Brazilian states manufacturing production and employment: evidences of deindustrialization

Abstract This paper investigates the deindustrialization hypothesis in Brazilian states in the period 1996-2014, and whether this process is linked to the economic policies (interest rate and trade liberalization) implemented in the country and to exchange rate and favorable prices context for primary products. For this, it analyzes manufacturing states production and employment indicators, and estimates panel data models. In general, manufacturing performance indicators signal a possible deindustrialization process in progress for some states. Moreover, the econometric results suggest the relevance of exchange rate and commodity prices to explain the lower capacity of the states manufacturing industry to generate output and employment, supporting deindustrialization hypothesis by Dutch disease.