It seems evident that the economic situation, exchange rates and unfair practices by other countries affect sectors of the Brazilian industry.

Though It is more difficult to distinguish which sectors suffer from these “evils” and which ones are just simply inefficient. Overall, according to IBGE, it is known that in the last 12 months alone 40 of the industry’s 76 sub-sectors saw reduced activity. Other seven have grown under 1%. In other words, the difficulties seem widespread.

The Brazilian government, however, gives the impression that it knows in detail the problems of each niche within the industry, as it often either offers some type of tax cuts or increases barriers to foreign competition. For instance, the government has now imposed new import taxes on air conditioners, microwave ovens, and motorcycles.

The choices seem arbitrary, at least until the government explains and shows effective results of their policies. Otherwise, how are we going to rule out the possibility that these have to do with business favors tied in to market lobbyist and political influence?

The source of problems of these favored sectors must be clear if they are to be protected. There must be some sort of accountability for the result of these stimulus measures, both in terms of production and price and quality.

Was the consumer harmed by the protectionism given to a specific Brazilian company? If so, was there any kind of benefit in terms of efficient production, better investment, or more jobs?

The Brazilian government seems obsessed with measures aimed at stimulating consumption, but it risks feeding the indebtedness of households. Economic activity should be reactivated by other means: public investment.

The government does not invest because it gets entangled in the bureaucracy and the lack of project planning. And also because it keeps restructuring ministries responsible for major projects but embattled in corruption allegations.

Hence, the government settles for the tempting and easy way out, the short-term solution which is the interventionist activism. It just doesn’t realize that it’s not performing its core duty: to govern effectively, which, in this case, means investing more.

Source: Folha (“Protecionismo Facil”)

Share →