<b>The ‘beauty’ and the sleeping ‘giant’: comparative analysis of two cases of recent de-industrialization and its causes - Brazil and Italy

Abstract

The productive sectors are indifferent to the growth in neoclassical models, different from Keynesians authors that highlight the centrality of the industry by enabling technological changes, productivity growth, positive externalities and synergies, balance of payments sustainability and in developing countries, relate to catching up processes. Acknowledging the centrality of industry brings concerns about de-industrialization, which is the theme of this article, focusing on the cases of Brazil and Italy, aiming to identify their pattern and determinants. In order to achieve this aim, there is a conceptual discussion about de-industrialization, followed by the identification of the main ‘stylized facts’ of these economies: i) a decrease in the industry relative share in GDP; ii) reduction of industrial employment in total employment and iii) stagnant productivity. Finally, the specificities of Brazilian and Italian industrialization are analyzed, observing that in Brazil, this appears to have been caused mainly by post-commercial opening macroeconomic environment that when associated with the appreciated exchange rate has changed the industry expertise and involved de-industrialization. In Italy, it is connected with the Kaldor-Verdoorn’s law because lower levels of demand have reduced productivity and investment, as well as relocation that directed parts of the production process to other countries