Reflections on Industrial Policy: A Practitioner's Perspective

1. Reflections about Industrial Policy from a (current) practitioner with (still) traces of academic research on the subject João Carlos Ferraz 2011 My opinions do not reflect those from the organization I am currently associated with

2. Facts

3. PITCE, PDP, PBM: Industrial Policies under PT Administrations -2004-2011 PITCE (2004-2007): Industrial, Technology and Trade Policy Foster selected technology based sectors The return of Phoenix PDP (2008-2010): Productive Development Policy: Innovate and invest to sustain growth. Riding favourable winds and the storm PBM (2011-2014): Plano Brasil Maior: Innovate to compete; compete to grow Against a hostile environment, aggregate value through innovation. Competitiveness is high in the agenda 3

4. Reflections

5. Role model: hypocrisys prevails In the context of the international financial crisis - which may even be a cognitive crisis-, policy makers, academics and opinion-makers are becoming more receptive to policies that, until very recently, were ostracized Industrial policy is gaining space in the public policy agenda but... labels change: Innovation policy, Regional policy, SME policy, Green policy, Defense policy, Trade policy.... One size fits all does not apply. And, beware of the “do what I tell you, not what I do” 5

6. Conception: Fabio Erber synthesis apply Without theory there is no effective policy (Fabio Erber) Any policy must be grounded in good analytical framework in order to aim at relevant challenges and mobilize adequate instruments 6

7. Where to go? Vision of future matters... Industrial policy is part of long term development policies. These are instruments of a vision of future. Contradiction with term-based democracies? A strategic vision of the future must find ressonance in the aspirations and possibilities of a society. How to capture and “package” them? 7

8. ...but beware of trade-offs between desires and possibilities A deep sense of reality to propose feasible goals is necessary 8

9. Instruments: the verticality of horizontality Even the most “horizontal” of instruments will benefit some more than others The more vertical a policy action is, the more difficult its implementation Instruments´ pertinence have sectoral or thematic logic Down with dogmas! 9

10. Interactions... Lone rider does not exist (2/2) One swallow does not make summer The very notion that industrial policy can be “practised” without consultation is very undemocratic Cooperation and interaction are needed to propose feasible objectives that find ressonance with private sector It is naïve to believe that business sector will not try to lobby for their interests. What to do? make explicit the role played by each actor; associate benefits with obligations; contract out monitoring; foster strong circulation of information 10

11. No money, no honey. Two fundamental dilemmas Instrument availability Without sufficient financial and regulatory instruments, an Industrial Policy is just a collection of desires... For every real economy challenge there is a correspondentt specific set of policy instruments that are under different Ministries. • Where are the determinants of challenges: inside or outside the firm? • They say: • “From my gate inwards, everything is fine” • “Lower the cost of capital and taxes and leave the rest to us” • Really? 11

12. Riding the unknown Wilson Peres´ evaluation and prediction must be overcome: “Latin Americans are formidable in analysing; great in proposing; very bad in implementing and horrible in evaluating industrial policies” No text book and very, very, very few articulist register the hardships of policy implemenation. We systematically underestimate how much the success of an industrial policy is associated with implementation NOT with conception 12

13. Very important ingredients for policy practitioners Personal cumplicity among key players Patience, patience, patience, patience, patience, patience, tenacity, tenacity, tenacity, tenacity, tenacity, tenacity, patience, patience, patience, patience, patience, tenacity, tenacity, tenacity, tenacity, tenacity, tenacity, patience, patience, patience, patience, patience, tenacity, tenacity, tenacity, tenacity, tenacity, tenacity, tenacity, patience, patience, patience, patience, patience, tenacity, tenacity, tenacity, tenacity, tenacity, tenacity, patience, patience, patience, patience, patience, tenacity, tenacity, tenacity, tenacity, tenacity, tenacity, patience, patience, patience, patience, patience, tenacity, tenacity, tenacity, tenacity, tenacity, tenacity, 13

14. Learning by doing, Learning from tenacity, Learning through hardship Be humble Learn with your mistakes And try to be able to transmit them to others 14

15. Reflections about Industrial Policy from a (current) practitioner with (still) traces of academic research on the subject João Carlos Ferraz 2011