP as a priority. This being the case, there is no manager of recourse should the policy fail.

Labor qualification also begs review, since government officials are not duly qualified to follow up the sectors for which they are responsible. As presented in the analysis, often times the same manager is responsible for two or three industries that bear no relationship to each other.

Finally, the authors emphasize that this paper does not purport to assess PDP nor the consequences of PDP's actions. This article sought to demonstrate the importance of an efficient management system for the success of an industrial policy. Besides, this paper contains certain limitations, since no interviews were conducted with private agents, who are the target public of a policy of this type. Future studies, therefore, could attempt to better capture the influence of an industrial policy in corporate strategy formulation, productivity and competitiveness.

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Carlos Arruda, Fundacao Dom Cabral

Arthur Kux, Erasmus University and Fundacao Dom Cabral

Marina Araujo, Federal Unversity of Minas Gerais and Fundacao Dom Cabral
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Author:Arruda, Carlos; Kux, Arthur; Araujo, Marina
Publication:Competition Forum
Article Type:Report
Date:Jan 1, 2011
Words:6020
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