From Industrial Policy to Regional and Local Locational Policy: Experience from Santa Catarina/Brazil

Abstract — Industrial policy is no longer what it used to be. In the industrialised world and in advanced developing countries alike, the focus has shifted from a top-down, statist approach that sought to create industries to a decentralised, networked approach whose aim is to shape competitive advantages and to create ‘systemic competitiveness.’ This reflects the fact that globalisation and localisation are parallel and mutually reinforcing processes: The firms which do better in a globalised market are rooted in well-developed networks of supporting firms and institutions. The analysis of the case of Santa Catarina, a state which had a strong industrial growth record in the 1970s and 1980s, shows that the relevant actors tend to be slow to move to this kind of pattern. State-level industrial policy mainly consists of participation in a ‘guerra fiscal’ geared to attracting external investment as well as, to a very limited extent, measures aimed at giving financial support to local firms. Yet there is no such thing as an explicit policy at the state level — to say nothing of the local level — designed to support firms by shaping locational advantages. This is due to limitations on the part both of the state and the private sector. As far as the state is concerned, a traditional clientelist and ad hoc style of policy making prevails. In the private sector the business associations (sindicatos and the Federation of Industries, local chambers of industry and commerce and their umbrella federation) are slowly adapting to the new conditions presented by an open economy and far more competitive pressure, though they have thus far lagged in putting more pressure on local and state government to support company-level efforts to increase competitiveness. Within this general picture, however, there are differences between industrial clusters. The most advanced of them, made up of world-class firms manufacturing ceramic tiles, may show the way by strengthening associations, shaping locational advantages, and articulating the demands of companies toward the state.