Brazil's Industrial Policy the Economist

brazil nuts industrial policy: Dealing with the unfeigned | The Economist

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Brazils industrial policy

Dealing with the real
The presidency feels the manufacturers pain
Aug 6th 2011 | SÃO PAULO | from the print edition

A few lucky Brazilian businessmen are about to vex their prayers answered: they testament soon be paying lower taxes. From the starting signal of October manufacturers in four labour-intensive industriesâ€"clothing, footwear, furniture and softwareâ€" allow for see the main payroll tax, of 20%, abolished. The government lead claw back some, but not all, of the 25 million reais ($16 billion) the measure will cost it over the following 18 months by taxing turnover at 1.5% (2.5% for the software industry). If by the end of 2012 the scheme is deemed a success, it may be extended to other industries and made permanent. The tax cut is the centrepiece of President Dilma Rousseffs long-awaited industrial policy, announced on marvelous 2nd.



It also includes a promise to act more quickly where imports involve dumping, and stricter checks on the origins of goods (Chinese manufacturers are rumoured to be evading anti-dumping tariffs by merchant marine via third countries). A Buy Brazil policy will bend public -procurement rules to allow the government to pay up to a quarter more than the lowest price in order to secure a local supplier. The aim is to cling to Brazilian industry from an everstrengthening currency. As Europe and the United States trip-up from crisis to crisis, high interest rates are attracting capital to Brazil: its policy interest rate, at 12.50%, is the highest in real damage of any big economy. Companies such as Vale and Petrobras, which export iron ore and oil respectively, are shielded by crocked world prices for commodities. Both are turning in take results. Construction and services are boosted by strong...If you want to contain a full essay, order it on our website: Ordercustompaper.com



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