According to the latest edition of the United Nations Industrial Development Organization (UNIDO) International Yearbook of Industrial Statistics, the world's manufacturing value added grew +7.2% in 2021, more than offsetting the 2020 decline (-1.3%) caused by the shock of the pandemic. It was the best result of the last decade, only below 2010 (+9.0%), but in this case there were larger losses to offset (-5.9% in 2009). 

This performance of the global industry in 2021 happened despite important obstacles, such as those faced by motor vehicle production, particularly hampered by disruptions in material and component supply chains. Other transport vehicles also registered a sharp drop in MVA (manufacturing value added) in 2021, as did coke, refined petroleum and other petroleum products, metal products and textiles. 

In turn, the pharmaceutical, electrical equipment and computers, optical and electronic products branches have managed to remain positive in the last three years, with the latter segment becoming, in 2021, the largest segment of the manufacturing industry in terms of worldwide MVA.

Among the different countries, China retained its leading position in the ranking of the largest manufacturing industries last year, reaching its highest share ever recorded: 30.5% of the sector's value added (MVA). In the other top positions there were the US (16.8%), Japan (7.0%) and Germany (4.8%).

Two countries deserve to be highlighted for their recent performance. One of them is India, which held the position of 5th largest manufacturing industry in the world, with a 3.2% share of the world's MVA in 2021, almost double the 2005 share. On other occasions, the IEDI discussed the Indian government's effort to strengthen its industrial competencies, as in Letters IEDI n. 709 and n. 849.

The other country is Taiwan, whose share of the world's manufacturing industry has progressed from just 1.0% in 2005 to 1.6% in 2021, when it ranked 10th in the UNIDO ranking. In almost a decade, Taiwan surpassed Brazil in the ranking, which occupied the 10th place in 2010. We were also overtaken in recent years by Indonesia and Turkey.

In fact, Brazil has been systematically downgraded in the ranking of the global industry. Between 2020 and 2021, our relative position continued to worsen, with Brazilian participation in global MVA falling from 1.31% to 1.28%. In 2005, we had the 9th largest manufacturing industry in the world, in 2020 we were the 14th and in 2021 we fell to 15th in the ranking.

In the international competition for the development of industrial capacities and, thus, in the consolidation of robust trajectories of economic growth and expansion of the income of the population, it is not enough to register increases in the value added by the sector. This must occur at a pace similar to the rest of the world and, in the case of Brazil, approaching the performance of other prominent emerging countries.

In 2021, while the global MVA grew +7.2% in real terms, Brazil's varied +4.8%, although it had a much weaker comparison base (-4.3% in 2020). For more than a decade, we have been below global industrial performance; thus, the downward route of our position in the UNIDO ranking is not surprising.

The reversal of this picture depends, as the IEDI has long advocated, on systemic actions to improve the business environment in the country, starting with a tax reform that brings us closer to the world standard of value added taxes (VAT) and with greater integration into international trade. Measures will also be needed to address the trends of digitalization, sustainability and resilience, which are axes to modernize and leverage industrial productivity.

In doing so, given that the industry is a vehicle for socio-economic development, it is the country as a whole that wins. So much so that industrial strengthening is part of the UN Sustainable Development Goals (SDGs), receiving emphasis in this latest edition of the UNIDO Yearbook.

The need to revitalize Brazilian industry is clear when, in most of the indicators of SDG 9 provided by UNIDO (corresponding to industry, innovation and infrastructure), Brazil's performance was decreasing and fell short of the world average and the group of middle-income industrialized economies to which we belong.

For example, the share of manufacturing in GDP, according to UNIDO's current data, decreased between 2015 and 2021 from 10.5% to 10.2% in Brazil, falling well below the average of 22.9% for the group of countries to which Brazil belongs and also below the world figure (16.9%). Brazil's MVA per capita has shrunk from US$927 in 2015 to US$875 in 2021, which is equivalent to 42% of the MVA per capita of middle-income industrialized countries and almost 50% of the world average.

As for the medium and high technology intensity industry, UNIDO data show a downward share in total MVA for Brazil:  from 35.5% in 2015 to 33.7% in 2021. The average of the group to which Brazil belongs is 39.3% and for the world the figure is 45.1%.

The only exception is the intensity of CO2 emitted by the manufacturing industry, but even in this case we have not been able to overcome the performance of the sector's aggregate in the world. Between 2015 and 2019 (last available data) the average of Brazil in kg of CO2 per dollar of value added in the manufacturing industry (at 2015 prices) decreased from 0.47 to 0.43, same as the world average (0.43). Regarding the set of industrialized middle-income countries (0.63), we did better.

Globally, the manufacturing industry alone accounted for 18% of energy-related CO2 emissions. There was a 5% drop in emissions in 2020, but a further 6% increase in 2021. Currently, the leaders in manufacturing-related CO2 emissions are middle-income industrialized countries, followed by high-income ones. But all groups of economies are managing to reduce CO2 emissions per unit of MVA, according to UNIDO.

The full text is available in Portuguese.