Brazil minister prescribes technology shock for ailing economy

Written by on April 28, 2015 in News with 0 Comments
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BRASILIA (Reuters) – Brazil’s government plans over time to remove tariffs on high-end capital goods in a bid to boost productivity and breathe life into its flailing economy, an adviser to President Dilma Rousseff told Reuters.

Strategic Affairs Minister Roberto Mangabeira Unger, a Harvard philosophy professor tasked by Rousseff with laying out a new development path for Brazil, said new tools are needed to evolve from an economy based on commodity exports to a manufacturing nation with a skilled and well-paid workforce.

That’s easier said than done. Brazil has some of Latin America’s highest import tariffs, and industrial groups and Rousseff’s own leftist Workers’ Party have historically opposed efforts to remove protections for local manufacturers.

Unger said any change to tariffs would not come until after the current period of tough austerity measures has passed – which analysts say may not happen until 2016 or later.

Nonetheless, he said the tariff plan has Rousseff’s support – the latest sign that four years of stagnant economic growth are spurring her to adopt more business-friendly policies.

“We need to equip ourselves with the advanced technologies that are available in the world,” Unger said in an interview last week.

He said Brazil’s large private sector is handicapped by outdated equipment and business practices and needs a “shock of advanced science and technology.”

The government plans to unilaterally lift all tariffs and non-tariff restraints on the import of advanced capital goods, and could also compensate advanced technology importers for the rising cost of their purchases due to a depreciated currency, Unger said. He did not specify when this would happen.

The goods covered could range from 3D printers to super computers, satellite components or jet engines for Brazil’s most successful airplane maker, Embraer, he said.

Unger, 68, has a reputation as an original thinker who has inspired leaders in Latin America and beyond, such as British Labour Party leader Ed Miliband. President Barack Obama was his student at Harvard Law School, but Unger criticized him later for bailing out Wall Street banks and called for his defeat in the 2012 presidential election.

In Brazil, Unger remains a controversial figure who slammed the ruling Workers’ Party for corruption and then accepted a Cabinet post in former president Luiz Inacio Lula da Silva’s government. He holds the same position today.

The greater emphasis on technology has implications for foreign policy as well.

Unger said Brazil must redefine its relationship with its largest trade partner, China, to move beyond the exchange of iron ore, soy beans and other commodities for industrial goods.

“We want a different kind of relation to China in which we share in the development of advanced technologies rather than exchanging the products of nature for the products of human ingenuity,” he said.

Brazil also needs to rebuild relations with the United States, the main market for Brazilian manufactured goods and the main foreign source of direct investment in its industries. Ties were damaged by allegations of U.S. spying on Brazilian officials including Rousseff two years ago.

Unger said the hemisphere’s two largest nations should forge partnerships in advanced technology, education and climate change issues to advance economic opportunities in the Americas.

(By Anthony Boadle; Editing by Brian Winter and Paul Simao)

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