Neither synthesis nor rivalry: Complementary policy models and technological learning in the Mexican and Brazilian petroleum and automotive industries

Abstract

Although technological learning is indispensable for economic transformation in developing countries, recent research on industrial policy both lacks consensus regarding policy models and engages in little long-term analysis of policy impacts. This study contributes to this literature through a controlled case comparison of the varied addition of new and unique functional capacities in the Mexican and Brazilian automotive and petroleum industries from 1975 to 2000. It offers a dynamic industrial policy perspective that underscores the explanatory role of alternating state- and market-led industrial policy approaches and their associated cumulative processes of “exploration” and “exploitation” (March (1991)). It also suggests that two background conditions—prior investments in learning and exogenous shocks that undermine the status quo—intervene decisively in the successful sequencing of policy approaches. The study concludes by proposing a framework that recognizes three main learning pathways formed through different configurations of the main independent variable and background conditions. This framework can be deployed as a rough predictive tool to assess how other industries might most effectively increase their technological sophistication.

Creating innovation capabilities for improving global health: Inventing technology for neglected tropical diseases in Brazil

“…Other studies reveal policies that promote local production to replace and reduce dependence on imports of pharmaceuticals (Horner, 2022 ; Kaplan & Laing, 2005 ; Mackintosh, Banda, Tibandebage, & Wamae, 2015 ). Research has also focused on the pre-requisites for fostering DEEs’ new industrial policies’ ability to expand the global technological frontier in strategic industries but disconnected from social policy goals (Amsden, 2001 ; Fuentes & Pipkin, 2019 ). Some studies, however, show a strategy that connects innovation to social policy and industrial policy (McMahon & Thorsteinsdóttir, 2013 ; Perez-Aleman & Alves, 2017 ).…”

“…The role of government in promoting learning to build DEE capabilities is well established in the literature (Amsden, 2001 ; Cimoli, Dosi, & Stiglitz, 2009 ; Perez-Aleman and Alves, 2017 ; Pipkin & Fuentes, 2017 ; Rodrik, 2007 ; Sabel, 1994 ). Previous studies mostly focused on production capability building, leaving partially unaddressed the need to understand how government policies in DEE can also build innovation capabilities that advance the technological frontier, not just production capabilities (Fuentes & Pipkin, 2019 ). That is also the case for work highlighting that DEE governments foster learning connected to local problems in agriculture, manufacturing, health, information technology, and finance (Lema, Iizuka, & Walz, 2015 ; Mazzucato, 2018 ; Parente et al, 2021 ; Shadlen & Fonseca, 2013 ; Stiglitz et al, 2013 ).…”

“…For example, overcoming dependence on oil imports drove Brazil’s initiatives to promote knowledge creation networks to innovate advanced biofuels from agricultural waste, attracting local and foreign firms (Perez-Aleman & Alves, 2017 ). The same import-substitution approach focused on industrial policy in the 1980s and 1990s fostered Petrobras’ buildup of frontier technological capabilities and leadership in international joint ventures (Dantas & Bell, 2009 ; Fuentes & Pipkin, 2019 ). Brazilian industrial policies in the automotive sector leveraged instead the subsidiaries and suppliers linked to leading Western MNCs to support the creation of flex-fuel engine technologies.…”

“…Brazilian industrial policies in the automotive sector leveraged instead the subsidiaries and suppliers linked to leading Western MNCs to support the creation of flex-fuel engine technologies. This brought Brazil’s automotive suppliers close to the technological frontier (Fuentes & Pipkin, 2019 ). Similarly, government demand for health technologies that benefit the local population triggered networks to advance innovation in regenerative medicine with financial and social policy support (McMahon & Thorsteinsdóttir, 2013 ).…”

“…Existing research also highlights that DEE PROs respond to local priorities (Mazzoleni & Nelson, 2007 ; Parente et al, 2021 ). In addition, research shows that DEE governments can steer industrial policies to generate market demand and production capabilities in competitive industries (Fuentes & Pipkin, 2019 ; Rodrik, 2007 ). Public policies also shape internal markets and partnerships to foster catch-up growth in areas responding to national welfare goals (Mazzucato, 2018 ).…”