Are There evidences of deindustrialization in Brazil? This paper aims at analyzing the theoretical concept of deindustrialization, and evaluating if Brazil, following the implementation of economic reforms in the 1990´s, has suffered from a "new Dutch disease". Despite the manufacturing sector declining participation in the Brazilian Gross Domestic Product (GDP), the empirical evidence show that the changes in the economy structure since the mid-1980's to the end of 2005 should not be described as deindustrialization. Since there was not evidence of either generalized reallocation of resources towards industries based on natural resources, or a pattern of export specialization in goods technologically based on natural resources or even on labor, one cannot conclude that Brazil was infected by a "new Dutch disease".

The majority of economic literature tends to discuss economic development issues by analysing the industrial policy and other long-term development policies separate from short-term macroeconomic policy. However, development strategies require a close coordination of the macroeconomic regime with the industrial policy. In addition to Brazil, our analytical discussion and normative implications can be addressed to other developing countries also facing premature deindustrialisation. We propose an analytical discussion of the phenomena of industrialisation, deindustrialisation and reindustrialisation, including a discussion on the connection between the macroeconomic regime and industrial policy, both oriented to reindustrialisation and catching up. The main point is that both policy regimes must be closely coordinated with each other. Concerning the macroeconomic regime, we argue that consistent monetary, fiscal, wage and exchange rate policies are those which are able to not only keep price stabilisation, but also provide average real interest rates below the average real return rates on capital, a competitive real exchange rate and real wage rates increasing in accordance with labour productivity growth. As for industrial policy, theoretical and empirical evidence suggest strategies aimed at the diversification of production, processes and products, especially within the manufacturing sector and within tradable segments of the service sector.

We present a Kaldor-Thirlwall theoretical and empirical framework on the basic driving forces of the behaviour of productivity and economic development in the long-run. From the Kaldorian view, we anchor on the hypothesis that, by operating under static and dynamic economies of scale, the main sources of the growth of productivity of the economy as a whole come from the manufacturing sector. Yet, according to the so-called Thirlwall's Law, for a country to prevent from facing balance of payments contraints to growth in the long run and successfully catch up with the levels of income per capita and well-being of developed countries, it must maintain an income elasticity of demand for exports above the income elasticity of demand for imports. Based on these main hypotheses and some stylised facts observed and pioneered by Kaldor, we show some empirical evidence based on both descriptive statistics and econometric regressions for Brazil between 1970 and 2010. There are at least four clear indicators to suggest that Brazil has entered into a process of early de-industrialisation: i) the sharp drop in participation of the Brazilian manufacturing industry in total value added in the last decades; ii) its declining average yearly growth rate of labour productivity since the end of the 1990s; iii), the dramatic augmentation of the technological gap in all subsectors of the manufacturing industry, classified by technological intensity, since the end of the 1990s and; iv) the significant trade deficits in the manufacturing subsector of more technological intensity between 2006 and 2008. In addition, since our econometric estimates also show that there was a dramatic increase in the income elasticity of demand for imports (from 1.97 to 3.36) and a decrease in the income elasticity for exports between 1999 and 2010, compared with the 1980-1998 period (from 1.36 to 1.33), we can conclude that Brazil has already embarked on a trajectory of falling-behind and has been facing balance of payments constraints to growth in the long run. However, since our econometric estimation of the Kaldor-Verdoorn coefficient revealed that the Brazilian manufacturing industry operates under dynamic economies of scale, this result means that the Brazilian manufacturing industry has, in principle, potential to sustain economic growth in the long run. All these results have important economic policy implications. The most important is that there is still time to revert both the early de-industrialisation and falling behind path in favour of a catching up trajectory in the Brazilian economy, since there is a fine coordination between the long-term policies (industrial and technological policies, infrastructure and education policies, among others) and the short-term macroeconomic policies (monetary, fiscal and, especially, exchange rate policies) oriented to boost the technological content of both Brazilian manufacturing goods and exports.

RESuMO: Este artigo analisa o chamado tripé da política macroeconômica brasileira, que desde 1999 tem combinado um regime de metas de inflação, um regime de taxa de câmbio flutuante e metas de superávit fiscal primário. A menos que o seu modus operandi seja alterado, o tripé não será capaz de libertar a economia brasileira de outra "possível trindade": altas taxas de juros reais, a apreciação da taxa de câmbio real e crescimento econômico muito baixo. Depois de analisar brevemente a base teórica sob o tripé macroeconômico, o artigo mostra por que este regime de política macroeconômica, se avaliado numa perspectiva de longo ou médio prazo, não tem sido capaz de garantir a estabilidade dos preços nem o crescimento econômico. Além da sugestão de romper com a estratégia brasileira de crescer com poupança externa, o documento também sugere três principais formas de mudar o modus operandi do tripé brasileiro: i) aumentar o horizonte de tempo para atingir a meta de inflação, como tem sido o experiência da maioria dos países que adotam esse regime de política monetária; ii) restaurar o papel anticíclico da política fiscal brasileira; e iii) adotar uma combinação de mecanismos que visem prevenir que a moeda brasileira entre em uma nova tendência cíclica da apreciação em termos reais. PAlAVRAS-CHAVE: regime de metas de inflação; regime de taxa de câmbio flutuante; superávit primário fiscal; crescimento econômico; estabilidade de preços; Brasil.ABSTRACT: The traps of the tripad of the Brazilian macroeconomic policy. This paper analyses the so-called tripod of the Brazilian macroeconomic policy, which since 1999 has been combining an inflation target regime, a floating exchange rate regime and targets for primary fiscal surplus. I argue that, unless its modus operandi is changed, the tripod will not be able to free the Brazilian economy from another "possible trinity": high real interest rates, real exchange rate appreciation and very low economic growth. After briefly analysing the theoretical base under the macroeconomic tripod, I will show why this macroeconomic policy regime, if it is evaluated in a medium or long-term perspective, has not been able to assure neither price stability nor economic growth. In addition to the suggestion of breaking with the Brazilian strategy of growing with foreign savings, the paper also suggests three Revista de Economia Política, vol 35, nº 3 (140), pp 426-443, julho-setembro/2015