Brazil’s sea economy potential depends on technology and industrial policy

Whether because of the increase in the deforestation rate or the possibilities that the carbon credit market can bring, the Amazon forest has gained relevance at an international level and is on the agenda of economic discussions in Brazil.

On the other hand, the economy of the sea is still unknown to most of the population, even though the country has a coastline almost 11,000 kilometers long and one of the longest coastlines in the world.

But the potential for development of the Brazilian economy of the sea, still essentially extractive, requires more investment in technology and innovation, according to a study by researchers at the Federal Rural University of Rio de Janeiro (UFRRJ), provided exclusively to Prática ESG.

The economy of the sea is a relevant subject in ESG (English term for environmental, social, and governance issues) for its potential in topics such as bio-economy and sustainable development.

Worldwide, the sector should reach a turnover of US$3 trillion by 2030, according to the Organization for Economic Cooperation and Development (OECD). With an eye on the economic potential of the exploitation of living and non-living resources, countries like the United States, China, and South Korea have created strategies for the segment over the past decade.

In Brazil, however, the theme is so recent that there is no strategic positioning nor a consolidated base for data analysis and measurement of the segment’s impact on the economy.

Therefore, researchers Isabela Marques, Marcelo Fernandes, and Alexandre Freitas, from the Center for Studies of the Economy of the Sea for Rio de Janeiro, linked to UFRRJ, crossed, in an unprecedented way, the data of economic activities provided by IBGE and found that, in 2018, the economy of the sea moved R$415.7 billion (US$80 billion), corresponding to 5.93% of the Brazilian gross domestic product (GDP) that year.

According to the researchers, the economy of the sea is still essentially extractive in the country. Almost half of the economic movement of this segment (49.4%) corresponds to oil and gas activities, especially oil refining and crude oil extraction.

In comparison with countries such as the United Kingdom, Denmark, and Italy, Brazil is the nation that has the highest participation of non-living resources – which involves oil and natural gas extraction – in the economy of the sea.

The dependence on extraction means that the country still has a very underdeveloped manufacturing sector, a challenge that the shipbuilding industry has faced since the 1980s when the segment collapsed and several shipyards went through financial difficulties or filed for bankruptcy.

According to the National Union of the Naval and Offshore Construction and Repair Industry (Sinaval), today, the segment employs 15,000 people, a drop of 80% compared to the amount in 2014, when the naval sector generated about 82,000 jobs.

Today, according to the researchers, the participation of the shipbuilding and manufacturing sector in the economy of the sea corresponds to a little more than 2%, a rate similar to that of countries like Denmark (2.6%) and Spain (3.2%). In countries like France and Germany, the market share rises to 14.1% and 11.3%, respectively.

It means that Brazil extracts resources using state-of-the-art technologies manufactured in other countries. Even so, there are possibilities for leverage: 71% of the volume is related to the construction and maintenance of ships, and almost a fifth of the sector’s production is related to the machinery for mineral extraction and shipbuilding.

“Manufacturing can grow more if there is a policy for this segment. We can grow more if we invest in more technology-intensive sectors,” says Alexandre Freitas.

In the opposite direction to manufacturing, the tourism sector has great relevance for the economy of the sea, being responsible for 37.9% of the movement of the segment. The main importance of the sector, according to academics, is in the capacity to generate jobs. They also argue that tourism can serve as a lever for developing shipbuilding.

For researcher Isabela Marques, there is a need for a combination of policies between job-generating activities such as tourism, which do not have great productivity but bring income, and efficient operations such as the oil and gas sector.

“Policy choices can be focused on generating added value, employment, and income more immediately, but they can also aim at changes in the productive structure, which would be a slower process, but vital to reduce the existing disparities between Brazil and the central countries,” she wrote in her research.

With information from Valor Econômico