Industrial Policy: Opportunity to Innovate with Responsibility

Rafaela Carvalho (Fundação Getulio Vargas)
Antônio Porto (Fundação Getulio Vargas)

Abstract: In academia or in politics, the theme of industrial policy returned to the center of discussions. Not that at some point it had completely disappeared, but it was for some time relegated to the sidelines. The debate is controversial and sometimes heated. In Brazil, one area where the debate over industrial policy is on the rise is in the meat-packing sector. Although the goals of this recent industrial policy - Productive Development Policy (PDP) - are essentially sectoral, political practice has shown that specific private groups seem to have benefited more than others. A possible problem caused by the PDP is a disruption of the internal meat market since the companies that got the financial aid, besides growing bigger, bought small companies that were struggling to survive the 2008 crisis. The result of this acquisition movement is that meat-packing sector became less competitive. The empirical approach uses the difference and difference methodology with a database of over 128 observations and 6 variables. Preliminary results show that the farmer’s received price decreased and the consumer’s paid price increased. These results indicate that meat producers and consumers are worst off after the PDP implemented by the Brazilian Development Bank (BNDES). More precisely, the PDP has made the meat market more concentrated allowing a handful of companies to control this market.

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