SCHOLARLY ARTICLES

Paper by Gilson Nunes de Paula e Roberto Alexandre Zanchetta Borghi

Brazilian Journal of Political Economy

This study examines Brazil’s manufacturing industry (2002-2024) through New-Developmentalist Theory. Using a VECM, it shows that real exchange rate appreciation and import penetration are key drivers of manufacturing sector’s decline, amplified by commodity cycles (Dutch disease) and hysteresis. Three major structural breaks are identified: commodity-driven growth (2003-2008), post-2008 decline, and post-2017 stagnation. Findings indicate that exchange rate adjustments alone are insufficient: coordinated industrial, technological, and investment policies are required to restore manufacturing dynamism and strengthen Brazil’s role in the global market.

Full article: https://periodicos.fgv.br/bjpe/article/view/98249