Reindustrialization of Brazil and Colombia: How much money will each country allocate to industrial policy?

At the end of 2023, Colombia presented the National Reindustrialization Policy and in 2024 Brazil presented the New Industry Brazil. A crucial element in the viability and capacity for these projects to materialize are the resources allocated by governments.

Brazil released the text of the industrial policy that the country will follow. According to the policy, the South American country intends to invest USD $60 billion until 2026. Meanwhile, around USD 1.8 billion will be allocated for Colombian reindustrialization until 2034.

In other words, Brazil will invest 35 times more resources in three years (2023-2026) than what is budgeted in Colombia for the decade (2024-2034).

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What do the industrial policies of Brazil and Colombia have in common?

Brazil and Colombia have in common the importance they give to sustainability, food sovereignty, health and technological development. The objectives established in the industrial policy shed light on the sectors they intend to develop and in which it can be profitable to invest.

Both countries, Brazil and Colombia, have as a priority the development of the agroindustrial sector as a driver of their economic growth, with a focus on food security.

Brazil seeks to promote the domestic production of agricultural machinery, agricultural implements, agricultural bioinputs and fertilizers. The goal is to mechanize 70% of agricultural establishments, with 95% of the machinery produced by the national industry.

Colombia is committed to “agroindustrialization”, transforming agricultural production into food, biologicals, materials, textiles, fibers and energy to add value to products. The sector’s value added should grow by 3.9% to reach a 6.4% share of the agricultural sector in GDP by 2032.

Brazil also focuses its industrial policy on sustainability, aiming to develop technologies for decarbonization and energy transition, while ensuring energy sovereignty. For example, it aims to increase the share of biofuels in the transport energy matrix by 50% and to reduce carbon emissions from domestic industry by 30%.

Colombia, for its part, seeks decarbonization, that is, to reduce dependence on oil and coal, relying on alternative energies.

The Colombian government expects that within the framework of the energy transition, every $1 billion invested will generate 18 jobs in the automotive vehicle and parts sector.

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Both countries recognize the need to reduce foreign dependence in the health sector. Brazil, for its part, aims to increase the share of domestic production from 42% to 70% of the supply to meet the needs of medicines, vaccines, medical equipment, among others.

Colombia also prioritizes the pharmaceutical industry, improving the production capacity of active ingredients, molecules, vaccines and medical devices, as well as promoting the export of medical services.

Both Brazil and Colombia consider it essential to boost innovation and cutting-edge technology in their industrialization process, recognizing the importance of process digitalization, productivity improvement, the development of artificial intelligence and the promotion of innovation.

In addition, both nations recognize the importance of training and capacity building of people involved in the implementation of their industrial policies, including state and industrial officials, by improving education, creating research centers and strengthening the relationship between the productive and academic sectors.

What has Minister Umaña said about reindustrialization?

Last February 20, the Ministry of Industry, Commerce and Tourism launched the reindustrialization policy, with the purpose of “moving from an extractivist economy to a knowledge-based, productive and sustainable economy”.

The Minister of Industry, Trade and Tourism, Germán Umaña, explained that the basis of the reindustrialization policy is to fulfill the objective of generating development, employment, economic growth, incorporation of technical progress and greater use of human capacity. An ambitious approach that demands a strong investment of resources.

The February presentation is the first of three presentations to be made by the Ministry within the framework of the policies that will be its working axes: the reindustrialization policy, the tourism policy and the foreign trade policy.

The Minister also spoke of “diversifying and sophisticating the domestic and exportable offer, and deepening integration with Latin America and the Caribbean”. Statements that generate expectations and that raise questions when contrasted with the resources allocated.

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