The manufacturing industry in the country has seen a decline in its contribution to the national GDP from 36% in 1985 to 11% in the first quarter of the year, as per data from the Brazilian Institute of Geography and Statistics.
Similarly, employment rates within the industry have also declined. Industrial production has decreased by 10.4%, with certain sectors seeing major drops.
Several factors contribute to this decline.
The country’s complicated institutional environment, intricate tax system, lack of qualified labor, poor infrastructure, and lack of trade agreements are significant barriers to industry growth.
The country’s economic environment, as rated by the Heritage Foundation, is largely unfree, hindering industrial progress.
The way forward lies in tax reform, simplifying rules, and making business operations easier.
Additionally, improved education standards could produce the quality labor the industry requires.
Moreover, industry expansion is impeded by inadequate infrastructure and logistical challenges.
The country’s reliance on problematic and unsafe roads makes insurance costs higher.
Trade agreements are also lacking, restricting the industry’s access to other markets.
Agreements can facilitate access to innovative technologies, which is crucial for productivity growth.
The industry’s decline is further linked to societal, economic transformations, with other sectors advancing.
Modern agriculture, service sector growth, and increased automation play a role.
Finally, changes in consumption patterns towards services also affect the industry.
Furthermore, even technology-intensive segments are struggling to progress, with only medium-low technology industries managing to expand production recently.