Productive densification and hollowing-out process in Brazilian manufacturing

Abstract By import substitution, Brazilian industrialization provided high levels of productive densification; however, these levels reduced after trade liberalization. The existing studies used sectoral disaggregation that does not allow identifying productive niches that are densified or hollowed-out among the manufacturing subsectors. For the first time for Brazil, this work mapped and analyzed the degree of productive densification in all 258 industrial classes based on unpublished data obtained from the Brazilian Institute of Geography and Statistics (IBGE). Thus, the study identified the niches with the highest and lowest densification, which would be possible targets of public policies. Results show that the low and medium-low technology classes are still predominantly densified, but half of the high and medium-high technology industrial classes have moderate to high productive rarefaction, and some technological classes are already maquiladoras. We concluded that the more technological industrial classes' productive hollowing-out process could delay Brazilian development, particularly in Science, Technology, and Innovation.