Brazil Has Lacked a Clear Development Project for Thirty Years, Says Industrialist

RIO DE JANEIRO, BRAZIL – The President of the Brazilian Association of Infrastructure and Basic Industry (ABDIB), Venilton Tadini, said on Monday, September 9th, that the industry breathes and suffers from what has been happening with the recent investment in infrastructure in Brazil.

There are two points considered to be structural causes of the trend towards secular stagnation in the country. “The first is that for 30 years we have been, virtually, without a clear development project”, said the executive, to whom there were only three cycles where this articulation took place, which was in the Vargas and Juscelino governments and then, to an great extent, in the military government.

“From the moment of the exchange crisis and hyperinflation, attempts at stabilization have left us short-sighted in relation to the development strategies that the country should follow,” said Tadini.

In the morning, he took part in the opening of the 16th Getúlio Vargas Foundation’s (FGV) Economic Forum in São Paulo.

According to Tadini, Brazil, which in the last century competed with Korea on productivity levels, with the intervention of the State, sees this intervention demonized because of the misuse of some tools in the recent past. Therefore, according to him, the issue of medium and long-term economic planning is highly critical.

“It is difficult to say what infrastructure you need when you only grow at the expense of demand. And infrastructure is a catalyst for the development process. It’s an absolutely inconceivable thing for you to invest in infrastructure to break the deadlock. We do this because we are attacked by the fact of not having a clear development strategy to follow,” criticized the president of ABDIB.

Recently, according to him, this becomes more pronounced with the fact that we forget vertical policies and think that only horizontal policies will solve the problems with legal certainty. “It will not solve them. In the recent past, we have seen that the interest rate has dropped and investment has not increased. It is difficult for those with a more classical background to understand this phenomenon,” he said.

The second point raised by Tadini is that the primary deficit is high and, however, inflation is below the target center. “So there is something wrong. We have been working systematically on this lack of planning without an articulated program between infrastructure and industry. Infrastructure is a competitiveness driver and not an end in itself. I hear about infrastructure as an end in itself and that’s not true,” he commented.

However, according to the president of ABDIB, it is necessary to discuss what infrastructure is required once the desired structure for the circulation of goods has been defined. “If I want a country that deals with iron ore or agribusiness, I will go down this road because I will quickly find in each international cycle of declining commodity prices a drop in our internal income, a difficulty to regain and maintain sustainable growth,” she said.

For Tadini, the products with higher added value are not considered in the production chain structure. According to him, Brazil does not have a plan for integration in international markets, much less more adequate coordination with neighboring countries either in infrastructure, or in terms of transportation and energy, or from the point of view of goods.

According to the executive, there is a need to regain planning ability. Today, it is clear that the structuring capacity of the projects that are being organized has improved greatly, according to him. But investments no longer grow because there are simply no projects. “We have eliminated an existing backlog from the moment we got to flow, after the creation of the PPI Investment Partnership Program with more adequate investment structures,” he said.

Pro-cyclical policy

The president of ABDIB also criticized what he termed “Brazil’s capacity to have specialized in always being pro-cyclical in politics”. “We did this in the recent past and demonized all public policies that would fall into disrepute now that we need to activate a state mechanism to get out of the crisis,” he said.

According to him, some people think that only changing the structure of supply, with increased productivity, and improving the legal security institutions is “fantastic”.

In other words, while asking for the withdrawal of the State, it asks for more legal security. “There is no such thing as capitalism without the State, and we have had this kind of thing again and again,” he said.