Engagement of workers necessary to ensure that industrial policy serves the public interest in Brazil

The involvement of workers and others in society is essential to ensure that Brazilian industrial policy serves the country’s development goals and the public interest, according to a new study.

Researchers found that limited public involvement in the design and implementation of industrial policies in sectors such as animal protein skewed practices towards corporate welfare, benefiting companies but not society.

Analysis of industrial policy plans developed since the mid-1990s shows that those that were more effective had greater involvement of trade unions and civil society. In return for support, the government demanded more from the private sector.

The industrial policies with the weakest conditions included agreements with the meat industry, where unions were weak and government funding helped Brazilian companies become global forces with limited benefits to the public interest.

The study, conducted by Renato H. de Gaspi of the Central European University and Pedro Perfeito da Silva of the University of Exeter, was published in the journal Development and change.

Researchers examined industrial policy for different sectors and found that it was influenced by the power of trade unions and social pressure. They found significant differences between different sectors such as automotive, animal protein and pharmaceuticals.

Dr Perfeito da Silva said: “There is always a risk that risk policy plans can backfire on corporations – when money is given to companies that give nothing back to society. If you include trade unions and civil society in discussions, you have a better chance of having an industrial policy that is consistent with national goals.

“The rise of China means all nations must better plan their industrial policies. They must have relationships that do not involve companies taking resources from the state. If countries impose fewer conditions, industrial policy has less impact on development.”

The automotive industry, where unions have greater power, has been subject to stricter conditions. Private companies have been given specific targets for technological innovation and job guarantees.

Dr de Gaspi said: “Rather than focusing solely on persuading business groups to invest, governments committed to an economic transformation agenda should activate other groups that can bring with them the necessary motivation to direct industrial policy outcomes towards goals that can improve society.”

The presidency of Luis Inácio Lula da Silva, himself a metalworker, in 2002 meant that trade union leaders now had greater influence on government policy. This balanced the relative power of business in negotiations, enabling unions to call for better working conditions and greater nationalization of the production chain.

This greater influence of non-business groups in shaping industrial policy seems to be returning in the new Lula government. The new mission-based industrial policy plan indicates conditions and specific indicators, although they are still vague. One can only hope that the lessons of the past will make a difference in current development attempts.