Macro/Micro interactions : Economic and Institutional Uncertainties and Structural Change in Brazilian Industry

The objective of this paper is to associate structural changes in industry to a long period of persistent economic and institutional uncertainties in Brazil. The analysis of adaptation strategies, capabilities and performance of firms is taken up in search for common features of those capable of developing adequate response to uncertainty. The evolution of indicators related to sector of origin, size and ownership of firms, among others, are taken into account in order to stylise emerging trends in morphological and structural features of industry. This retrospective analysis, covering the period 1982-97, will provide the basis for an exploratory assessment on how the future evolution of the Brazilian economy may be influenced by observed changes in its microeconomic structure.2

This is an exploratory and empirical analysis on the implications of macro to micro interactions for industrial development, drawing from different sets of data, from traditional economic indicators to literature review and interviews with firms. It is hoped that this exercise may contribute to the further understanding of the behaviour of economic agents under economic and institutional related uncertainty. The works of Katz (1996), among others, who search for links between economic and institutional changes and the recent transformation of Latin American industrial structures inspired this analysis.

The paper is organised as follows. Section 2 develops the main concepts and arguments used in the article. Section 3 describes, briefly, the nature and extent of changing economic and institutional conditions in Brazil, according to a periodisation defined in terms of main economic and political events. This periodisation anchors the analysis of macro to micro interactions, the subject of the next sections. In the final section main conclusions are summarised and prospective and policy implications are drawn.

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