ABSTRACT
This chapter demonstrates that despite three decades of reform initiatives, Brazil still remains beset by profound competitive challenges. As, from the late 1980s, the direction of policy shifted towards trade and market liberalisation, then in the direction of state-led developmentalism and finally – from 2016 – back to liberal reforms, Brazil’s competitiveness failed to take off, despite the emergence of major global opportunities. The performance of productivity outside agriculture, in particular, has proved highly disappointing. The precise determinants of this poor performance are complex and contested but revolve around some familiar themes. These include, but are not limited to, under-investment in human capital, wilting fixed capital and infrastructural investment and, relatedly, technological inertia. Regarding the latter feature, this chapter makes clear that while nodes of world-leading technological capability exist, these tend to be exceptional and are characterised by their proximity to sources of natural comparative advantage and state support. This is exemplified in the case of some of Brazil’s most successful multinational companies. Tackling the issues highlighted in this chapter will be a challenging and long-drawn-out affair. It must necessarily involve broadening the scope of competitive excellence which currently characterises only a select few sectors and enterprises.
