Deindustrialization and subsectoral heterogeneity: international standards and challenges for the Brazilian economy

Abstract

This paper investigates deindustrialization as a globally unequal process, related both to the degree of development and path dependence, and to economic policies that reinforce long-term trends or enable structural changes. Traditionally seen as the fall in industrial production/employment as the country develops, this phenomenon can engender considerable subsectoral and even regional heterogeneity, an aspect that this research seeks to explore. The methodology comprises a theoretical analysis, with a review of the literature on deindustrialization and sectoral heterogeneity and an empirical investigation, with descriptive analysis of manufacturing data for 111 countries, in addition to a specific study for Brazil from 1993 to 2018. The results show that developed countries consolidated their leadership in the most advanced sectors of industry, whereas most developing economies, including Brazil, experienced deindustrialization and at the same time, the concentration of industrial productive activities in lower-value added, technology-intensive subsectors . In this scenario, if structural change constitutes an important driving force of economic development, the recent trends observed signal serious challenges to promoting inclusive and sustained growth in developing economies and in Brazil.