Territorial Governance: Linking Local Economic Development and Subnational Industrial Policies in Brazil

• In Event: Experiences in Subnational Industrial Policy, Local Economic Development, and Public-Private Governance in Latin America

Abstract

Since the late 1990s, state and municipal governments in Brazil, along with Federal agencies, and industry associations have promoted “local production systems” (APLs) as a vehicle to foment the competitiveness of small enterprises and trigger processes of local economic development. Such policies were designed towards the strengthening of regional production chains, and targeted specific market failures such as the absence of credit, limited market access, or the prohibitive costs of inputs faced by small firms, usually by encouraging collective action by entrepreneurs. As such policies were implemented in Brazil and elsewhere in Latin America, institutions engaged with knowledge production and dissemination (such as the IDB, ECLAC, and universities) began to recognize the importance of not just specific sectors, but of entire territories in which these production systems were situated. Despite the evolution in thinking from sector-specific toward territorial approaches, most policies developed by Federal, regional, and municipal governments and implemented through the governance structures that organize the APLs continue to have a strong sectoral bent, and only incidentally engage with territorial issues.

This paper argues that the extent to which policies to foment APLs engage with the territories in which they are situated lie within a spectrum. While all policies are strongly sectoral, some are targeted to benefit a narrow range of firms within a particular sector, others are more broadly targeted towards all (or most) firms within a sector, and a few can be classified as local economic development policies. I posit that the extent of the territoriality of these policies is determined by the factors motivating firms to organize into governance structures, which can be related to markets, technical/workforce, or technology and infrastructure. I develop this taxonomy of APLs through an analysis of twelve case studies undertaken by the RedeSist network, and then analyze an original case study, the furniture APL of Linhares, Espírito Santo.

Author

• Pedro F Peterson, University of California/Berkeley